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Strategy on 4Hour timeframe

 

Strategy on 4Hour timeframe

CHART SET UP:  20 SMA, 50 SMA, 100 SMA, Stochastics

REQUIREMENTS FOR ENTRY:  1.  Stochastics overbought (for a sell) or oversold (for a buy) and just starting to roll over the other way.  2. Price is bumping against one of the moving averages.  3.  Only trade in the same direction that the moving averages are trending in.

STOP LOSS:  Just below pivot low for a buy.  Just above pivot high for a sell.

PROFIT:  A high probability target is just inside the next moving average.

 

Wed, 09/09/2020 - 8:48pm
 
triguylm1

May I share my successful calculations for your 4Hour TF?

Trading 7 positions of 0.04 lots is a total of 0.28 lot maximum leverage. Thus, giving one room to overcome volatile price swings of 140 pips to capture 300 pip targets with a 10K account. (140 pips x 0.28 lots max. x 10 factor = $392.00 or about 3.92% risk) to earn $840.00 (300 pips x 0.28 lots x 10 factor = $840.00)

Generally, the 4 hour TF has price swings around 300 to 350 pips depending on which currency pair one is using. So your approach to entry into the market is in your favor to reach higher profit targets on these 4 hour set ups....

Best wishes!

 
ccc

triguylm1, Thank you for your input & calculations. It is greatly appreciated!!

 
GreyFox

Finally made it to Gold 2 and thought I would never make it there...LOL. I owe a lot of that to TriGuy and the Apiary crew here. I was wondering if anyone here uses a double or triple Bollinger Band as well to see the tops and bottoms? It seems to help me on the overall view and I like how you use 4 hr timeframe CCC. It seems to be the best timeframe and believe that is the timeframe the "Big Players" utilize as well. Might as well be in sync with them if we are going to play ball with them. Thanks guys!

 
Rookie

GreyFox, congrats to your achievement,

I was introduced to the double bands by Cathy Lein and used them as well as the regular bands adjusting for the percentage of deviation and period.

That said I had a hard time reading the change in trend or not. SO I moved to two EMA's which have a crossover.
I find these are much easier to read trends and if one misses the change when the cross it reminds you, with something like hay wake up trader and review tour bias.

How both are fore reading trends and I found that an oscillator is very helpful for both entries and exits.

 
davidemile

I consistently use the Kathy Lien X-Treme 15 min chart Double BBands after significant news announcements in the live account. Other than that, I'm all about trend -following on Daily/1 Hr charts. X-Treme 15 min is the only short-term strategy I feel comfortable with.

 
FrankS

GreyFox, also consider multiple Envelopes as bands. The difference is BBands use volatility while Envelopes use price percentages. I wish there was one for pips so as to make that as a unique scale. Then again, I'd like to see Range Bars in Alveo.

 
Scott L.

davidemile, where can I find the information on Kathy Lien X-Treme 15 minute chart Double Bands that you mentioned? Thanks!

 
FrankS

Alveo allows only 3 measures of Std Deviation for BBands: 1, 2, and 3, with no partial measures, like 1.5 or 2.5. Simply load the BBand 3 times and revise the Std. Deviation setting with those settings and voila, a triple BBand overlay. Or simply use two settings; your choice. Adjust the period to suit your taste but it has to be the same for the sake of alignment, like period = 20. And, for reference, setting the period to 16 on an M15 timeframe would represent 4 hours of data.

How you choose to use the signals is up to you and your preferred style of trading.

 
lancevoorhees

So what I am gleaning is that the most efficient traders rely on the four hour chart. Is this correct?

 
dcame

After reading triguylm1's calculations I may have to revisit the higher time frames again. Thanks!

 
Dave L

Thanks for sharing

 
FrankS

Lance: I've learned from others here (Vess, Rookie, etc. as well as ProAct) that the Big Boys plan trades on H4. However, I cannot help feeling that they also have a larger picture based on D1 in their purview. Nonetheless, an H1, M30, M15 has price action details that the H4 does not and cannot reveal, yet it does not lose the major H4 pivots. It's no different than using an M15, then going to M1 or M5 for the greater detailed view of price action.

I just like to have at least one indicator of the lower TFs tied to the H4 for reference. Nothing magical; it's just me trying to be inclusive of the Big Boy map.

