NOT closing previous 2 positions yet.
It's clear that I'm avoiding the USD.
Charts on USD crosses are just NOT pretty (hourly's ok, daily's ugly, and that's enough to make me avoid USD).
Fundamentally, I wouldn't want to have anything to do with USD FOR NOW.
3 comments:
Noticed you're using Joe Dinapoli's MACD settings. (I'm sure they aren't *his*, per se, but at one time he wrote about them. Can't remember, exactly, what his Stoch settings were. (I can find out if you're interested.) Never thought to combine his settings with PSAR and Heiken Ashi, though I've looked at Bollies and Donchies. I'm intrigued. Looking forward to more posts.
It's 8,3,3, T.L.T :-)
I actually have Dinapoli's book but just couldn't get pass even the first chapter. When I first learn to trade FX, I was more interested in indicators than FX itself LOL, but I just could not sit down with Dinapoli's book.
I personally don't find Parabolic SARs useful and have thrown it out once before. I've put it back just to give it another chance :-)
I've always used MACD in FX and people found it odd that anyone would use MACD in FX. What I found out through experimenting with different combinations of indicators is that MACD is best used together with another oscillator and I've always preferred Stoch to RSI.
Another reason I put MACD on is to look for divergence. If you pull up your daily chart for USDJPY and put MACD on, you'll see the negative divergence accurately foretold the current downtrend. I choose 8,17,9 over 12,26,9 coz..well..I always like faster and more signals. I didn't get this from Dinapolis, saw it for the first time in a book written by Phil Town (Title of book is "Rule #1").
I actually ignore most of my indicators both in FX and in futures trading. The only indicator I would depend on when I'm totally clueless is the moving average. I'm starting to like Bollinger bands and am starting to know how to read it with MA (that is, when instrument is TRENDING). I used to use BB in a ranging market, and I use it with stoch. It's a method called "Gimme Bar". Google it, if you can't find it, I'll email the document to you (very short write-up, but extremely good to use :-)).
I look at price actions and patterns basically, and although most would disagree with me, I look at fundamentals too (not relying on it, but using it to gauge how much I can stretch my position). I also look at many pairs to identify the weakest link and to avoid pairs that are going to consolidate. I look for theme (for instance, for today, my trades are about longing yen - ie. about risk aversion), then I look at chart patterns to validate the theme. I'd have up to 12 charts opened and then end up with 2 to 4 pairs to trade. I'll close the ones that are showing me a loss for the first 15 minutes, (in the process of doing so, I will know i'm wrong about the strength/weakness of a currency). Within 15 minutes, my PnL will usually start to get into the positive territory. Has worked for me all the time so far - cutting loss quickly and letting the ones that are making profit run until they lose steam. That's why I don't trade just one pair. Sometimes I hedge by trading pairs with negative correlation but i will close the losing position once the other one gets really profitable. The losing trade will give me some idea on what other pairs to trade/ avoid. That's when you see me adding new positions. Not very methodical, not Dinapolis-style at all :-)
T.L.T,
re Heiken Ashi - I actually discovered it by accident, and went on to google it, and found this entry by Globetrader: http://globetrader.blogspot.com/2008/05/heikin-ashi-candlestick-charts.html
I like HA so far. On FX, it filters out a lot of noise and allow you to stay in a profitable trade. I've not used it on ER2 though (Globetrader uses it).
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