A-B-C-D Trade - page 310
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
GAB Pivot
Here is a way to have a quicker reaction to pivots. We have a 4-hour USD/CHF chart with HAMA_T3, Gann Activator Bars (GAB), and RSI(4-Period).
This is a 2-candle formation. They must be the same color and the 2nd close in divergence from the 1st candle.
An example would be the 1st candle has a high price of .9510. The 2nd candle’s high is at a price of .9520. Therefore, the trend is up.
The 2nd candle must have a diverging RSI(4) reading. In the above example, this means the 1st candle is 70, and the 2nd candle is 60.
We marked points when this divergence occurs. However, the instances when it happens at the HAMA_T3 would allow traders to trade with the trend. These are labeled with an “X”.
Entry would be at the open of the next candle (entry candle). S/L can be placed at the high or low of the previous HAMA_T3 candlewick price (pivot candle). S/L at the low HAMA when direction of trade is up. S/L at the high of HAMA when direction is down.
The pivots that are not in the HAMA_T3 were often good signals, and can also be used as guidance for exit.
The fractals indicator by Bill Williams, and standard on the MT4 platform, is a 5-candle formation, with entry at the 6th candle. We’re not saying the GAB Pivot is better, but each individual trader can assess its merit.
Listed below are the GAB Pivot dates/times from late May to late June,, when bumping up against the HAMA_T3. The 2nd date/time is the entry at the next 4-hour candle’s open. These are the pivot candles and entry candles. Add spread/cushion.
May 28th 04:00/08:00 BUY = .9556 S/L = .9532
June 4th 00:00/04:00 SELL = .9680 S/L = .9697
June 12th 08:00/12:00 BUY = .9611 S/L = .9572
June 15th 12:00/16:00 SELL = .9506 S/L = .9561
June 22nd 12:00/16:00 BUY = .9568 S/L = .9508
June 26th 08:00/12:00 BUY = .9618 S/L = .9563
5 out of the 6 had nice moves. As usual, need trade management (trailing S/L, etc.) and money management (including scaling of amount of lots traded based on risk).
Let's not reinvent the wheel. Here's a site that lists trailing stop EAs for free download. Obviously, use at your own risk.
Sorry, I cannot answer questions about them. Once you figure out which ones are useful for you and your trading style, and have tested them, it should improve your results.
Our recent examples are of the swing trade variety, therefore a trailing stop-loss EA can be very useful and allow you to actually get some sleep.
Trailing Stop EAs for MT4 | Forex Strategies & Systems Revealed
or cut and paste forex-strategies-revealed.com/mt4/trailing-stop-eas
Now, we'll go into a little more advanced techniques.
GAB Pivot Counter-Trend
Let’s pull up the recently posted GAB Pivot 4-hour chart for USD/CHF. We spoke about the marked pivot candles that were bumping up against the HAMA_T3, which would be trading in the direction of the trend.
Now let’s examine the other pivot candles. We marked them with blue arrows and the date/times are listed below. These are counter-trend. It generally operates on the premise that when price is away from its mean (average), it shall revert back. Note that the mean or moving average will be changing, as illustrated by the HAMA_T3.
We added SQ9(Price) with StartPrice of June 1st high .97705. This can assist us in S/L options.
Each pivot candle marked shall have a trade entry at the opening price of the next candle.
S/L would be normally placed on the pivot candle’s high/low + cushion.
We must measure the R/R prior to entry. Therefore, the TP area must be ascertained.
Since these signals are counter-trend to the HAMA_T3, which acts as S&R, a conservative plan that considers the highest probability would be to trade only to the HAMA_T3.
We look at the pivot candle time period, and then check the HAMA_T3 prices for that same period. As mentioned, the HAMA_T3 has 4 prices, which can be seen in the data window. The one we want to use is the closest to the entry price. This is our TP price target area + cushion.
Example:
Pivot candle = June 5th 00:00 (trade direction is BUY)
Pivot candle June 5th 00:00 low = .9576 (for S/L – add cushion)
HAMA_T3 candle June 5th 00:00 = .9635 (value 2 in data window) this is TP target - add cushion.
Open price June 5th 04:00 = .9590 (Entry) add spread
Reward = 45 pips – add cushion
Risk = 14 pips – add cushion
Gross R/R = 45/14 and ratio of 3.2:1
Net R/R = about 40/19 and ratio of 2.1:1
***
If the point of entry is too far from the S/L (which is discretionary for each situation and trader) for acceptable R/R, the SQ9 levels can be used. Alternatively, the SQ9 can also be used for S/L if trader prefers larger S/L.
