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Day Trading GC with Pivots.


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Day Trading GC with Pivots.

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  #1 (permalink)
 eric73 
Kingsport, TN
 
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I am going to make this journey towards a TST Combine inside a journal aimed at trading GC (Gold), using floor trader pivots.

The Combine I want to get ready for is a $150k, 20 day combine trading just GC.

I currently use Metatrader 4 to trade forex, but I have a friend of mine that has done a couple of Combines at TST trading CL (Crude) and GC (Gold). Encouraged by what he was doing and looking at my own progress in trading forex with Pivots...I decided to try my hand at trading GC with pivots.

After several conversations in chat with my friend, I believe that I have a workable plan (similar to what he's already tried) for trading GC.

I'm going to use my MT4 platform (Gold Spot on Oanda MT4) for my main chart signals, and over the next several weeks and months I'm going to slowly learn how to use CTS T4. T4 seems like a good platform for entering and managing trades...and it's a standard toolset for Top Step Trader.

I have set aside enough funds to do the TST Practice for several months. I want to get comfortable with T4, and how I'll trade with it. After several months of practice I'll decide if a Combine is a good idea. The idea of spending a $100/month to get comfortable with something, has more appeal to me than spending $400 (perhaps several times) to find out that I'm not yet ready for it.

I've traded things on forex with Pivots before, but I've never traded GC before. I have traded Gold Spot, back before it was outlawed in the US.

The Pivots that I'm using have mid pivot points built into them. The area between mR1 (Mid Resistance 1) and mS1 (Mid Support 1) seem to hold the best opportunity from grabbing my profits during normal trading hours.

I'll detail my trading plan, reasoning behind it, and beginning charts in the next few posts.

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  #3 (permalink)
 Fat Tails 
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You mention that you want to trade Gold and use floor trader pivots.

The main floor for trading gold is located at NYMEX. The floor trader pivots are calculated from the regular session high, the regular session low and the settlement price. The regular session starts at 8:20 AM EST and ends at 1:30 PM EST. The settlement price is the volume weighted average price of the daily settlement period (1:28 PM to 1:30 PM EST) and is published by the exchange.

If you trade Gold Spot (this is just a private contract or CFD), your data will not allow you to catch the regular session high and low, and there will be no way to know the settlement price. Also your data will be skewed relative to the gold futures contract, on which the CFD contract is based.

In short, in my opinion it is impossible to display correct floor pivots for a MetaTrader spot contract.

Attached is a chart for last Thursday with correct floor pivots for the GC 12-13 futures contract. Would you be able to reproduce this chart with an indicator for MetaTrader? The CFD pivots might come out a few points higher, but the relative position of the pivots compared to price action should be the same.


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  #4 (permalink)
 eric73 
Kingsport, TN
 
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Hi FT,
I knew there was a difference in the session times versus the spot, but I thought I could still trade what I was seeing on Metatrader. Maybe not.


Fat Tails
The main floor for trading gold is located at NYMEX. The floor trader pivots are calculated from the regular session high, the regular session low and the settlement price. The regular session starts at 8:20 AM EST and ends at 1:30 PM EST. The settlement price is the volume weighted average price of the daily settlement period (1:28 PM to 1:30 PM EST) and is published by the exchange.

If you trade Gold Spot (this is just a private contract or CFD), your data will not allow you to catch the regular session high and low, and there will be no way to know the settlement price. Also your data will be skewed relative to the gold futures contract, on which the CFD contract is based.

In short, in my opinion it is impossible to display correct floor pivots for a MetaTrader spot contract.

The spot prices on Oanda MT4, are for a 24 hour day starting and ending at midnight. So when I'm seeing a bearish sentiment reaction on a Metatrader pivot...this may or may not have any trade-able significance on a GC contract.

I'm glad someone pointed this out to me before I spent a lot of time and money trying it.

Thanks,

Eric.

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  #5 (permalink)
 eric73 
Kingsport, TN
 
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When I went back and looked at the 15min charts, I'd have to say that any reaction I was seeing to the MT4 pivots is probably just my imagination playing tricks on me.

Thanks FT.

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  #6 (permalink)
 Fat Tails 
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I also want to point out that many traders have shifted from floor pivots to Globex pivots.


Floor pivots: based on regular session high and low + settlement price
Globex pivots: based on full session high and low + settlement price

Full session: 6:00 PM EST to 5:15 PM EST
Regular session: 8:20 AM EST to 1:30 PM EST
Settlement: 1:28 PM EST to 1:30 PM EST

For example, if you check the website Emini Day Trading, you will find the following values

Wednesday:

Open = 1287.50
High = 1324.20
Low = 1276.90
Close = 1320.70

Thursday: (pivots are calculated from Wednesday's HLC)

R2 = 1354.60
R1 = 1337.60
PP = 1307.30
S1 = 1290.30
S2 = 1260.00

Source: COMEX Gold Futures December 2013

Those values are identical with the values displayed by the pivots indicator, when set to ETH.




