Addressing the issue of time frames

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Last post of charts and this is what the cycle analysis has evolved into. By writing different codes in the pro real time the 'cycles' have turned into something a bit more visual.
The chart on the left is around the 1 hour time frame and shows how powerful the set up is when both cycles line up and cross the blue line.

The chart on the right is a scalping chart and shows how selective you have to be. Sub five minutes.

You can see from the chart on the left the advance warning you get that the price cycle is about to change. The price is coming down while the first cycle indicator is starting to rise up from the overnight range. But the trade entry doesn't come until just before the usa open. Once it does happen though you only want to scalp trades in that direction on the scalping chart. Because even by taking all the 'right' signals you still get bad trades.

I'm saying 'scalp'. But some of these trades are going 20/40 points. These charts are ftse charts by the way. The left hand chart move was good for around 114 ftse points.

 

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I think, come Monday, I'll run a test between two time frames, live. (If I can remember to post the signals).

I'll run 2 'books'. One will be a 15 minute chart, the other chart will near to an hour. For the exact time frame you would have to speak to Mr Dent. It is though, the answer to the universe and cannot easily be revealed on these pages. (probably the only person on here who may have any idea of what I am going on about is Neil. Although LMQ is a crafty bugger who can do some digging when he wants to, but I think his youthfulness will be a failing).

I have set up the 2 charts to flash a warning on the cross of the cycle with the horizontal line. So that should give me a bit of time to post them up.

All trades will be for one pound a pip on the cable as this keeps things simple.
The exit is the cross back through the horizontal of the cycle indicator, but I think for practical purposes I will place a hard stop to start the trade with.

The screen shot is from Sunday and we may get a down signal more or less straight away. But patience is a virtue or so they say, and I shall just re-read my favourite trading book 'The hair and the tortoise' while I wait for the signal to trigger.

My normal trading chart with the long above, short below (now in colour), injamicator (patent applied for) but no free pen, sub 5 min chart gave a 'scalp' trade towards the close of play Friday, that lasted exactly one hour and gave 47 pips. Then the next signal lasted 6 mins and would have got you out at best for a scratch, so during busy times it would not be practical to log this one.

Starting bank for both will be... I dunno. 100 quid?
(I should be able to blow that preeetttty quickly).

 

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Just been taking a look at the daily chart of cable. The cycle indicator is showing divergence from price and is cycling upward towards the line. A possible up move on the cards?
However it doesn't look like it will be a strong move...yet. The bottom cycle is not lining up with the top cycles near the blue line.

The 2nd chart shows the match up of the cycles shown by the red vertical line giving a strong move.

The 3rd chart shows another cycle match for strong move.

Yet the 4th chart shows a no match up with the cycles. You could still have made pips, but your fighting both the trend and the cycles.

 

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First sig on the hour. The Daily is signalling up as is the 4 hr.

15min and shorter had signalled shorts for a trap. with 15 now changing to up.

The secret of the universe chart t/frame is taking a while to warm up. Guess it doesn't like Mondays.

 

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As an aside, just been getting signals for short on the hour dow, others are flashing behind it so could be a down morning for the indicies.

And up for us light crude 09.25

 

[options]

Well, exit signal came for a paltry 7 pips, although on the table at one point were around a very comfortable 82 pips. A trailing stop or a user moved hard stop would have given you a bit of that.
There is actually another option to exit using the bottom indicator that would have caught most of the move.

Could I have done any better by not using indicators?
Truthfully. Just by bar reading. The entry would have been almost the same, my exit would have been around 15024 for 52 pips.

But this is about cycles, and you have cycles within cycles. It happened that this trade was in a sideways moving market, inside the overnight range to boot. On a Sundaynight Monday morning, so probably one of the worst times to trade.
At another point in the day/week/cycle. Trades will go for further. Any losses should be tiny or a small cycle.

I won't post any 15 min trades because today while the market was moving sideways I was getting so many alerts (which I have to take off by hand) that it was driving me crazy. Apart from causing me to miss a trade on another instrument, and that just can't happen!

Will I continue to use this cycle analysis in my day to day work, even though I am a confirmed bare naked chartist?

You bet!

