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clarification
Ok they say the only stupid question is the one not asked so here goes. Just to be clear I'm not here to criticise, rather to get some clarification and help others with the same.
Looking at your chart I think I'm right in saying that the SHI channel wouldn't have painted the down-sloping channel until after price had first broken the lower limit of the LRC at about 2.0490 and then had came back to about 2.0805, (where it turned downward again just before the purple channel lines also turned downward) I think your post was to illustrate what the price did, not how to look at it as it's happening. That's an important question for me as I've seen another similar chart of yours a ways back in this thread and it confused the hell outta me.
But no drama. If I understand your system at least to a certain degree all would've been well without the SHI channel. Now hold on... please indulge me while I test my understanding of your system. Go back on the chart to the middle of the white LRC channel, both lengways and widthways. (no time axis on the screen grab) There's a bunch of blue Support lines just below 2.0330 and a bunch of red Resistance lines at about 2.0490. Right there the trend is UP and at that time I would've been looking for a good long entry. AND the ZIG ZAGS not shown on the charts hopefully would have got me in somewhere around that Support price. IF NOT when I saw that big red day go down to that support and touch the bottom of the LRC to boot it would have been hard not to go long right there.
The target would've been either the overhead Resistance (I understand you use S&R for TPs) at 2.0490 or, if I trusted the LRCs, I would have let at least half the position ride because that Resistance is still under the center of the LRC. If I had let half the position ride on I would have exited at 2.0805 (I'm not greedy) and if not there definately at the Resistance shown at about 2.0900 just left of the three white arrows on your chart.
So the upshot of all that is when the price did do a screaming nosedive all the way from 2.1120 on it's way toward 2.0330 shortly thereafter I would've been well out, laughing as opposed to blubbing and waiting for the next good long entry.
Sorry there's more. What I would have done then, given that the trend was still in place at that point, is take another long position when the price came down somewhere near the lower LRC at about 2.0490. It's looks like there would have been a ZAG dot somewhere around that point. Keep in mind I don't know the trend is over yet. (right?) When the price continued down to about 2.0330 then I know the trend, if not over, is definately in trouble. BUT as you say what goes one way comes back, so I would have either sat and waited or even averaged down. Anyway low and behold price comes back up to 2.0805. I probably would have exited at a modest profit well before 2.0805 because I don't trust the trend anymore. AND then I would have waited a bit to see what the price was doing.
And finally when the price did move down with gusto from 2.0805, and when the SHI channel kicked in I would have seen the downtrend and would have started looking for a good short, which with the help of the ZIGGIES and the fact that the price is near the top of the SHI channel I would have got at at about 2.0490. The target would have been very recent blue Support lines at 2.0175. (probably a bit above that)
Is that right or am I way off? And sorry for the long post.
this is a copy and paste from another post done concerning the LRC, so forgive if it sounds a bit strange.
there is a decent substitute that has been coded, called SHI channels and the DeMarker trend lines are also right on, but the LRC channels are SO right on visually, showing top resistance and bottom support, that its hard not to love them.
BUT, you can hand draw the LRC lines by using the LRC tool contained in MT4, which is actually THE BEST way to do them.
the enclosed chart shows BOTH the hand drawn LRC channel (WHITE) and the custom indicator (GREEN) called "SHI_Channel_true" working together.
Note the three white arrows pointing to the intersection of the two channels ?
when trading, one watches and waits to see if the upward movement of the currency shown by the WHITE channel CONTINUES PAST THE GREEN lines ! If the price fails to break out, you now have a trend change and if you were watching, the first DOWNSIDE MOVE, shown by the small red downpointing arrow, the multitude of red dots and the purple line (which would have been screaming EXIT HERE) would have given you an excellent return.
Now notice that the channel is DOWNWARDS, which is now the trend for the currency, and notice how the price moves UP and DOWN in that channel --- you are seeing, in lovely detail, JUST HOW FOREX WORKS !
