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10.6 EDSEL
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Author:  nanningbob [ Tue Nov 12, 2013 10:39 pm ]
Post subject:  10.6 EDSEL
10.6 is all about trend detection and trading into the trend after a retrace.

There are two moving averages:
a 2 period lwma on the monthly chart.
a 2 period lwma on the weekly chart.
The relationship of the two ma's is irrelevant.
If the market is above these two ma's, we are in an uptrend (UT).
if the market is below these two ma's, we are in a downtrend (DT).
if the market is in between the two ma's, we are in a range.
Having established UT, DT or Range, we drop down to the H4 chart.
the 240 period MA is a conversion of the MN1 to the H4.
the 60 period MA is a conversion of the W1 to the H4.
Having established our trend direction. We look for our trade trigger.

The first trigger is based on the Stochastic 7,2,2 indi.
For buying back into a UT it must flatten out at or near the bottom. i.e. zero.
We then wait until it rises back up above 20 to indicate the trend has restarted. We have the trade setup, so we start to look for the actual trade trigger. The trigger could be:
a cross of the Daily Pivot.
the cross of some other clearly visible previous resistance.
the cross of the x.000.
a cross of the 15 LWMA.
maybe even the fact that Stoch has risen above 20, or 40.
For a sell, everything in reverse with Stoch levels 80 and 60.

My 10.6 EA helpers at http://www.stevehopwoodforex.com/phpBB3 ... =38&t=3273 are there to take over the watching and waiting once you have decided you can see a trade trigger.

The entire 10.x series has been gradually refining the trade trigger to reach the point we are at now.

Sometimes it is easier to start with a summary and work outwards from there. Hope this helps.
SUMMARY BY STEVE HOPWOOD

10.6 is the culmination of over two years pursuit of asking a simple question I could not find an answer to: "What is an uptrend (UT) and what is a downtrend (DT)?" This is what I wrote back in Aug. 2011:

10.0 Will attempt to define the markets in a way I have not seen before. We will attempt to define an uptrend (UT), downtrend (DT), and range periods (RT). 10.2 will add definitions for range trading with DT bias and UT bias. We will know when they begin and when they will end. With this knowledge we will then apply the appropriate trading strategy or EA.

10.6 EDSEL is the trading system that tries to clearly and specifically answer those questions. I understand not everyone will agree but it is a big undertaking. I will try my best to make it understandable and clear.

Welcome to 10.6 EDSEL

Nanningbob

PDF file added November 24, 2013
Author:  nanningbob [ Tue Nov 12, 2013 10:57 pm ]
Post subject:  Re: 10.6 EDSEL
There will be 3 basic buy trades and 3 basic sell trade scenarios. Here is the standard 10.4 buy trade.

1. First bar is green meaning price is above the 240 and 60 MA lines on the 4H chart. This bar will show only 4H reads no matter what time frame you are on. So when price action is above the white 240 MA (monthly trend) and the green 60 MA (weekly trend) the bar will be green letting you know price is in an UT.

2. At the bottom of the chart is the stochastic oscillator set at 7 (STO7). When it crosses above the 20 line and also at the 40 line it will give you a signal letting you know a potential trade set up is happening. When this happens you can then look at the chart and decide whether or not to take the trade.

3. You then can set your buy trade using a pending script, EA, or manual trade. You set your trade crossing the DP (Daily Pivot), xxx.000 line (solid line), xxx.050 dotted line, or in some cases the 15 MA line. If you like trading lower time frame charts (TF) you can do that also. The signal to buy into the trend has been given it is now your choice whether or not to take the trade.

4. Profit targets are the xxx.000 or xxx.050 lines. This decision is really based on your understanding of the market and market times. I will talk more about this later.

5. SL lines are your choice. I like large SL lines so I often use the 240 line. Many are not comfortable with that so they choose the 60 line or the last swing low or a lower xxx.000 or xxx.050. That has a lot to do with what kind of trader you are. I explained why I use the 240 line in my 10.4 booklet.

I used the usd/chf 4H chart to illustrate the trade.
Author:  nanningbob [ Wed Nov 13, 2013 12:16 am ]
Post subject:  Re: 10.6 EDSEL
There will be 3 basic buy trades and 3 basic sell trade scenarios. Here is the standard 10.4 sell trade.

1. First bar is red meaning price is below the 240 and 60 MA lines on the 4H chart. This bar will show only 4H reads no matter what time frame you are on. So when price action is below the white 240 MA (monthly trend) and the green 60 MA (weekly trend) the bar will be red letting you know price is in an DT.

2. At the bottom of the chart is the stochastic oscillator set at 7 (STO7). When it crosses below the 80 line and also at the 60 line it will give you a signal letting you know a potential trade set up is happening. When this happens you can then look at the chart and decide whether or not to take the trade.

3. You then can set your sell trade using a pending script, EA, or manual trade. You set your trade crossing the DP, xxx.000 line (solid line), xxx.050 dotted line, or in some cases the 15 MA line. If you like trading lower time frame charts (TF) you can do that also. The signal to sell into the trend has been given it is now your choice whether or not to take the trade.

