Friday | September 22, 2023 Having optimized my Forex trading system as best I can to handle the challenges presented by both Nadex and Tradiac, this week I began using it to actively trade USA indices as well, and am taking this time to compare the two... First, let me note that at this point, I've concluded when it comes to Forex day trading, the only time it is appropriate to use trend lines is with respect to one-, three- and four-minute measures. From six minutes on up, I believe it is better to conceptualize trends as bands rather than lines, with price fluctuating among the breadth of values typically comprising each specific measure (0.02% deviation with respect to the six-minute channel). On the other hand, when day trading USA indices, in addition to the one-, three- and four-minute measures, I use the 8½-, 10- and 11½-minute moving averages to to convey the intraday bias; so then, the six-minute measure (envelope) might as well take the form of a line as well (though I continue to use an envelope for consistency) in its role as sort of an intermediate trend—stable enough to be actionable, but fluctuating too frequently to suggest the overall general direction of rates from an intraday perspective. (Price movements on USA index charts are too radical/dramatic to be defined by any boundaries which might be assigned to a six-minute envelope.) I DO also use an 11½-minute price range envelope on my index charts (in addition to the 11½-minute moving average), but ONLY to define the typical price ranges when the assets are neutral or evidence consolidation/accumulation. The last three channels I plot on my USA index charts are 20-minute price range envelopes at 0.25% and 0.40% deviation, and a 27-minute price range envelope at 0.50% deviation. On my Forex charts, the 11½-minute channel is plotted at 0.02% and 0.05% deviation; and the 20-minute envelope at 0.08% and 0.20% deviation. I no longer give much (if any) regard to the two- and four-hour measures as they have only limited influence on what rates do within a given day, so that noting their "typical" limits can often lead to a trader being diceived or misled, which leaves the eight-hour price range envelope at 0.70% deviation as the last band or channel I plot on my lower-time-frame Forex charts.
Let me be clear... Deviation of the six-minute simple moving average (price range) envelope on: Forex Charts - 0.02% USA Index Charts - N/A (Use the baseline instead...for temporary intermediate bias/sentiment.) Deviation of the 11½- (or 13-) minute simple moving average (price range) envelope on: Forex Charts - 0.02% in neutral markets, 0.05% in trending markets USA Index Charts - 0.12% in neutral markets Deviation of the 20- (or 23-) minute simple moving average (price range) envelope on: Forex Charts - 0.12% USA Index Charts - 0.24% during significant volatility, 0.40% during heightened volatility Deviation of the 45-minute simple moving average (price range) envelope on: Forex Charts - N/A USA Index Charts - 0.50% during extreme volatility
SUNDAY | SEPTEMBER 24, 2023 Believing that I had finished the process of optimizing Numerical Price Prediction (NPP) for day trading both foreign currency pairs AND USA indices, I wondered if I might not be able to return to the standard/traditional indicators that, in my opinion, "don't really work all that well," and recalibrate their standard/traditional settings so that they would be more closely aligned with my customized chart configurations, and as a result, become adequately "functional" from my perspective. In doing so, I have found that it appears the Momentum Indicator Bulls and Bears Power MACD Stochastic Oscillator and William's Percent Range CAN be made to play a role in my approach to day trading in the following ways... ONE: Look for opportunities to enter long positions when the Momentum Indicator's oscillator exceeds the upper threshold level, and short positions when its oscillator clears the lower level: However, as I take a second look at the above chart, I see a number of instances where selling as soon as the green buy zone terminated, and buying as soon as the pink sell zone terminated, would have also led to significantly profitable trades (but not always). TWO: Moving on... be prepared to go long when the length of the bars comprising the Bull Power histogram are longer than the length of the bars comprising the Bear Power histogram; especially when both histograms are positioned on the same half (higher or lower) of the panel—not to mention when the MACD histogram and MACD SMA are also positioned on the same half of the panel as the stronger (longer) Power indicator: (Use the appearance of a bar contrary to the prevailing trend as a hint as to when you should pocket your gains and exit a given position.) THREE: And finally, I think the combination of the Stochastic Oscillator and William's Percent Range gets my vote for the most helpful standard lower-panel indicators. So long as the Stochastic %D and the William's lines remain above the Stochastic %K line, I want to remain bullish, especially when the William's oscillator persists in sustaining its positions above the upper threshold level. And I want to sell (and remain bearish) so long as the Stochastic %D and William's lines are located below the Stochastic %K line, even more so if the William's line remains below the lower threshold level:
...because all of my proprietary indicators are coded for MT4 charts, so I unable to load them on the MT5 charts I am using to trade USA indices through Scandinavian Capital. I've now put five of the six indicators in one panel, which looks kind of confusing. But, so long as I can tell what's going on (which I can) that doesn't really bother me.