If there is an easier way to tell what a currency is doing, or is expected to do, Im open to the facts and would use it, but after many many years, I cant find another way!
once you use them, your eyes will be opened wide, you will now SEE what is happening in forex instead of thinking its just a mumble of junk and will now have enother tool in the toolbox.
oh yeah, while i cannot ever be rid of "spaghetti", if you move back and squint a bit, all the little stuff goes away and you can then see the work the channels do !
enjoy and trade well
mpMP -- another look at the LRC
this is a copy and paste from another post done concerning the LRC, so forgive if it sounds a bit strange.
there is a decent substitute that has been coded, called SHI channels and the DeMarker trend lines are also right on, but the LRC channels are SO right on visually, showing top resistance and bottom support, that its hard not to love them.
BUT, you can hand draw the LRC lines by using the LRC tool contained in MT4, which is actually THE BEST way to do them.
the enclosed chart shows BOTH the hand drawn LRC channel (WHITE) and the custom indicator (GREEN) called "SHI_Channel_true" working together.
Note the three white arrows pointing to the intersection of the two channels ?
when trading, one watches and waits to see if the upward movement of the currency shown by the WHITE channel CONTINUES PAST THE GREEN lines ! If the price fails to break out, you now have a trend change and if you were watching, the first DOWNSIDE MOVE, shown by the small red downpointing arrow, the multitude of red dots and the purple line (which would have been screaming EXIT HERE) would have given you an excellent return.
In a situation where there is NO green channel formed yet, one uses the LRC by watching for it to break UP or DOWN thru its "normal" trend lines -- in this case, even without the green channel, we would have seen the price drop past the LOWER white channel, which has a pretty standard meaning, but can be tricky if youve never seen it before. When the price drops thru the WHITE LRC, the rule is to SHORT and then WATCH ! In this case, shorting WAS correct, BUT the currency hit support and bounced (where you better EXIT and where the ZIGGY would have shown the bottom) and started up again, BUT COULD NOT BREAK THRU the UPPER GREEN CHANNEL ! Once we see the price in a continued drop within the GREEN channel, the trend is fully in place and if you placed a short in there, no matter if the currency was rising up again in one of its cycles, YOU were trading with the trend and just being carried along like those old CB songs of the 70's --- you were in the middle, safe from what happens in the front and in the back of the convoy !
So now that we see that the GREEN channel is DOWNWARDS, which is the NEW trend for the currency, please notice how the price moves UP and DOWN in that channel --- you are seeing, in lovely detail, JUST HOW FOREX WORKS and TRADES !
Ive gone into the UPS and DOWNS of prices in a post below --- please understand there is little or any random movements in forex --- what you are seeing is a currency that has topped for a short time, and then the sellers stepped in, followed by the SHORT SELLERS, who take advantage of the decreasing prices. the up and down movement within the downside channel is caused partially by shorts covering at support points which drives the prices up and short term LONGS stepping in BECAUSE the prices are going up and then which drives the price up to resistance, where the LONGS take profit and the shorts step in again to bring the price down. ONE ADDITIONAL AND IMPORTANT POINT IS THAT THERE ARE PROBABLY A LOT OF STOPLOSSES sitting at or near the resistance points also, so by raising the price, your stops get hit and you have now retired from the game !
this process continues till we reach a solid support point, where everyone jumps out --- you will see the currency go sideways at that point as the shorts take their profits, but the LONGS have not yet stepped in, waiting to see if we have hit THE bottom or not !
Sooner or later, and it usually happens in the Euro market when many of us cant see it happening, ANOTHER LRC forms, or the currency simply cannot bounce DOWN again, and lo and behold, we start the UPTREND BACK TO WHERE IT ALL STARTED, and dollars to doughnuts, the ORIGINAL UPTREND is continued !!
NOW, looking at this, one could have entered a single short at the point everything went south and rode it down, BUT at each and every support point you would then suffer those frightening drawdowns that so easily hit a stoploss or a trailing stop and wipe out a lot of profit --- Once you become familiar with HOW and WHY the market moves as it does, you would be able to BUY at support and SELL and SHORT at support !
While it takes some experience and the ability to see and comprehend whats happening, IT IS A LEARNED ABILITY and not beyond the reach of any normal human ---- and the use of the ziggys, s+r and the channels will give you the clearest understanding of whats happening.
I see a lot of questions as to why ziggys repaint, why silverlining and super signals repaint and why things dont always seem to move as easily as they "should", but the questions are usually based on YOU wanting something to happen the way YOU want, and not that the currency will get to its expected point when IT decides to, not YOU !