Pivot candles (also used for S/L) and Entry candles – TP – Reward/Risk
1) June 5th 00:00 .9576 BUY June 5th 04:00 .9590 TP .9635 R/R = 45/14 *
2) June 6th 08:00 .9586 BUY June 6th 12:00 .9609 TP .9621 R/R = 13/23
3) June 7th 12:00 .9513 BUY June 7th 16:00 .9557 TP .9579 R/R = 22/44
4) June 8th 12:00 .9658 SELL June 8th 16:00 .9620 TP .9615 R/R = 5/38
5) June 15th 04:00 .9495 BUY June 15th 08:00 .9516 TP .9533 R/R 17/21
6) June 20th 12:00 .9437 BUY June 20th 16:00 .9452 TP .9476 R/R 24/15 (S/L unless used SQ9)
7) June 28th 16:00 .9673 SELL June 28th 20:00 .9648 TP .9635 R/R 13/25
8) July 1st 20:00 .9471 BUY July 2nd 00:00 .9496 TP .9549 R/R 53/25 *
9) July 6th 04:00 .9711 SELL July 6th 08:00 .9697 TP .9632 R/R 65/14 * (stopped-out post-NFP)
Under this strategy, we can see that signals #1, 7, and 9 had an acceptable predetermined R/R (gross). Deducting about 5-7 pips for spread/cushion will give you a good handle on net R/R, with this quick analysis.
The result from the 9th signal was impacted by reaction to Non-Farm Payroll data, stopping out the position. Many traders choose to stay on or move to the sidelines.
***
Should traders desire to be more aggressive and attempt to capture some of the larger gains, they can monitor the color of the GAB. Wait beyond initial contact to the HAMA_T3. Once the color changes in favor of the trade direction, traders can ride it out using HAMA_T3 for trend/S&R and SQ9 or fibs for TP target levels.
This technique produced substantial gains on the last 3 swings.
Now let's examine the colors of the GAB. The standard and 1st example simply outlines RSI(4) divergence off 2 GAB of the same color. They can be either blue (up) or red (down).
The attached 4-hour GOLD has labels indicating GAB pivot where the colors of the 2-candle formation is opposite of trend, prior to trading the pivot direction.
An example is the June 1st 04:00 pivot. The 2 GABs 00:00 and 04:00 were blue, while price was declining. These are marked with "O" for opposite color.
The same designation for price rising and the GABs are red,
Of the 16 GAB pivots, 5 were of the O variety. Each O pivot tells us that the larger trend will likely continue and this is just a pullback.
The GAB pivots that were "O" can also be "X", which means it is bumping up at/near the HAMA_T3.
Here are the pivots at GMT + 2 hours time. Entries are 4 hours after these pivots.
1) June 1st 04:00 BUY (O)
2) June 4th 08:00 SELL
3) June 6th 12:00 SELL
4) June 11th 16:00 BUY (O)
5) June 13th 16:00 SELL
6) June 15th 12:00 SELL
7) June 20th 08:00 SELL (XO)
8) June 22nd 08:00 BUY
9) June 26th 08:00 SELL (X)
10) June 28th 04:00 SELL (XO)
11) June 28th 20:00 BUY
12) June 29th 20:00 SELL
13) July 4th 12:00 SELL
14) July 5th 04:00 SELL
15) July 6th 12:00 SELL (XO)
16) July 6th 20:00 BUY
Attached is 4-Hour EUR/USD with labeled GAB Pivots. After a long decline, price has been chopping around, but with a couple of good swings.
The check mark focuses on the June 20th peak, where it failed against resistance again. The OX labels point to GAB pivots going in the direction of the trend and up against the HAMA_T3 S&R.
We had spoken about watching for price to pull away from the HAMA_T3 and then trading the first pullback. The GAB Pivot technique can assist in doing that. Sometimes, a price is paid with loss of front-end pips.
We placed an arrow at the first pullback on June 22nd 22:00. There were 2 other subsequent OX pivots, each with declining profit potential.
The 2nd pullback can actually help us stay in the trade, because we understand that divergence is happening.
The 2nd arrow points to a time when price was consolidating. The blue bars on the upswing retreated and turned red and into the HAMA_T3.*
In this case, our GAB Pivot gave us an early indication (July 3rd 04:00 bar) that price may decline. Although there was a GAB Pivot going the other way at the end of the 12:00 period, the bars were red.
* edit add: For those adapt at basic Fibonacci, we can plot off the most recent decline prior to pivot: High = 1.26916 Low = 1.25670.
We can then see the July 3rd 04:00 pivot bar's high at the 38.2% retrace level of 1.26146. S/L can be place just above the 50% or 61.8% fib levels.
Subsequently, the 12:00 bar made a hit to the 50%, but was rejected. Price proceeded to decline after that and drop below the HAMA_T3.
Here's a 30-min chart of EUR/USR using the ATR (14-period) trigger based on a fib plot and cross at its 50% level.
The next candle period after the 50% ATR fib cross today at open of the 12:00 price of 1.2179 for BUY. We also see BAJA Bullish Divergence and a Doji at bottom pivot.
The 3rd element is a SQ9(Price) plot using StartPrice of 1.2273, which is the high during yesterday's 18:00 FOMC. Compliance seen en route down, set up the BUY near the 90-degree. S/L just below this level of 1.2162.
TP targets at SQ9 levels 68, 45, 22.5, and 0-degree.
The 15:30 candle period rejected 1.2210 and shy of the 45-degree of 1.2218 and retreated to the 68-degree where it is consolidating.
