Baruch's Forex System Journal

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Quote from Baruch:

Hi again,

4hr chart - wow! How can you trade using such a big chart? I try to use 1hr instead of 30min, but it's not easy. I want to know the details. I also use 1min and 10min.
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Well, I actually prefer trading off the daily chart, but I find I sacrifice too much profit potential.

Basically, I use the 4hr chart for an idea of the bigger picture: I try and find the trend and get an idea as to the health of the trend. I've found the three indicators (slow stoch., MACD, DMI) all provide a piece of the picture which when combined, gives me a decent idea where things are going. It's been my experience that a longer-term trend will eventually over-ride the shorter term movements. Since I'm looking for gains of 50+ pips, I tend to use a longer time frame. I'll usually use the 1hr and sometimes 30min charts for entry, but I prefer the 1hr trend move in conjunction with where I think the 4hr chart is going for two reasons: 1) I can let it go on its own more without as much babysitting; 2) It seems a little more predictable. I've found if the 1hr conflicts with the 4hr, you can get a move that will last anywhere from an hour (or less, of course) to a trend reversal; as of yet, I haven't found a way to differentiate just yet.

I've tried trading off the 10-30 min. chart and I'll probably go back to it at some point. The problems I've run into are more a pyschological problem and a practical one: It's hard for me to shoot for a gain of 10-30 pips (though I'll absolutely take it if that's what's given) and more importantly, refcofx's spreads aren't exactly close to being the tightest in the business. When you shoot for a holding time of hours, it's not a big deal, but the shorter charts really makes it more difficult.

As I said, I haven't been doing this too long, so it's really just what's been working for me. I'm constantly refining things and coming up with new ideas. I've spent the past few weeks predicting direction off the 4hr charts using the 1-3hr for confirmation and I've done pretty well with my predictions. I'll eventually work on incorporating shorter trades off 15-30 min. charts, but I think I prefer going off the longer charts. The main problem I've found is the potential drawdown can get to people, but it doesn't really bother me.

I'm sure this is really jumbled, so if I can help clarify anything, please ask.

Steve
 
Quote from SteveL91:

Well, I actually prefer trading off the daily chart, but I find I sacrifice too much profit potential.

Basically, I use the 4hr chart for an idea of the bigger picture: I try and find the trend and get an idea as to the health of the trend. I've found the three indicators (slow stoch., MACD, DMI) all provide a piece of the picture which when combined, gives me a decent idea where things are going. It's been my experience that a longer-term trend will eventually over-ride the shorter term movements. Since I'm looking for gains of 50+ pips, I tend to use a longer time frame. I'll usually use the 1hr and sometimes 30min charts for entry, but I prefer the 1hr trend move in conjunction with where I think the 4hr chart is going for two reasons: 1) I can let it go on its own more without as much babysitting; 2) It seems a little more predictable. I've found if the 1hr conflicts with the 4hr, you can get a move that will last anywhere from an hour (or less, of course) to a trend reversal; as of yet, I haven't found a way to differentiate just yet.

I've tried trading off the 10-30 min. chart and I'll probably go back to it at some point. The problems I've run into are more a pyschological problem and a practical one: It's hard for me to shoot for a gain of 10-30 pips (though I'll absolutely take it if that's what's given) and more importantly, refcofx's spreads aren't exactly close to being the tightest in the business. When you shoot for a holding time of hours, it's not a big deal, but the shorter charts really makes it more difficult.

As I said, I haven't been doing this too long, so it's really just what's been working for me. I'm constantly refining things and coming up with new ideas. I've spent the past few weeks predicting direction off the 4hr charts using the 1-3hr for confirmation and I've done pretty well with my predictions. I'll eventually work on incorporating shorter trades off 15-30 min. charts, but I think I prefer going off the longer charts. The main problem I've found is the potential drawdown can get to people, but it doesn't really bother me.

I'm sure this is really jumbled, so if I can help clarify anything, please ask.

Steve
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Hi again,

You don't use any ma's?
 
Steve, your doing very much the same as me. While I do look at 30min-5min for turning points I focus on hourly and 8hour charts mainly. I find the risk/reward to be far greater. I dont call tops/bottoms, I wait for the 30min to show the trend is now heading in the direction I want on the 8hourly. So I dont call a top/bottom on the 8Hr, I wait for it to move in the direction im anticipating. Keep stops to 20-30 pips thereafter with mostly open targets. The worst I find holding for so long sometimes is ignoring the 50-60pip minor retracements and let it ride.
 