Although it is an indicator. It is an 'intelligent' one and it will not have you trading solely off the indicator and then looking at the price for conformation. It will always be 'in vogue'. Because it is price driven.

I was talking to someone the other day about working for them. They are into algo's and the like. They showed an interest in my cycles, and would have wanted to implement that into their trading. Then they asked if I could code and such like as they were always after having different codes written.

Well, First off. I don't code as such. I'll take a bit of code and then 'adapt' it for my use.
My second thought was. WTF! why do you want to keep changing things? How many times do you have to invent the wheel. If you have a good system, (They had one or two as well), that give's very low losing trades and very good profitable trades in all market conditions, why attempt to change something and risk fcking up something so simple and good?

Err,I won't be working with them.

 

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Bull baiting in action. Dangers of too small a time frame for the unwary.

These charts show the dangers for the unwary of using too small a time frame.

The chart on the right is my scalping chart. If you had entered the signalled long on the main cycle indicator without checking other factors. The professional bull baiters would have got you. Although the move was good for 20 pips, it then changed on you and dropped 59 pips against you. Ending smack on the lower pivot.

The break of the down trend line was there as well as the main cycle indicator buy signal. But the bottom cycle indicator was at the top of the range and rolling over.
The hour chart indicators as well as price told you that the o'all trend was still down. In fact, the hourly bottom indicator was crossing below it's blue line to confirm the major trend on the hourly AT THAT MOMENT IN TIME was down.

The bull baiters won and a swift victory for the real bears.

 

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And then the confirmed move

Entry at 940 for a long when both cycles cross. and good for 70 pip so far. (posted chart will lag slightly).

Although I haven't shown it the bottom indicator on the hour had pulled back up above the blue line.

 

[JTrader]

Hi options

Slightly off topic, but regarding forex on short timeframes, i find EUR mornings are pretty reliable in terms of consistency of signal strength and tradeability of conditions. After the US open however, with news & speeces due etc. the chances of messy conditions, and erratic/irregular price action are quite strong.

That being said, a good looking setup is a good looking setup, and if they dont arrive, dont trade. If they do, trade them. Sit on your hands in the mean time.

But i am thinking of becoming just a morning trader, and leaving the US session alone. Just weighing up the pros and cons. Man hours v's profit etc.

How do you generally view AM v's PM conditions?

Cheers.

 

[options]

Hi options

Slightly off topic, but regarding forex on short timeframes, i find EUR mornings are pretty reliable in terms of consistency of signal strength and tradeability of conditions. After the US open however, with news & speeces due etc. the chances of messy conditions, and erratic/irregular price action are quite strong.

That being said, a good looking setup is a good looking setup, and if they dont arrive, dont trade. If they do, trade them. Sit on your hands in the mean time.

But i am thinking of becoming just a morning trader, and leaving the US session alone. Just weighing up the pros and cons. Man hours v's profit etc.

How do you generally view AM v's PM conditions?

Cheers.

JT. I prefer the mornings. GB and euro can drift a bit in the afternoons. as everyone forgets them and trades the dow or so it seems.
I'll trade the cable before 8am and then normally flick over to the ftse for a couple of hours. If the spread stayed at 2 points before 8 o'clock with IG I'd trade from earlier. It's put out at 6points pre 8am I think. Yet the dax is 2 spread from 7am. Haven't got a clue what they are playing at there.

Having said that. What you mentioned earlier about if a trade appears etc holds true. You can get good moves at 1.30 and 2.30. I think there is an example on here showing a move Friday on the ftse 30 mins beofre the usa open.

If you can get your money in the mornings though, it frees up the rest of your day.

 

[JTrader]

If you can get your money in the mornings though, it frees up the rest of your day.

Yes. and giving it back in the afternoon is a real swine!

 

[options]

This is the continuation from the 'scalping' trade, also shows that when a trade appears jump on it.

The initial move came around 12.25. You can see how many pips are there for the taking.

Don't know what will happen when the usa opens.

 

[JTrader]

JT. I prefer the mornings. GB and euro can drift a bit in the afternoons. as everyone forgets them and trades the dow or so it seems.

.....

If you can get your money in the mornings though, it frees up the rest of your day.

