Yet again, the year has passed all too quickly and we find ourselves enjoying the season of goodwill and a trading holiday. 2018 has seen remarkable moves across just about all the instruments, the DOW in particular., offering plenty of chances to bag some pips.
For the H1 traders, eWavesHarmonics gave us lots of setups this year, just for trading eW4 into eW5, let alone the numerous other opportunities: -
EURUSD TZ1 hit 40 times for a total possible 3,967 pips (or more, if you targeted TZ2 on some trades). The last TZ1 hit was on the 19th Dec, after a retrace price went to TZ2 on the 20th – that was nearly a 10R trade from the W4 TLB.
GBPUSD H1 did even better, reaching TZ1 48 times for at least 6,886 pips
USDJPY H1 reached TZ1 38 times for a minimum 3,291 pips
In terms of pip-gains, DOW H1 was monumental: TZ1 reached 50 times for a minimum of 28,554 pips – just incredible and some mind-blowing RR opportunities there, that I know many were able to benefit from.
And … that’s just a few examples from H1. I could go on for the lower timeframes and other instruments but it takes a fair bit of time to gather those stats.
(pip figures quoted are from the bottom of eW4 to the auto-plotted TZ1)
During 2018, I added some extra videos to the Trader Training, increasing the total to 19. Feedback from traders who have done the course has been terrific, so thank you to everyone for your kind words; I’m obviously very happy that I’ve been able to help with your trading success and that some traders are now confidently trading on behalf of others. More videos to come in 2019. I also made quite a few improvements to eWavesHarmonics and the Advanced Trade Manager; and have a few more ideas for enhancements in 2019, as time permits.
In my last pre-Christmas post, I said I wanted to create a fully hands-off EA this year. With just a couple of weeks to spare, it looks like my goal has been achieved: trading eW4s into eW5s using harmonic-type patterns. The first week of forward-testing (last week) saw the account grow by 5.4%; but that’s just one week of trading on DAX and DOW M1. I’m planning to do a further 3 months of forward testing before claiming success; more details to follow when there is something worthwhile to be shared (we might just have had a lucky week). Automated trading will be my focus for the new year.
A very big THANK YOU for your support in 2018. Whatever you celebrate, at this time of year, I wish you and yours a very happy and relaxed time and, of course, a most prosperous pip-filled 2019.
We all want trade signals that alert us to high-probability trade setups, removing the need for in-depth analysis of the many variables that yield profitable trades. There are hundreds, if not thousands, of so-called ‘trade signals’ available from scammer sites - with false claims of guaranteed success – but they offer no easily-verifiable statistics to support the claims of greatness.
I get many requests for trade alerts or buy/sell signal indicators and, over recent months, have been working hard on some ideas; It’s no easy task though.
As traders, we consider some, or all, or more, of the following variables: trends (although I dislike that term – more on that in another blog post), support/resistance; supply/demand; time of day; higher timeframes; lower timeframes; fundamentals – including news releases, recent and planned; most-recent price bars; relatively-recent price bars; trend lines; gaps; patterns of all types and shapes; symmetry; balance; projections (time and price), Fibonacci levels, wave counts; etc. And … let’s not forget the plethora of technical indicators that could form a part of the decision making. The human brain, trained from years of charting, can do this in seconds, or less. Programming a computer, to consider all (or, at least, the most relevant) of these variables, is a considerable undertaking.
The fewer of the aforementioned variables that are considered, the more random the trade signals will be – likely yielding, at best, a break-even success rate.
Getting good trade alerts is just half the job. In addition to entries, we need to know where to put our stop loss, where to take profits and how to manage the trade. An alert on its own is useless, if you don't know what to do with the trade or what the best place to take profits is.
With eWavesHarmonics (eWH), we have visual representations of, what I consider to be, the most important trading variables: the technical elements that I look at for trading, plus some extras for those that like them. Presented with the many critical elements of technical trading, on the chart in view, our brains can easily focus on good setups. So, it goes without saying, that eWH is my focus for the trade signals and there are a myriad of options and setups to choose from.