The ziggys work, although they work on information that is constantly being altered (repainted) in the real market, and so they can be early but they are never late ---- when you work with ANY system, you must give it and you time to understand each other, without using real money because the system may well be working perfectly, but youre not understanding it and you bail in fear.
What i show on my charts is of course hindsite, BUT I work every day using foresight and a dollup of experience to understand what will later become hindsite, and it works for me ONLY because i give each new thing i do a whole lot of time for me to understand and i can understand most simply because I have the EXPERIENCE to understand it !
Im put off by people who think they can jump right in, grab an EA and make a fortune today and forever, without ONCE ever given thought to the HOWS and WHYS of forex culture --- I can understand the desire to make money by simply hitting a button (or lazier still, have a robot do it for you !) BUT it just aint that simple, and often I am split between trying to help everyone (a really really hard job as there are new ones of you every single hour) or going with the very real thoughts of the pros --- "I had to learn, and i suffered --- now let them go thru the same thing !"
Its hard people, very hard to keep repeating the same things over and over, day after day and one gets tired as i was not born with a teachers ability to continuously teach the same things.
Now having gone thru that cleansing, If there is an easier way to tell what a currency is doing or is expected to do then by using the channels and their "assistants", Im open to the facts and would use it, but after many many years, I cant find another way!
once you use them, your eyes will be opened wide, you will now SEE what is happening in forex instead of thinking its just a mumble of junk and will now have enother tool in the toolbox.
Ive left out the ziggys, but just let your minds eye see every reversal point as a stop and reverse, with ziggys and dots, and youll understand how nicely this system tends to want to work for you --- with a bit of experience, you can hit it EVERY time and soon have your own private army of bodyguards because you have become one of the super rich wall st tycoon types !
oh yeah, while i cannot ever be rid of "spaghetti" on my charts, if you move back and squint a bit, all the little stuff goes away and you can then see the work the channels do !
enjoy and trade well
mp
Join the Dots v1.2.1A Expert Advisor
Attached is the Join-the-Dots Expert Advisor that I've downloaded from the MTI_and_E YahooGroup.
The EA was written by Legrupo with modifications made by Saidas. Thanks and credits to both authors. Originally it was on version 1.2 but I've added MoneyManagement and UseTripleFilters on it, so I renamed it as version 1.2.1A
I also attach the settings that I've used for the forward-testing.
Avoid using M1, M5 and M15 timeframes as they are too noisy and will create false signals. If using H1, H4 or D1 timeframes, do not use big lots because although these timeframes can yield bigger profit, they also can create huge drawdowns that can wipe out your account in one sweep. Remember this EA will place a trade at the first sighting of the dot. If the market moves the other direction and the dot repaints itself, you will have to ride the opposing trend until market recovers. If you don't have enough free margin, then your account will be wiped out.
I find that the M30 timeframe is the best balance overall.
Ok they say the only stupid question is the one not asked so here goes. Just to be clear I'm not here to criticise, rather to get some clarification and help others with the same. Is that right or am I way off? And sorry for the long post.
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THANKS FOR THE QUESTION --- shows me someone is listening and spending enough time to comprehend (or not -- lol)
originally, when i first posted this, it was to be a stop gap answer as i prepped for the book i had to write to answer your questions, but as i wrote and edited it, i believe it became an answer -- if there are more questions, bring em on and by seeing what ive put down here, one should understand why i never use stoplosses --- the trend will show with the ziggys and the LRC and once you got that, you got everything !
a quick first answer is that one would NOT yet have a formed GREEN channel on the DAILY chart, but that would have been of no matter as you would still be working with the WHITE channel, which would have had the price DESCENDING in steps with it, and reaching the support level at 2.0171, WHERE IT WOULD HAVE FALLEN THRU SUPPORT, creating the green channel ON THE DAILY CHART. During this time, the ziggies would have been showing the trades as i have now shown in the latest DAILY chart attached.
While i would not live without the LRC, one realizes that its a channel that "shows" what is happening and "warns" that you should observe your positions at each and every top or bottom point, because that is where a new trend will originate --- if nothing else, if LONG, go flat when you hit the top of the LRC and wait for a confirmation of reversal or continuation (reverse of course for SHORTS)
presently i hold 3 longs which must have been entered by slink, the forex ferret walking on the keyboard, cause we know i dont make those mistakes, but looking at the daily chart, and reading the LRC with my cursor, I breathe easily because each should be taken out on this present upside move (within the downside trend), which is the reason none were thrown away in fear or to the dreaded STOPLOSS MONSTER !)