Here's the view on a weekly time-frame for EUR/USD that goes back to Jan 2010, with identified GAB Pivots and breakout points.
The qualified breakout levels are previous failed attempts to penetrated and breakout from the HAMA_T3.
The vertical white and yellow trend lines point to GAB Pivot points. "X" denotes pivot point is at or near the HAMA_T3 S&R , and "O" is a signal going with the trend.
Entry is the open price of the next candle, after pivot point. S/L options include just above/below pivot candle. If the distance is too large, we can use the mid-point of the pivot candle for the S/L level. As usual, add cushion.
Take-profit varies depending on the trader's style.
Can opt to attempt to stay with a potential long-term trend, or stay in trade for shorter duration, such as one or two weeks.
The pivots marked with yellow vertical trendlines are trades that lost, based on a one-week holding period.
Let's focus on pivots that are marked OX, meaning they are up against the HAMA_T3 and are in the direction of the trend. The resulting win/loss is based on a one-week holding period. These pivot dates are:
1-10-2010 SELL
3-14-2010 SELL
4-11-2010 SELL
8-22-2010 BUY
11-14-2010 BUY (L)
2-13-2011 BUY
7-24-2011 SELL
10-16-2011 SELL (L)
4-29-2012 SELL
6-17-12 SELL (L)
For your homework:
1) Scale number of lots to trade based on stop-loss and risk as percentage of account.
2) Calculate risk/reward for each trade at its conclusion (one-week)
3) Base trades on a two-week holding period, and calculate resulting R/R.
This technique is harder to project R/R in advance. One way to do it, however, is to use fibs. We won't get into that in this segment.
****
There were 5 trendline S&R breakouts. These price levels and breakout dates are:
8-1-2010 / 9-19-2010 BUY 1.3334
11-21-2010 / 1-30-2011 BUY 1.37851
7-10-2011 / 9-4-2011 SELL 1.38363
10-2-2011 / 12-11-2011 SELL 1.31443
2-12-2012 / 5-6-2012 SELL 1.29732
S/L options include using the HAMA_T3 candle's high/low, that was the last candle previous to entry candle.
Now let's train our minds to analyze things further with this technique. The attached chart marks GAB Pivots that had a resulting 3:1 reward/risk. Pivot point dates are:
1-10-2010
4-11-2010
8-22-2010
2-13-2011
7-24-2011
4-29-2012
Homework: Based on 6 trades at 3:1 R/R, and 3% risk per trade.
What are returns for win/loss scenarios, 5-1, 4-2, 3-3, 2-4, 1-5?
Homework: Based on 6 trades at 3:1 R/R, and 3% risk per trade.
6-0 = $10,800 (54% R.O.I. non-compounding)
5-1 = $8,400 (42%)
4-2 = $6,000 (30%)
3-3 = $3,600 (18%)
2-4 = $1,200 (6%)
1-5 = minus $1,200 (-6%)
0-6 = minus $3,600 (-18%)
The 6-0 and 0-6 scenarios while mathematically possible are most unlikely. When trading 6 times per year, the compounding aspect is very minimal. Always understand your risk and maximum risk. Increase risk if you can afford to, and have the proper level of experience.
The GAB pivot opportunities on the 4-hour chart recycle capital much more often, versus the weekly. A monthly average performance of 4 wins and 2 losses will produce a 30% R.O.I. that can compound into an attractive total.
An account that starts at $20,000 using 3% risk and 3:1 R/R, gains 30% monthly, and would compound into $466,000 after one year. The net gain = $446,000 and 2,230% (multiple of 22 times original account balance).
If withdrawals are made, the average monthly gain would be $6,000, and $72,000 per year, a 360% annual return.
An average of 3 wins and 3 losses per month averages approximately 18% return per month. When left to compound, its R.O.I. is 629% for the year.
The attached EUR/USD 4-hour chart labels 20 opportunities with GAB pivots, between April and July.
Using a 3:1 R/R, we count 12 wins, which are labeled with green asterisks. A couple of pivots were close to each other and counted just once.
We divide the 12 wins and 8 losses by 3 months to get an average of 3 wins and 2 losses per month.
We input that into the risk calculator and arrive at:
Average of $4,200 per month return (21%). If withdrawals of all profits are made each month (non-compounding), the total gained per year is $50,400 (252%).
If allowed to compound monthly, the year-end total is $197,000. After subtracting the $20,000 starting balance, the year-end gain is 885%. This is an example of the magic of compounding and leverage.
Not surprisingly another mega-scandal, this time with the manipulation of Libor (the London Interbank Offered Rate) interest rates. Barcalys is the first but not the only headliner in this new drama.
Some have labeled this the largest rigging of prices in the history of commerce. The alleged criminal bank participants were described as a cartel.
Other alleged bank participant names have been thrown around, such as J.P. Morgan Chase, which is still reeling from another scandal involving losses that may total USD 5-7 billion.
BBC News - Barclays: 'Other banks to face Libor revelations'
or cut and paste
bbc.co.uk/news/business-18848673