Currently being tested is a setup, that anyone who has done the free trading course should know: SD4 bounce after a W4 TLB. This is a logical approach to finding the end of a correction and getting a high RR trade. The picture, at the top of this post, is an example from GBPUSD M15 since 1st October:
The blue ticks shows successful trades, reaching the minimum target of 1R.; the red cross shows losing trades (the first would have been avoided, when manual trading; the second one was only just stopped out). Putting eWH into Test mode, I let the chart auto-scroll and the setup indicator records how many wins/losses and what RR could have been achieved. In two months, you could have ‘blind-traded’ (i.e. not given any thought to other factors) this particular setup: 10 trades, 6 losses, 3 x 4R wins for a net gain of 6R … that’s very acceptable. Would the average trader, who wants to blind-trade, be happy to suffer 6 losses and only 3 x 4R wins though, even if the overall returns were very good? I suspect not, so now I need to code some of the extra variables that I would consider before trading this type of setup, then run more tests: across multiple instruments and timeframes.
I’ve done some recent testing using customised and well-known harmonic patterns for eW4 corrections (anyone with eWH can do this for themselves, if you don’t mind manual-recording). I’ll give you a clue, from my automated testing, as to which patterns make for the best end-of-W4-correction trade alerts: Bat, Gartley and quite a few of my own custom patterns. I don’t trade with harmonic patterns but if they can provide reliable trade alerts, while I’m not watching the charts, then they’ll have a place in my trading plan.
I'm making slow progress with the trade signals and will keep you posted when I have something good to share. In the meantime, it’s far better to trade with the Mark 1 Human Eye Ball indicator (any bets on how many emails I’ll get asking for that indi ?).
The Trade Levels Indi, free for ATM users, has been updated and is available for download from the ATM folder.
New features: -
A few of us have been using this for a couple of weeks and feedback has been very positive.
Great traders look for great R:R opportunities - this indi is designed to help with that endeavour.
Last week (ending 5th October 2018) provided some terrific trade opportunities on DAX and DOW one-minute charts, so it seemed like a good idea to share some of my best trades, to show how eWavesHarmonics can be used on the lower timeframes and the thought process behind taking and managing each one.
The video explains the logic for entering and managing the DOW trade, referred in the last blog post, as well as many others on DAX, that offered amazing returns.
'M1 Trading in One Week', was uploaded to the ‘Extras’ section of the Trader Training Course this morning. Feedback, so far, has been even better than I’d hoped for - I hope you enjoy it too.
There is probably enough information, in that picture alone, to tell you that the market is bullish but it would obviously help to see what price was doing to the left of the picture. Sadly, I think it would be fair to say, the majority of retail traders would just see that as congestion and wait for price to break out of the range; which is a safe option but it won't give you the best possible risk to reward.
A range-break trade, with stop loss on the other side, could have returned an R:R of 1:1 or, if you held the trade to its peak, 3:1, Not a bad return but if you went long on the very next candle, with stop below the previous, you could have easily gained at least an R:R of 7, just by using ATM's T-Candle, or even double that if you managed the trade yourself, allowing for some corrections.
This is a real trade from yesterday, on the DOW 1 minute chart ...
That trade was closed by moving the stop loss to the Target Zone 2 level (plotted by eWavesHarmonics - eWH) when price had closed above it. A return of 7.5 which, if 2% was risked, as many traders do, would have given 15% profit. If anyone had wanted to hold the trade longer, a 30% profit could have been realised. I'm a firm believer in the adage - bulls get fed, bears get fed and pigs get slaughtered - so banking a 7.5R trade, like in this example, is a nice stress-free way of trading.
eWH helped to not only show where the buyers and sellers were (the zones have been removed from the above picture, to keep it clean) but presented logical price targets to support trading long.
With some knowledge of price action at key levels, as covered in the Trader Training, plus some patience, discipline and a no-fear approach to taking and managing the trades, anyone can benefit from these setups, There have been a few such examples this week on DAX (check the London Open for some great setups) and DOW M1, as well as the main FX pairs on higher timeframes in the past week weeks., .