By the way, I have selected Thursday, because the floor pivots and Globex pivots were different. On days where the regular high and low are also full session high and low, there is no difference between floor and Globex pivots. Therefore I had to select a day where either the full session high or the full session low was made during the night session.

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  #7 (permalink)
 eric73 
Kingsport, TN
 
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So, the Oanda spot pivots that I've been using still won't be smack on the full session (Globex) pivots...because the ending (Closing) levels and times will be different.


Fat Tails
By the way, I have selected Thursday, because the floor pivots and Globex pivots were different. On days where the regular high and low are also full session high and low, there is no difference between floor and Globex pivots. Therefore I had to select a day where either the full session high or the full session low was made during the night session

Even if the 24 hour highs and lows are the same between Globex and Spot...my ending time is different...so my closing price may be different...and the MT4 pivot can't be trusted to be the same.

Gotcha.

I need to rethink how I was going to be doing this. The other component of my strategy is the uncleared stops clusters on the 1hr chart.

Thank you, FT.

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 Beljevina 
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eric73 View Post
So, the Oanda spot pivots that I've been using still won't be smack on the full session (Globex) pivots...because the ending (Closing) levels and times will be different.



Even if the 24 hour highs and lows are the same between Globex and Spot...my ending time is different...so my closing price may be different...and the MT4 pivot can't be trusted to be the same.

Gotcha.

I need to rethink how I was going to be doing this. The other component of my strategy is the uncleared stops clusters on the 1hr chart.

Thank you, FT.

Sounds like you need a MT4 broker that has a 5pm EST/NY closing time for all it's charts, which then of course aligns with the CME opening/closing hours (ie., GC reopens at 6pm EST, and that would be a new MT4 daily candle in FXPro's MT4.) There's a few out there, FxPro is the one I use: the demo is free and it lasts perpetually. Many pro traders will tell you that is key for candle, chart alignment, esp. for 4H, daily charts etc. There is some debate if those traders are in London, but, ultimately, that is where NY and London opens and closes become relevant and thus debateable. Beyond GC, the 5pm EST candle close is relevant and quite important for all other instruments as well.

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 Fat Tails 
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Beljevina View Post
Sounds like you need a MT4 broker that has a 5pm EST/NY closing time for all it's charts, which then of course aligns with the CME opening/closing hours (ie., GC reopens at 6pm EST, and that would be a new MT4 daily candle in FXPro's MT4.) There's a few out there, FxPro is the one I use: the demo is free and it lasts perpetually. Many pro traders will tell you that is key for candle, chart alignment, esp. for 4H, daily charts etc. There is some debate if those traders are in London, but, ultimately, that is where NY and London opens and closes become relevant and thus debateable. Beyond GC, the 5pm EST candle close is relevant and quite important for all other instruments as well.

The 5 PM EST candle is relevant for FOREX cash, FOREX futures and interest rate futures.

Index futures (ES, YM, NQ, ..) close at 4:15 PM Central (5:15 PM EST).
Energy and metal futures (CL, HO, RB, GC, SI, HG, ....) close at 5:15 PM EST.
Agriculturals (ZC, ZS, ZM, ZL, ZW, ....) close at 1:15 PM Central (2:15 PM EST).
Eurex futures (FDAX, FESX, FGBL ....) close at 10:00 PM CET (4:00 PM EST for 49 weeks per year).
Soft commodities (SB, KC, CC, CT) close at 2:00 PM / 2:30 PM EST.

With 5PM candles you can not cover all cases, only FOREX and bonds. In my opinion, MetaTrader is suitable for trading FOREX, but should not be used for anything else.

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 Beljevina 
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Yes, you're of course right Harry; I was too generic in my answer, and wasn't thinking of all the 'other instruments' which you listed with their unique trading hours. I would never ever recommend trading them in MT4, they are difficult to find, plus they are CFDs - as is gold - which often results in different price levels (from the proper CME contract) when it comes to quick spike moves. I do like the ability to easily check and receive realtime charts & prices if I am mobile on Android or IOS, with a perpetually lasting MT4 demo account; GCI's MT4 is one that has most of the contracts you listed, and prices are usually within 2 ticks or so of the proper CME contract.

I think the FxPro gold CFD closes at 5pm EST as opposed to the formal CME 5:15pm close. And if new lows/highs are made in that period (as tends to happen sometimes, ie., Fridays), the price of course won't reflect it. But, if @eric73 is looking for pivot accuracy, they should be accurate and equal to the GC CME contract close to 99% of the time.

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 Fat Tails 
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Beljevina View Post
Yes, you're of course right Harry; I was too generic in my answer, and wasn't thinking of all the 'other instruments' which you listed with their unique trading hours. I would never ever recommend trading them in MT4, they are difficult to find, plus they are CFDs - as is gold - which often results in different price levels (from the proper CME contract) when it comes to quick spike moves. I do like the ability to easily check and receive realtime charts & prices if I am mobile on Android or IOS, with a perpetually lasting MT4 demo account; GCI's MT4 is one that has most of the contracts you listed, and prices are usually within 2 ticks or so of the proper CME contract.