One would have received EARLIER warningof the new channel by using the 30 min or one hour charts ----- using that time frame, the green downside channel would have formed early on, leading from the top of the white channel to the bottom of the white channel at the very least -- i show this now with the YELLOW channel, at which time we would automatically SHORT the breakdown thru the white channel (the std rules of the LRC) and watch for a bottom which we see from the ziggies were WAY down there at 1.9757 on the short ziggy (i ALSO use a half value ziggy to show me the bumps in the road on the main ziggy) and 1.9338 on the long ziggy. Notice how the short value ziggy shows the upside moves WITHIN the downside trend nicely which allows me to keep drawdowns lessened, should i choose to take the trade !
your question is involved and lengthy, and i want to answer it all without writing a book, but MT 4 limits me to being able to go back in time and show the channels, as they only apply channels to the current chart range, so give me some time to go to my other charts and see if there is anything usable, or I will then have to hand draw my examples on the MT4 charts. In the meantime, this set of charts should point out some answers !
Whichever, the real answer behind most of your questions lies in the fact that the channels WOULD appear sooner in lower timeframes, including the H4, although I usually go to the 30 to judge during the day ! Also note that using the WEEKLY chart gives one a lot of insight into "happenings", and with a combination of low and high, things become clearer and i have attached this latest so we now have an idea of what direction things will be happening during the week as it also agrees with our daily chart (unless of course it falls thru support !) One of the greatest assets to forex is the use of much longer direction charts as they tend to be more "predictive" and seperate out the noise from the trend --- unfortunately, if one takes the really longer trades, there will be many drawdowns (they increase with the higher the timeframe, being least on the one minute, of course !)
I tend to play a strong trend such as this one by using a core position (short in this case) and then taking scalps, flips, overnites and the SHORT ziggy plays also --- this protects my margin from severe drawdowns and allows me to live to play the game another day !
One thing im watching now is what the double bottom on the daily truly means but i imagine we shall have a nice upside move here
I hope the association between the ziggies and the LRC is made more apparent by these charts, but remain open to questions that may arise, of course ---- although i would like a good number of single malt scotches before i try to anwer the next !
thnx for your patience and hope this helps
mp
Ok big thanks for the detailed response. I think I'm getting it. So even if you're following the general trend of the higher time frames, (and people should obviously) you have to look at the trends of the lower time frames and you should use the lower time frames for your entries. I guess if you were ultra careful you could only enter the lower time frame trades in the direction of the larger trend. DUH!! Trading 101. That was at me not you.
Anyway thanks, I'm sure there's a lot of people following your posts, trying to learn something. I for one hope you stick around. People have trouble with things involving more than about three components. Your system considers trend determination, multiple time frames, ZIG ZAGs, S&R, LRCs, reversal points/times, averaging, anti-trend trades, a whole mess of lines I don't even know what they are, and I guess some other stuff. So it'll take a while before people get it. I find a good stiff Jim Beam helps no end with the getting it part. Certainly helped me with that post that night.
Please excuse my ignorance of how zigzags work. I just put HMA_Color, Swing_ZZ_with_alert and zigzag-pointerV2 on a H1 cable chart and had a quick look. Entering only in the direction of the HMA_Color, which means a buy on a ZZ local minimum/low signal if the HMA_Color was blue and a sell on a ZZ local maximum/high signal if the HMA_Color was red. The TP was the first opposing ZZ signal including repainting arrows. (orange or yellow arrows from zigzag-pointerV2)
I counted 78 trades from the 24th August to the present and they were all winners. Not one loser. And also there was no repainting at all against the direction of the HMA_Color so there was virtually no drawdown on any entry. There was plenty of repainting in the direction of the HMA_Color and it meant a lot of trades were exited very early and for comparatively very small profit.
Anyway there is where you tell me the ZZ and the pointer would have looked completely different if they had painted the same area in real time and I don't understand how they work. So the 90 million dollar question is how different is the historical version and real time version?
