I am trying to catch more ADX trades with 20 ema per LBRGroup.com's website "grail trade" explanation. Here is how it works per LBRgroup.com website in FAQ section:
"What is a "Grail" Trade?
The "Holy Grail" trade was originally described in my Street Smarts book. The setup occurs when the market's trend has been strong enough to cause a 14-period ADX to rise above 30. When the price then retraces back to the 20-period EMA, odds favor a retest of the most recently formed high or low."
Soo, I guess I read this to mean that you need to probably trade the first retracement this way but that doesn't seem to be the case per this desciption because of her notable "first cross" trade. Today I totally missed what I thought was a reversal that turned out to be a killer grail trade.
Who got this right today? I am referring to the grail trade at 6:54 am on the attachment. How do we spot more of these trades? This retracement was so wierd to me because I thought two retraces already occurred prior to this one.
I look forward to hearing what everyone has to say.
The following user says Thank You to Dragon for this post:
Soo, I also use the LBR indicator from time to time, but I also use a basic MACD 3,10,16 which seems to be the same setup. When reviewing price action through the day, I like the ADX to be hot as well, but I don't stay out of a trade if it is below 30. Recently, I've geared my ADX down to as low as 20.
If you like trading the 1,2,3, which I also like, then the breakout you noted above, should have been good enough to trade. However, I missed it only because it occurred too quickly for me.
I look forward to everyone's comments as well.
Last edited by benharrell; August 15th, 2009 at 10:31 AM.
The following user says Thank You to benharrell for this post:
I think are talking about two different trades. The first cross and the holy grail are totally different. But yes, you are right, keeping an eye on the adx is useful. A lot of traders do not trade unless the adx is over 15 or 20. Others don't care so much about the actual number as they do the direction it's going. That's why I had this adx attached to turn colors for up/down. See attached LBR chart.
Thanks for the post. I've been considering donating since I joined the forum, and I understand the costs to tweak indicators. I appreciate the help here and in other threads, it is much appreciated for a young trader.
GREAT idea for the donation, though. More peers should be challenging members here in the forum for that very purpose.
Thanks for your reply. I guess when I saw the ADX rise above 30 at 6:56 or so I thought that maybe the retracement could happen first then have the ADX rise within a few minutes and the grail trade still be valid. From what you said, the ADX must be above 30 and the retracement along the 20 ema must happen at the same time. Is this correct?
Do you look for any other LBR trades? I have been a little frustrated with ES because I don't see a lot of first cross and grail setups there on the 5000 volume chart that much. I have been working to spot the LBR divergences with the LBR 3/10 in hopes of catching more trades. I might switch to a different chart type but I am not sure yet. Lately, I might be lucky to catch one first cross trade on ES in the morning session.
The hope is to watch price first, then LBR 310, trading breakouts and pullbacks. That being said, I do want to catch those first cross and grail trades.
I have been using the above setup with a multi-colored ADX histogram. With the help of mrLogik, the attached iADX turns magenta when the ADX is above the 50 threshold. (I use a very short setting of 5 for daytrading/scalping.) The parameters for the threshold and colors can be changed in the indicator window.
Also attached is the multi-colored ADX line which I super-impose on top of the iADX for a better visual effect (see attached screenshot).