4. Profit targets are the xxx.000 or xxx.050 lines. This decision is really based on your understanding of the market and market times. I will talk more about this later.

5. SL lines are your choice. I like large SL lines so I often use the 240 line. Many are not comfortable with that so they choose the 60 line or the last swing high or a higher xxx.000 or xxx.050. That has a lot to do with what kind of trader you are. I explained why I use the 240 line in my 10.4 booklet.

I used the nzd/usd 4H chart to illustrate the trade.
Author:  nanningbob [ Wed Nov 13, 2013 2:13 am ]
Post subject:  Re: 10.6 EDSEL
10.6 EDSEL sell trade for no STO7 trade signal. This is a very strong sell trend move. Part 1

1. The bar is red showing DT but the STO7 does not retrace back to the top. Very strong DT and a strong move. Many times the move is so strong that price will not come back above the DP yellow line or will just touch it.

2. The second bar then comes into play and will turn red based on signals from the 1H chart. When both are red we have a 10.6 trade.
Author:  nanningbob [ Wed Nov 13, 2013 2:31 am ]
Post subject:  Re: 10.6 EDSEL
10.6 SELL trade 1H chart.

1. The second bar on the chart is the 1H signal and is a different trade setup than the 10.4 setup. It is for strong trends when the 4H is not giving a clear entrance signal to enter a trade because price action is stronger than the 4H indicators can pick up and show. Often price will not retrace inside the DP line so you can get a good entrance.

2. The 15MA on the 1H now becomes the important entrance signal on a 1H chart. If price action is between the 15 and the 60 on the 1H chart you will then get a red bar signalling a potential re-entrance back into the trend. Whereas you will not get any signal on the 4H chart. If you missed the strong move on Tuesday, you have a chance to get in on Wednesday OR if you closed the trade on Tuesday you can get back in off the retrace on Wednesday.

3. You set up your trade with a pending crossing a xxx.00, xxx.050 lines, the DP if it is in play or now you can use the 15 MA as your entrance line. It will give you a place to enter if the others are not good spots to enter. 1H 60 MA or 1H 240 MA can become your SL lines on the 1H chart.
Author:  nanningbob [ Wed Nov 13, 2013 2:35 am ]
Post subject:  Re: 10.6 EDSEL
Here is the aud/usd 4H and aud/usd 1H showing the double red bars being active. This is telling you a classic 10.6 setup trade is possible. You see the double bars on the 4H and you go to the 1H chart to trade it.

This is an example when price action wont even move above the DP. This happened 4 days in a row on the aud/usd, aud/cad, and aud/chf. I only got 64 pips on the aud/usd, 62 on aud/chf but I did get over a 100 on the aud/cad, so I did well following these classic 10.6 trades.
Author:  nanningbob [ Wed Nov 13, 2013 2:41 am ]
Post subject:  Re: 10.6 EDSEL
10.6 SELL trade aud/usd 4H chart

The 4H chart is not giving you any signal to enter the trade. Price is running strong as a DT and you are missing it. Where and how to enter??????

1. 4 days of no retracement back above the DP line.
2. 4 days of no STO7 signals.
3. You are missing a nice run :(
Author:  nanningbob [ Wed Nov 13, 2013 2:54 am ]
Post subject:  Re: 10.6 EDSEL
10.6 EDSEL trade aud/usd 1H chart

You see the double bars you now go to the 1H chart. You will now get STO7 1H signals and places to enter.

1. Price is not moving back above the DP 4 days in a row but on the 1H STO7 will give you signals. The STO7 will now work on the 1H chart but the bars remain coded to 4H and 1H moves.

2. So you will get the follow signals. Double red bars, STO7 when it goes below the 80 from above on the 1H. You enter your trade at the 15MA or xxx.00 or xxx.050 lines.

3. Profit targets are again xxx.00 or xxx.050 lines. I will talk about taking profits during session times later.

4. SL line is the 60 MA or a xxx.00 or xxx.050 line.
Author:  nanningbob [ Wed Nov 13, 2013 7:45 am ]
Post subject:  Re: 10.6 EDSEL
10.6 EDSEL buy example eur/aud.

4H chart shows no entry after cross of 240 line. Cant use STO7, cant use DP. 240 line you could have tried but then what??
Author:  nanningbob [ Wed Nov 13, 2013 7:58 am ]
Post subject:  Re: 10.6 EDSEL
10.6 EDSEL buy 1H eur/aud.

1. When you see the double green/green bars you can go to the 1H chart and set up your trade. On the 1H chart the bars do not change and remain the same on all time frames. You will still have the double green bars.

2. The STO7 however does change and will start giving you signals off the 1H chart. You will see in the last 3 days it gave 3 trade signals. If you place the 3 trades the first day would have been small with 25-30 pips off of the 15MA line and maybe 5 off of the xxx.050 line.
The 2nd day though was much better with a nice move of over 100 pips.
The 3rd day nothing has happened so far.

3. Again you see no potential trade off of the DP but the 15MA or the nearest line to the 15MA gives you entrance points. Stop Loss points can be the last swing low, 60 MA or the last xxx.00 line. Take profit lines are the xxx.00 or xxx.050 or like I trade the Mid point of a session.
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