The important thing, as mentioned in past blog posts, is to look for the best possible R:R trades. You can happily be wrong, so many more times than you're right, with 4:1+ trades.
How many times do you pass on a good setup for fear of a loss – creating reasons why that setup shouldn’t be traded?
How often do you move your stop loss when a trade is in profit, so the worst-case scenario is a break-even trade; or perhaps a few pips gained?
And, the last question, how many trades do you place, or not place, where you are concerned about being wrong?
For most retail traders, the honest answer to all those questions will be “more often than not”. For most professional traders, the answer will be “never”.
Trades have to be placed and managed without fear of loss. You can not possibly succeed as a trader if you’re trading with ‘scared money’. Losses are just a part of the business. Call them what they are: ‘losing trades’. They don’t need an excuse, or blame, or other names to lessen their effect.
The markets will always be random, often doing what you least expected, Their negative effect on your trading account doesn’t mean that you’re wrong, or have a bad trading system; or, more importantly, need to add additional squiggly line indicators to eradicate future losses. You will never avoid losing trades - attempts to do so will likely increase the occurrence of losses, until you eventually forget what terrific setups you originally had in your trading arsenal.
Of course, it's not just the fear of losing trades, that bother so many traders; it's also the fear of missing out. You think price is going to make a big move so you quickly jump in with a trade, even if it's not part of your plan or a known setup. So you have both a fear of losing and a fear of not winning.
If you find yourself having a losing streak, your initial mild fear will likely grow to the extent that it turns into aggression, in defence of your treasured account balance. And that’s where it all falls apart. Sound familiar?
The best trades, in my own personal experience, are the ones where you set and forget. You find a good setup, as per the rules of your own trading plan; you’ve already identified a high-probability price magnet; you put your stop loss in a logical place; you forget about the trade: accepting the outcome with the same grace for a loss as you do for a win. If you’re unable to do that, then you’re in the wrong game.
Trading should be like having your morning shower; brushing your teeth or making a cup of tea. It’s a relatively-mundane sequence of tasks that you do without subjective thought.
Every trader knows about gaps ... right?
Does every trader know the different types of gaps and how they might be used for identifying potential turning points, the start of new waves or to forecast the end of a move, long before price has got there?
Most traders will only see the gaps that happen when the Forex market opens after the weekend; or perhaps the odd gap that happens when there is a major news release. They miss some of the most important gaps because those gaps are filled quickly or are too small to seem relevant. Those seemingly-irrelevant gaps can provide incredible information about where price might be going next..
Gaps play an important role in my trading decisions, so I thought they deserved a new button in eWH: a feature that shows newly formed gaps and closed gaps. For anyone who admits to not really understanding how gaps can be used for trading decisions, I've added a new course module, in the trader training, that explains the different types and how they can be used; as well as how the new feature can be used in eWH test mode.
The eWH Beta upgrade is available for download; the video available for viewing (if you have access to the training course).
Mind the gap! You'll be glad you did.
MT5 has been available since 2010, long before eWaves v1.0 for MT4 was released. There are still many brokers who don't offer MT5 and, as such, I don't get many requests for any MT5 programs; in fact, I know few people who use, or have used, MT5.
I don't relish the thought of converting everything to MT5 but will have to get around to it over the coming years. For the moment though, I am more than happy to continue using MT4, so the sense of urgency to suffer the laborious coding conversion is somewhat absent.
To get the conversion ball rolling, I thought it would be a good idea to work on eWaves. I've done some limited testing and it appears to be doing all the things it should do. The Advanced Trade Manager and eWavesHarmonics will be very big jobs, so they are on the back-burner for a while.
You can get your copy of the new eWaves from the MT5 indicators page (the only thing there at present). I have been compelled to introduce some anti-piracy into it (because there are too many scallywags who love to share and steal indicators), which has meant I can't keep the price as low as the MT4 version - I apologise to all the good guys for that; the bad guys can sit in the naughty corner and feel guilty.