Yes. As i see it, mornings generally behave more orderly on eurusd & gbpusd.

 

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And this is the signal to close the trade with the cross of the main cycle going under the blue line.

This was on my 'scalping' chart for a trade that lasted two and a half hours and for a total of around 293 pips!

I wish all my scalps were like that!!!

I was not going to post any charts under 15 mins because the pop up alarms were doing my head in. It was only that I posted the earlier charts of the bull baiting draw in the suckers,
pop up move, and the subsequent run down the stops for around 50 pips I think it was. That I continued to post as the 'real' move then got under way.

 

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Early morning short on cable on small time frame. (Typical, the day I decide not to get up too early...)

Looking like a short morning on the hour?

 

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While the wait continues for the hour chart to either fall through the overnight range and the cycle line, or bounce off them. The shorter chart has so far given 2 short trades of 31, 21, and one long just closed for 18. Total of 70 pips And it's just coming up to 8.30 am. (The first one I missed).
there was a blip at around the 7am mark, which was nothing really and with another method you could have avoided the spread by having to get back in again.

So there is something to be said for all time frames as long as you approach and trade accordingly.

The 8 hr chart though is still showing up from the 10th dec overnight bar for a trade of 458 pips,
with no sniff of the stop being touched. That pin worked well after all!

 

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The short trade on the small time frame could have been taken at the close of the previous long trade.

It is looking like the hour is going to follow through now and trade could be taken at 15254.
Or slightly lower.

In this instance though I wouldn't put the stop at the other end of the bar, but just inside the bottom of the overnight range lower bar.
*And clearly in this instance the stop was in the wrong place. Because it would have just been triggered. The shorter frame had signalled an up move and then reversed back to signal a short. Which took care of the stop on the hour chart. Even though the cycle is still under the blue line. The stop then, should clearly have gone above the top of the overnight range. Or at the very least just above the top of the previous bar. But you pays your money etc etc*

 

[JTrader]

I've been looking at the concept of this -

eg. If i get i "valid" long signal that formed the right pattern on the chart, but i don't much like the look of it because its R:R does not look great due to S/R, and its chances of failure seems greater than its chance of success. Is this a good enough reason to go short....though admittedly, such scenarios would often only present the opportunity for a quick scalp.

 

[options]

I've been looking at the concept of this -

eg. If i get i "valid" long signal that formed the right pattern on the chart, but i don't much like the look of it because its R:R does not look great due to S/R, and its chances of failure seems greater than its chance of success. Is this a good enough reason to go short....though admittedly, such scenarios would often only present the opportunity for a quick scalp.

No. There has to be a 'y' in the day of the week you are trading it.
If you are being serious. All trades are taken on the cross of the cycle injamacator with the horizontal (now in colour) line. For that timeframe.

But if the longer frame is clearly going long and you get a sell signal on the lower time frame, then yes you could go for a short scalp. In practise I have found that if the smaller frame cycle starts to turn around again before it has travelled too far. (In this instance upwards to match the bigger frame). Then you need to exit the scalp and not try to eek it out or you will give back some of the profit or even some of your own money. In a sideways market, (expected after yesterdays lovely moves), I would leave the small timeframes alone until they came out of the sideways churn.
But you know what scalping against the trend can be like.

The short trade from the hour chart this morning is looking like it is about to get closed, had you stayed in it with the 'correct' stop. Not there yet, but nearly. The cycle hasn't pushed through the line even though it is touching the bottom of it. If it does carry on up, the trade would be exited for a scratch or a tiny loss/profit and then carry on in the dircetion of the 8 hr chart. You could still be in the trade and there was a potential 69 approx pips there from trade entry to the current trade low. It is now easing off the entry point and ticking back down again. Waiting for the usa perhaps?

Working on a hour frame is less exciting/more comfortable than 'working' a shorter frame. This morning's early moves were an attempt to break from the overnight range and gave valid entries on the smaller time frame.

 

[options]

well the hour trade would have been closed off near it's entry point, and flipped to a long as the smaller time frame posted a very strong buy signal with the 2 cycles crossing the blue line together. All heading in the direction of the longer time frames.