Ok big thanks for the detailed response. I think I'm getting it. So even if you're following the general trend of the higher time frames, (and people should obviously) you have to look at the trends of the lower time frames and you should use the lower time frames for your entries. I guess if you were ultra careful you could only enter the lower time frame trades in the direction of the larger trend. DUH!! Trading 101. That was at me not you.QUOTE]
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the great problem with teaching how to trade is WHAT will you teach ??
first we have a number of timeframes -- which timeframe do you wish to work inbecause as you get lower, the methods become a bit different. These differences are what (partly) creates an upside move in a downside trend or the reverse, and are the biggest cause of consern and loss to many new traders.
IDEALLY, if one wants to be "perfect", i agree with trading 101 -- you use your lower timeframes for entry prices into the upper timeframes, choosing the lowest possible entry for that trade, even if you expect the trade to go several days. While this is all well and good, my belief is if the trade will run that long, i dont care if i miss a few pips along the way --- what i will do is check the 30 and H1 for trend "direction" so that i dont enter a BUY and have the currency drop 100 points immediately (that kinda gets to you right "here".
understand, that except in the case of high momentum first day movements, rare is the currency that doesnt reverse during a 24 hour day and give you drawdowns --- if youre trading the long timeframes, unless youre especially friendly with the TOP guy/gal, you HAVE to go thru it but its nice for the soul to at least start the trade with it moving in the same direction as your tp point.
regarding my charts -- you sorta nailed how i work, but ALL of those things are not needed as i trade, but all of them are there if i need em. Using the ziggys is one of the best methods around, as long as you understand from the offshoot that you may have entered at a point where the price is still moving down on the lower timeframes as discussed above and noted by you --- you can get a ziggy dot on the H1, but the one minute chart may have its own ideas of how low it wants to go.
thru all this, THE ZIGGYS SHOW THE TREND HONESTLY --- even if you make a mistake and enter too early (ie -- the ziggy continues down, for instance), you are still BUYING WITH THE TREND, because sometime that day, and its usually at a major reversal like the 12 oclocks (am and pm) the currency starts to move towards profit in the trend direction indicated by the dots --- I would venture, excluding the dreaded stop loss, that the ziggy is NEVER wrong, although it can be early !
on one of those charts, you will notice the half value ziggy i also use --- this is showing you what happens to the price as it moves up or down the full value ziggy -- its not a straight line, but rather a series of ups and downs whose purpose ive gone into a few times.
come to think of it, think the last 5 posts might well BE the book, as i think ive gotten into everything i do.
as far as what and how i trade, experience is what i use as my strongest indicator -- the rest are just there to dazzle the masses.
an LRC, ziggies and maybe a fib for the shorter trades and thats pretty much the arsenal needed -- the rest is basic fluff, but i like fluff !
enjoy and learn well
mp
Thanks MP, appreciated as always. PSST! It seems we all but have the thread to ourselves at the moment. So let me tell you the story about the barmaid, the priest and the donkey. AHA! That woke youse up! Perverts!
Seriously though I have the same chart up at the moment as I described last night. Not long ago the Swing_ZZ gave a local minimum alert (ie a buy) at 1.9444. The HMA_Color is red at the moment so I'm not interested in taking it. BUT then the price moved down on the same bar as far as 1.9421 and the indicator went down with it. There was no repainting arrow from the zigzag-pointerV2 indicator I assume because it's the same bar. As I type there is a new bar which is lower again, the indicator has moved to the lower point and there are no repainting arrows on the previous bar. So what I said last about no drawdown is obviously wrong as I knew it would be.
I tried the Join the Dots v1.2 EA which I've downloaded from the MT_E and I YahooGroup recently.
I've forward-test the EA on a small Alpari account with $250 start capital. In a period of one week, it doubled the account!
I'm not sure whether it is a fluke or just pure brilliance. But I'm going to let it run for a couple of months just to see if it hits drawdown. I will post weekly statements every Saturday.
Here is the statement for this week.Azmel this result is amazing! Is it what you got by using the EA with the settings you posted? I get different results when backtesting I'm afraid... I might do something wrong though...
Question
MP - if both the current and higher timeframe channels showed a downtrend, but the current timeframe zz showed a bounce up from the bottom of the channel would you take it? Or would you only take trades in the direction of the tend? I guess, can ziggy trump trend for a few pips?