For a bit of fun, and as a little incentive for people to buy it, there is a hidden 'easter egg' - a feature that's not in the original eWaves but offers similar testing capabilities as found with eWavesHarmonics. The first person to discover this feature, and how to use it, will get a full refund on the cost of purchase.
This is a first release and, as with all programs, there might be the odd glitch or gremlin. Just drop me an email if you find any issues and I'll get on to it.
Whilst I don't like the idea of Stop-and-Reverse trading, I've had quite a few requests for this feature; and so ... the Advanced Trade Manager (ATM) now has a Stop and Reverse button: available from the download area, as part of the latest Beta upgrade v2.9.
I call this the "Shit! What have I done?" button - for those crazy moments when you accidentally pressed the 'Buy Market Order' button, when you meant to hit 'Sell'. Now you can quickly reverse that error with one click.
The S&R button is displayed next to the 'Close Op' button, when ATM sees that there is just one open trade. It won't display if you have more than one trade running, or no trades at all.
As all traders know, there are several order types. For the avoidance of doubt, I’ll define them : -
Here’s a quick reference ..…
Most of the traders that I communicate with will say they prefer stop orders – they find a trade setup and place buy stop orders just above a key bar; or sell stop orders just below that bar. The goal here is to minimise the number of losing trades by making sure that price really is moving in the favoured direction. There is nothing wrong with that approach; I do it a lot as well. There is however a drawback in that you’ll be reducing the potential risk:reward on a trade.
Let’s look at a great eWave4 to eWave 5 TZ1 trade, on EU M15, in June (spread is not factored in the prices quoted).
A typical buy stop entry would have been at 1.16080. The stop loss would have been placed at 1.15930 and target price set at 1.16720 (or perhaps a few pips below).
Risk is 1.16080 - 1.15930 = 15 pips.
Reward is 1.6720 – 1.16080 = 64 pips
That’s a healthy R:R of 4.27:1 – a pretty good trade.
Of course, if you’d waited for the high of eWave 3 to be broken, at 1.16330, your R:R would have been less than 1 – that’s definitely not a good trade.
On many occasions (I won’t quote stats that I can’t back up but it could be around 50% of the time), an impulsive move will retrace to where it originated– back to the supply or demand zone. You can see that it happened at the start of the eWave 3 – that only took 2 bars; and it happened at the start of the eWave 5 – that took about 20 bars and was tested again later before the price really moved. This is why eWavesHarmonics (eWH) draws the zones relatively quickly, rather than wait for them to be confirmed in the traditional sense.
Knowing that these zones are often tested (an SD bounce) or can be reversed and tested (an SD flip) we can anticipate where price is likely to go and place limit orders; or, if we’re quick, we can place market orders. Using the same EU example but this time placing a market order (note the BRN confluence for entry) …
Risk is 1.16020 - 1.15930 = 9 pips.
Reward is 1.6720 – 1.16020 = 70 pips
That’s a healthy R:R of 7.8 to 1 … not far off double your profit. by improving your entry by a mere 6 pips; assuming that your lot size is calculated as a percentage of account divided by pip risk. If you just did a fixed lot size on every trade (not a recommended approach), you’d be risking much less and making a little extra profit, which is not to be sneezed at.
There will be times when you could increase your returns by many times more than that – a typical 2:1 trade could easily be 15:1, for example, by waiting for the best possible entry; or much much more.
Yes, you risk having more losing trades by using limit or market orders. The upside though, speaks for itself. If you can be getting triple your normal returns, on average, you can afford to have a few more losing trades.
Perhaps you might want to mix your order types: a pending order as usual followed by a limit order should price retrace on itself. That way you’ll be covering it both ways, in case price doesn’t come back.
Don’t get stuck in a rut with how you place trade orders. Always look for the best possible returns on your investment by being adept with your order types.
See the Trader Training course to learn how we trade with eWH, as in the above example.