I am trying to find an indicator or even a set of Indicators, to help Keep me in my trades.
A quick Summary.... I entered Short, on the EUR/USD back around the first week of May of this year ( 2014 ) based on the Weekly chart.
Well, from that point, until now, it has plummeted in pricem which was my initial thought when I went short back in May.
What happened was, it consolidated from June - the end of July, and of course, I tightened my stop, and was taken out of the trade, and then wham, the EUR/USD just tanks, and I miss all of that drop ( profit in Pips )
Looking back, I am trying to find a way, that I can avoid getting " Nervous " and tightening my stop and getting taken out of a trade again, right before a huge move.
I have been looking at Heiken Ashi and the ATR indicators, to use as a basis for leaving my stops more " Lose "
I trade on higher Timeframes usually ( Weekly charts, where each candle represents 1 weeks worth of trading ).
So given that, what would be a good setting to use on the ATR ( a 14, 21 or a higher lookback setting ? )
And what is a good guideline when using the Heiken Ashi, to help confirm a strong trend, that also filters out a majority of any whipsaw ?
I have heard that if your Short in a trade, some traders will tighten their stop or even exit the trade, if you get 3 consecutive Blue bars ( representing Buying strength )
Thank you for any insight and help.
I just can't stand to be on the sidelines on such a big move, when my initial entry was correct, but I let a consolidation of price make me nervous and I then miss all of those Pips
Thxo , The Heiken Ashi is an indicator that shows the strength of a trend .
I'm not sure of the actual calculations of it, but the bigger the candle and those candle without whicks on the bottom of them ( for upward moving trends ) , the stronger in theory the trend .
I enter my trades on pure Price Action alone, but am looking for a set of indicators that I can use, to help confirm the strength of the trade ( trend ) and thus, help keep me in the trade, and not tighten my stops or close out the trade to soon, before a big move occurs, and I miss it, due to the fact that I got scared when the trade started to consolidate, only to see it make huge moves in my favor, as 3 trades did to me over the last few weeks
And as tturner86 stated, the RSI is a great indicator, that shows strength of a trend.
So with the use of Heiken Ashi, RSI and ATR ( ATR for the use of telling us, what a likely expected move we can expect , and thus, not assume that a stock or Forex pair should move say $4 per day for a stock or 150 pips a day for a forex pair, when the ATR is telling us over say a 14 or 20 day calculation, is actually $2 for the stock and 90 pips for the Forex pair )
The following user says Thank You to mdsvtr for this post:
I would like to show you my "Trigger Chart" as a possible help for you. I will just describe the decision points in the chart.... not the reasoning in detail.... If you are interested in learning about this type of chart in detail please go to my journal starting here, where I go through this chart and its indicators in gory detail.
Ok here is the chart I would use.... I have tested/used this chart that I have developed for equities for the past 5 years...I believe it has applications in other types of trading as well.... I am happy to answer questions on this chart but please read my journal discussion before asking them as your question might be already discussed there. If it is not... please ask the question in my journal so that others that read my journal can enter the discussion and benefit from the comments/answers.
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My basic philosophy on charting is that indicators are useful if you select them wisely and understand their interaction. Individual indicators all lie at times and give misinformation....that is why searching for a magic bullet single indicator is as fruitless as looking for the holy grail .... But all indicators do not lie at the same time and a consensus of a suite of non-alike indicators usually gives a decent outlook. This is only one of about 4 charts that I use.... but it is the major one I use for Buy/Sell/hold "triggers" and the trigger indicator is the BBwidth...the MACD and Slow Sto give me clues as to the direction of the movement at the time of a pulled trigger.
Ok...I have several lines on this chart and these are points where one must make a decision.....so let's look at them in order.
1) This is where I would have entered the short. It is probably a bit later than you did but the direction is clear for me at that point. In the circle you see the rise of the BBwidth...that is the trigger.... the drop in the MACD and Slow Sto indicate a bear move....
2) I am guessing this is where you set a stop-loss and got stopped out and you covered the short.
To me this is more of a head fake bouncing down a bollie channel. A bullish rise in value is sort of the opposite of what we saw at (1)...there would have been a rapid rise in Slow Sto (which we do have), a rise in the MACD (which we also have) BUT the BBwidth trigger at that point is rather muted.
I would probably have set a Stop-Buy to protect my short a little higher but I would not outright sell as I would want to see a stronger movement of the BBwidth ... which as you can see did not happen.
3) this is another short signal...either as a confirmation that all is well with your original short or a sign to add to your short position...See the sharp up turn of the BBwidth, decline of the MACD and the Slow sto falling into the mud.
4) another short confirmation .... Slow sto still burried in mud, MACD declining and BBwidth rising....(NOTE: that the BBWidth is returning to the same starting place for these "triggers"
5) This is the first signal that the Short may be over... in the circle you see a MACD/BBWidth squeeze... this indicates a POTENTIAL bottom...it might be only a rest..... to distinguish between a bottom or rest you look at the Slow Sto...see at the arrow how there is a less than exciting change in the Slow Sto.... It is below 20 still in the mud..... you might set a stop-buy to protect your short but that would look like a rest to me.
6) we have another MACD/BBWith squeeze...but see the difference? The slow Sto is definitely rising on a sharper slope.... the MACD has a much sharper rise as well
7) this note covers the green and red dashed lines....it is a short indication but it did not last long...the red line shows a bottom and tells you to exit the short.... for very little gain
8) Now we look at what is currently going on:
............ a) the BBwidth has drooped to a low value, typical of a major movement trigger.
............ b) the slow Sto is still very weak...normally if it were bearish on the horizon it would be moving sharply upward.... it isn't, is it?
............ c) the MACD has flattened out from a slight rise.... not bullish at all.
.............Conclusion A major movement could take place any day now (BBwidth entering the "trigger" zone) So far it looks bearish, but that could change (MACD and Slow Sto could rise suddenly to change that perception to Bullish).... so it is a WATCH until the "trigger" is pulled.
I hope you found this chart interesting.... as I said earlier if you want more info on this chart and how I use it, read my journal starting at that link I gave at the beginning and all is revealed.