I have deleted the momentum indicator, bull power, and bear power indicators from my MT5 charts for reasons I don't really need to elaborate. What's left worked very well last night and will probably work even better with this morning's refinements. I have two sets of lines or levels. The first I call the "run lines." If the William's Percent R is above or below (or in contact with) the corresponding band, especially if it is accompanied by the Stochastic Oscillator Main and/or Signal lines, it suggests to me that there is a very strong possibility that price is "running." The second I call "surge lines." When the MACD histogram and signal line exceeds these bands, I need to be ready to take advantage of possible surges (or plummets) in price, and anticipate exiting the positions as soon as the measures fall below the run line, or at the latest, back behind that same surge line (unless the William's Percent R [and/or Stochastic Oscillator Main and/or Signal lines] indicate that price is running)... These measures are not 100% accurate, but the ARE precise enough so that, when used in combination with the upper panel indicators plotted on the main chart (not included in the above images) they constitute very powerful tools for instructing a trader as to what actions he or she should take while day trading foreign currency pairs.
My upper panel indicators (pictured below) are likely to constitute the "Numerical Price Prediction Cloud," the use of which is almost so self-evident as to not require explanation...
Duplicate "final" instructions for trading the NPP Cloud (on a one-minute chart) just in case you ever lose or destroy the notes you saved on your laptop... The red moving average in the main chart is the 28-minute baseline and approximates the center of the 60-minute cloud. The narrow envelope is a 20-minute measure. LOWER PANEL INDICATORS: When the "smooth" dark slate gray oscillator climbs above or crawls below either of the speckled bands, it means the 20-minute measure has reached critical mass in terms of the amount of separation between it and the 28-minute measure. In other words, it suggests that there is a tremendous amount of momentum pushing price in whichever direction the rate is headed. When the red oscillator climbs above or crawls below the maroon band at either 1.87912 or -1.87912, it means the current price has reached the threshold level in terms of the amount of separation between it and the 28-minute measure. Ideally, you want to be in positions when ALL measures are on one side of the price anomaly channel or the other, entering positions when the magenta oscillator, which corresponds to the instantaneous moving average (one- to two-minute baseline), pulls back to the far side, indicating price has crossed to the back side of the bold black five- (or six-) minute baseline. It is the slope of this same measure (the four- to six-minute baselines) that the bold black histogram is conveying (the five- or six-minute trend), with the "fluctuating" light gray oscillator displaying by how much price is above or below these four- to six-minute moving averages. (If the magenta [and light gray] oscillator is on the same side of the price anomaly channel as the bold black histogram, THIS is the direction you want to be going IF you are going anywhere, regardless of everything else.) The last thing you want to be on the alert for is when the four- to six-minute baselines are rejected by the 2½-hour temporal support or resistance level. By the way, one thing you forgot to mention is that the 28-minute price range envelope at 0.10% deviation represents the maximum level where the short-term trend typically reverses direction. Consequently, if price does NOT turn around after making contact there, this too is an indication that there is a good chance the rate is being pushed in the presiding direction by some rather significant momentum. ALL of this information is critical, so start MEMORIZING it until you can rattle it all off without even thinking about it.
This is my latest (and probably final, given my satisfaction with the NPP Cloud) version of the ADX. It is designed to measure trend strength, but NOT trend direction. So long as the indicator is above the threshold level, it is conveying the possibility that enough liquidity exists in the market to support a trend. If the indicator is ascending (the pink zones), it suggests sufficient momentum to keep the trend going. If the indicator is level or descending (the pale yellow zones), it implies that momentum is waning or might even already be gone...
MAIN CHART INSTRUCTIONS: When tracking intraday price flow from the perspective of the "15-Minute Threshold" configuration, the positional relationship of the shortest-term moving averages to the bold black moving average, which is the four-minute baseline, suggests where price is ultimately headed minute by minute. This is confirmed by whether this measure is tracking with the upper or lower band of the bold, rosy brown proprietary indicator channel, the center of which aligns with the 5-minute baseline. Now, taking this set of measures and slapping those from the "Tracking the 15-Minute Flow" on top, the above measures are confirmed (or questioned) by the bold, pale green 12-minute baseline. The fastest price flow channel used with this configuration is the four-minute envelope at 0.05% deviation, which serves as the "ultimate-direction-minute-by-minute" measure. This is confirmed, or reinforced, by the slope of the thin, red orange eight-minute baseline (and its partner), with its corresponding dark gray eight-minute price range envelope set at 0.08% deviation. (So actually, it's more like you have the four-minute measure being confirmed by a five-minute measure, which is in turn confirmed by an eight-minute measure, all of which are validated or questioned by a 12-minute measure. And it is the fastest-moving averages in partnership with the four-minute baseline the dictate when to enter or re-enter positions and when to lock in gains.) Finally the 15-minute flow is tracked by the 27-minute price range envelope at 0.13%, 0.25% and 0.50% deviation, with the ultimate confirmation of the eventual actionable direction of price at the intraday level provided by the orange or blue green "cloud" between the 20- and 30-minute baselines. (So, though at one point I concluded that the 20-minute price range envelope should be used rather than the baseline, that view has ultimately been rejected, with the baseline being deemed appropriate after all.)