On the other hand, I personally have found as much value with knowing and paying attention to previous days' highs and lows as well as the weekly high/low. I even use that with my futures trading where my performance is much better than with Forex.

 
davidemile

Scott, here are a couple of links for Kathy Lien Double Bollinger Band info also look for her at BKForex
https://www.youtube.com/watch?v=787VP1FKQzE

https://www.bkforex.com/wp-content/uploads/2012/11/BKFX5_BattleTested_A.pdf

Begin at pg.38

 
deerome

Hello. I've never tried that 4hr timeframe strategy. Lets put into play and see what happens.

Thanks for posting!!

 
suzanne989

Will have to try!

 
deerisaw

The Cathy Lien double bollinger band trade is usually on a 15 min time frame during active trading hours, usually the London session. Very limiting for US traders. On the 15 min chart, Cathy usually uses the 2 and 3 standard deviations on the Bollinger Bands along with the ADX for confirmation. If you want to trade on the daily charts, she uses the 1 and 2 standard deviations and ADX for the same trading style. Hope that helps

 
FrankS

With all due respect to Cathy Lien's Double BBand, be apprised that a trader can do the same with the Envelope tool in Alveo, which is based on price percentages about a mean average. That means you can make a clean, parallel percentage band with as many layers as you deem important or relevant but without the volatility nature of the BBand. It is my indicator of choice these days, and my stats have been made better for it due to its projecting price-grid nature.

 
davidemile

TY Frank, I'll have to take a look. I don't want to hijack a 4-Hr Timeline thread on my 15-min stuff. I've done enough damage already.. Are you using the Envelope tool with long-term charts?

 
dixonlynette28

Great thread lots of learning info hear thanks everyone for input.

 
FrankS

David: Yes, I use Percent Bands (aka Envelope in Alveo) with LT charts as well as intermediate and short term. Just note that if I change a chart from an H4 to M15, those Band levels are not the same as the H4 levels. And I think that's a problem at times, as I want to see those anchor H4 or even H1 lines on an M15 or an M5 for the sake of continuity. So, I will draw horizontal price lines on the H4 TF to allow that level to be known when I change the chart's TF. It's something that I have had success within my futures trading. Time will tell if I can relate it to forex dynamics. It may require some tweaking.

That's why in addition I have just recently been testing the Linear Regression Raff Draw Tool, as it is linear and not subject to the moving average dynamics (yin/yang) of the Envelope. I'm testing a 1-day vs. 3-day vs. 5-day lengths for defining RTM zones. The slope of the Linear Regression channel tells me the trend for each time series. And I use the daily vertical time-line at the 12amGMT or in my case 8pm EST (change of the guard) for time markers of the Raff channel to establish the levels for those zones as per the outer band of the channel. I'll let you know how it works out.

So, in my view, a trader has more than just BBands. One can also select an Envelope or a Linear Regression Raff channel.
Which is of the three is best? That's up to each of us to find out but here are the differences:

A BBand (single, dual, or triple) is subject to the Std Deviation volatility as well as the MA dynamics. An Envelope (single, dual, or triple) is not subject to the Std Deviation volatility of the BBand but is subject to the wave dynamics of the median MA. And the Linear Regression Raff Channel is a straight line channel which is a sloped channel and avoids any MA curvature changes because it is based on a straight linear regression line.

All this takes time and testing.

 
Rookie

"Linear Regression Raff Channel is a straight line channel"

"which is a sloped channel and avoids any MA curvature changes"

I find this sentence very interesting and broke it done into three parts.
Part one a straight line, the price action is not.
Part two, why avoid what is reality?

Methinks the real answer lies in the filtering of the linear regression by factoring in what influences the trajectory of the price movement and this the ability to plot and anticipate the overall and the next finite movement.

Time sees the trend but the next candle is random, we as traders weight the outcome of the next candle with a bet, in our mind's eye we are weighing the outcome based on how we perceive what we see. Which is why we need rule base trading with human perception.
-------------------------------------------------------------------------------------------------
So I looked up a RAFF, I do this all the time for trends... draw my own pitchforks, because I trade lower time frames I tend to trade the legs in the channel until the breakout is both identified and confirmed.

To me, it's all deviation and returns to the mean. But how we get there is the riddle we monkies are continually solving for.

 
FrankS

Rookie: I do appreciate your view here, especially the comment: "Time sees the trend but the next candle is random." That is worth writing down and placing it on the wall of my trading room.

I find it easier to see the probabilities and believe a reversion to a mean (RTM) than a breakout from a mean (BFM). And I know from experience that a breakout from a mean can test both sides of the mean multiple times before it settles in on an expansive direction toward a new level of price consolidation. Point: there appears to me to be a greater probability for a mean to get whipsawed.