I think the FxPro gold CFD closes at 5pm EST as opposed to the formal CME 5:15pm close. And if new lows/highs are made in that period (as tends to happen sometimes, ie., Fridays), the price of course won't reflect it. But, if @eric73 is looking for pivot accuracy, they should be accurate and equal to the GC CME contract close to 99% of the time.

For gold futures both the CME floor pivots and Globex pivots should be calculated by using the settlement price, which is the volume weighted average price established by CME between 1:29 PM and 1:30 PM EST.

https://www.cmegroup.com/market-data/settlements/settlements-details.html

How would you catch that settlement price with MetaTrader? Even if your high and low is accurate 99% of the time, your close will be always false, as you cannot use the candle close at 5:00 PM to approximate the correct settlement price, which was the gold price about three and a half hours earlier.

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 Beljevina 
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Fat Tails View Post
How would you catch that settlement price with MetaTrader? Even if your high and low is accurate 99% of the time, your close will be always false, as you cannot use the candle close at 5:00 PM to approximate the correct settlement price, which was the gold price about three and a half hours earlier.

I have seen MT4 indicators that allow one to specify open and close times to use in various calculations and I don't see why it can't be programmed.

I don't use MT4 for anything other than spot forex any longer, and the odd gold or other commidity trade I take is based off of NT7 provided levels and indicators.

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 Fat Tails 
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Beljevina View Post
I have seen MT4 indicators that allow one to specify open and close times to use in various calculations and I don't see why it can't be programmed.

I don't use MT4 for anything other than spot forex any longer, and the odd gold or other commidity trade I take is based off of NT7 provided levels and indicators.

I do not know how the settlement price is exactly calculated. In my opinion it is important to take the exact price published by the exchange. This in turn requires a data feed that comes with the settlement price (the close for daily data), and I do not know how to connect such an external data feed to MetaTrader.

If you want to calculate the settlement price from 1-tick data, there may be a different result, as some of the hidden volume may not be taken into account. Furthermore, you cannot access 1-tick data from CME with MetaTrader, so it will be impossible to calculate an accurate settlement price for at least two reasons.

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BlackSwan04
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Hi Fat Tails,

I've read through past posts where you discuss pivot points and how crucial the settlement price is to properly calculating them. Most of the posts are a couple years old however.
Do you know if Ninja will display proper pivots at this point, or if the workaround is still to connect with kinetic end of day data?

Thanks,
BlackSwan

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 Fat Tails 
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BlackSwan04 View Post
Hi Fat Tails,

I've read through past posts where you discuss pivot points and how crucial the settlement price is to properly calculating them. Most of the posts are a couple years old however.
Do you know if Ninja will display proper pivots at this point, or if the workaround is still to connect with kinetic end of day data?

Thanks,
BlackSwan


If you want to use the settlement price, you need a datafeed that supplies it. NinjaTrader is just the software, and you can connect it to many different datafeeds. If you trade futures, the best solution is to subscribe to a decent datafeed such as DTN/IQ or Kinetick and you are done.

If your primary datafeed is something else, such as Zenfire, CQG or Interactive Brokers, then NinjaTrader offers you to first-connect to the free Kinetick EOD feed (for daily data, including settlement) and then second-connect to your default datafeed.

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BlackSwan04
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Fat Tails View Post
If you want to use the settlement price, you need a datafeed that supplies it. NinjaTrader is just the software, and you can connect it to many different datafeeds. If you trade futures, the best solution is to subscribe to a decent datafeed such as DTN/IQ or Kinetick and you are done.

If your primary datafeed is something else, such as Zenfire, CQG or Interactive Brokers, then NinjaTrader offers you to first-connect to the free Kinetick EOD feed (for daily data, including settlement) and then second-connect to your default datafeed.

Ok great. Thanks for your help.
What got me started on this search is I noticed TF and NQ were real receptive to Ninja's default Pivots (based on daily bars), but YM was hardly responding at all. I thought it was weird because while TF is on ICE, I thought NQ and YM were both on CME. (at least that's my understanding)
I'll see if I can get kinetic EOD to backfill for historical.
Thanks again!

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 eric73 
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Hi FT,
I hadn't realized this about the Forex Futures.


Fat Tails
The 5 PM EST candle is relevant for FOREX cash, FOREX futures and interest rate futures.

Trading the FOREX cash market is where most of my experience lies. I do have a friend that trades FOREX spot using the Ninja trader volume footprint, on the 6E Euro Fx futures contract. That's not exactly what I was thinking of trying. But it's nice to know that the 5PM EST candle has some relevance for FOREX cash and FOREX futures.

Thank you,

Eric.

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  #18 (permalink)
 eric73 
Kingsport, TN
 
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I have had a FxPro MT4 account for some time. But I wasn't aware of the close relevance that FOREX cash had with the FOREX futures market that FT was talking about.

Here is a FxPro EUR/USD FOREX cash chart on 1 hr with one of my pivot indicators.

Thanks for all of the comments that this thread generated. Any more comments are welcome. I will start a new Journal thread based on 6E, and 6B.

Best,

Eric.

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