Quote from Baruch:

Hi again,

You don't use any ma's?
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I do, but what period depends on the time frame of chart I'm looking at. On the hourly grouping of charts, I'll usually use a 20 EMA and a 50EMA; I may toss in a 10 EMA but there's really no significance behind the moving averages; they're really just to give me an idea of where things are, where they've been and where they (may) want to go. I haven't really done much with ma crossover systems, but I found and read about a few that seem to have potential.

On the daily chart, I'll usually use 50, 150 and 200.

rax,

Thanks for the link. I'll definitely check it out!

izeickl,

That's definitely very similiar to what I do. I don't have a problem picking tops and bottoms, but lately, I've been looking for confirmation; I think I may mass a few trades, but I'll also miss a few spectacular misses as well and that's a trade-off I can live with. I try not to set profit targets - though I may have an idea of where the price may go - and I'm trying to let the market and charts tell me when to get out. I still haven't mastered it yet as I like to anticipate things by nature, but I'm getting better about it.
 
Quote from izeickl:

Steve, your doing very much the same as me. While I do look at 30min-5min for turning points I focus on hourly and 8hour charts mainly. I find the risk/reward to be far greater. I dont call tops/bottoms, I wait for the 30min to show the trend is now heading in the direction I want on the 8hourly. So I dont call a top/bottom on the 8Hr, I wait for it to move in the direction im anticipating. Keep stops to 20-30 pips thereafter with mostly open targets. The worst I find holding for so long sometimes is ignoring the 50-60pip minor retracements and let it ride.
More...

Hi izeickl,

Trends or news? The problem with trend-following is that some of the big news (e.g. nonfarm payrolls) moves the market 100 or 200 pips - with og against the trend.
 
Quote from Baruch:

Hi izeickl,

Trends or news? The problem with trend-following is that some of the big news (e.g. nonfarm payrolls) moves the market 100 or 200 pips - with og against the trend.
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I go with trends, but I catch counter movements also if a news day warrants it. With big news days price can shoot off and if I miss the start i will get in at a pullback/pause before the next movement. I use a price crossing over SMA similar to you also but do it at varying levels not just 30Min, I also trade pullbacks so if I do get out of a trend too soon or miss the start and a nice pullback/pause occurs I will enter again looking to use a smaller time frame as confirmation of the trend resuming. With news days moving 100-200 pips most times there are usually a good two/three places to enter at least part of the move. I trade GBP/USD over EUR/USD as it tends to make larger movements e.g today EUR/USD moved 100 pips from bottom to top (1.184ish-1.194ish) while GBP/USD moved 220 pips (1.7580ish to 1.78ish). On Tuesday GBP/USD fell 200 pips, EUR/USD fell just about 100.

Main things I look for ; Break Retests/Support/Res levels, coupled with stoch and SMAs (Either rebounds or breaks), and/or divergences that appear (e.g a nice hourly divergence appears on stoch coupled with a oversold/bought stoch on the 8 hourly while sitting at a supp/res level).
 
Quote from izeickl:

I go with trends, but I catch counter movements also if a news day warrants it. With big news days price can shoot off and if I miss the start i will get in at a pullback/pause before the next movement. I use a price crossing over SMA similar to you also but do it at varying levels not just 30Min, I also trade pullbacks so if I do get out of a trend too soon or miss the start and a nice pullback/pause occurs I will enter again looking to use a smaller time frame as confirmation of the trend resuming. With news days moving 100-200 pips most times there are usually a good two/three places to enter at least part of the move. I trade GBP/USD over EUR/USD as it tends to make larger movements e.g today EUR/USD moved 100 pips from bottom to top (1.184ish-1.194ish) while GBP/USD moved 220 pips (1.7580ish to 1.78ish). On Tuesday GBP/USD fell 200 pips, EUR/USD fell just about 100.

Main things I look for ; Break Retests/Support/Res levels, coupled with stoch and SMAs (Either rebounds or breaks), and/or divergences that appear (e.g a nice hourly divergence appears on stoch coupled with a oversold/bought stoch on the 8 hourly while sitting at a supp/res level).
More...

Hi again,

Yes, I think we should trade GBP/USD instead of EUR/USD. The losses are the same, but we get more pips, when we win.
 
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