Yes, an outer limit of a Lin Reg Channel can get tested, pause, then go higher, as it did with GBP/USD on Friday. However, the degree of expansion is seldom as catastrophic as a test and expansion from a mean channel. Think Crazy Ivan moves! LOL.

So, when I'm looking for a target for an RTM, it obviously is the mean itself or a zone about the mean; but I know price can travel further as that is the nature of the mean; meaning (pun not intended), it cannot retain price for very long. And once a price is inside a mean zone, the probability of knowing its next direction is lower especially if the MA which tells its trend is wobbly or of a low vector angle.

And the issue is further exacerbated as the mean's nature has two doors, up and down, which allows two easy paths to take place for expansion. How far? Well, that's where a percent band aka Envelope comes in, but a Linear Regression Channel takes all price data points into consideration as well as provides a clear slope for trend identification. And that's why I like it.

In Alveo, there is only a Raff version. However, in my TD Ameritrade platform, a Linear Regression Channel has in addition, Std Deviation levels as options. Still, the Raff takes into account the most recent furthest point from the regression line as the definer of the channel's size, making it less theoretical than a non-linear percentage band line which may be reflecting more noise than one may realize.

BTW, I think Sokyu Honma was right when he wrote that "we trade the past." In my mind, the logic is based on the premise that the past is true and factual, while all tools looking beyond the latest price are theoretical.

On a personal note, it's great to discuss this with you, as I know you see and understand the nuances. It helps me see where I might have to adjust my understanding so as to make more logic-based changes. How is that not a Win-Win?

 
Rookie

"I'm looking for a target for an RTM" This is a tough price point to identify.

However, there are clues in the cycles with the patterns, For example, with the EU. It's of late usual daily cycles from the London down to the NY Bottom with most of us or realizing the four-hour overlap. Still, the EU then hits bottom in a "V," and when that neckline on the way back up is a conformation, and yet sometimes this will happen a second time, causing a double bottom and undoubted dought in the traders'' minds. This could be the fake-out or more commonly referred to as the stop hunt.

Then at the end of the session and looking back on the plot trade saying once again, the price action/price pattern did the same old thing. Why was I weak?

When the MA is broken in trend trading, and ten confirmed, the price action has changed. The astute trader should ask the price and time cycle to gauge the proper guestimate of a Target and Stop for appropriate risk assessment.

This lesson comes from the Rookies book of doing as I say but not as I do...))

 
aim2know

Hey, the four hour strategy looks promising. Thanks triguylm1. Quick question: Is there a better time of day to execute this strategy?

 
aim2know

The Bolinger Bands were always a bit of a mystery for me so far. Thank you davidemile for sharing Kathy Lien info. Definitely going to check that one out.

 
aim2know

FrankS, I like what you wrote about trading the past. As I have watched this last few weeks i particular, it seems to me that the next trade may not always be random. What I mean by that is, there seems to be the potential at least for some measure of manipulation. If that is true (and it appears more true at certain times I suggest), then the stats only give us relevant ranges for the same or similar levels of manipulation. It would seem like a good idea to focus on that potential and try to uncover it.

 
FrankS

alm2know: Here is what I have learned. It can be a basis for your uncovering research.

The market can overcome any level that I can justify via Fib, S/R levels, Regression, deviations, etc. You name it, the market can overcome it. With that stated, the biggest piece of Honma wisdom that I garnered has been this: Future calculations produce theoretical prices. As a former engineer, theoretical is not a scary thing to me, because theoretical is math-based which I tend to trust; but in trading, it can be rendered more like a broken clock that is correct twice a day.

On the other hand, nearby highs, lows, and pivots are real prices already created and maybe even tested further back in time. Yet, we know all price levels get tested eventually, whereby they get broken or rejected. It's a simple fact of price dynamics.

Now as much as I can calculate or modify an indicator to render a price level as an outcome for projection, the simple reality remains: those types of prices are still theoretical. Of course, somewhere on the chart, that price has likely been touched. But this is the issue: Is that price level significant THIS time?

And that question challenges me every trading day. Moreover, I have to answer it, whether I want to or not. And denial is no less an answer. LOL.

 
foxtraderpro

Hi guys and gals.
Thanks a lot for great knowledge and personal experiences.
Best regards.
Alex

 
evansmgmt

Just getting to Gold !!. I need to practice more on the intermediate timeframes. this will also help me practice patience.

 
JP83

CCC, how successful has your 4 hr TF strategy been overtime?