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Switch my H4 strategy to M5-M15 charts?? ITERESTING!

FinanSquare
Nov 05 2010 at 14:27
11 posts
Hey guys and gals!

I have been trading for quite a long time most of the time in H1-H4 charts… But a few months ago me and my trading buddy had this crazy idea running trough our minds:

We risk 1,5 – 2%
Stop loss of 40-60 pips
Risk/Reward of 2:1
So in average we need to make trades of 80-120 pips to reach our goal: 4% per trade

Now this is the idea we had:
What is easier for the price and our psychology, move 80-120 pips or 20-30 pips??
20-30 pips right?

What if instead of trading swings in H1-H4 charts we use the same technique to trade the M5-M15 charts… the stop loss would be smaller 10-15 pips and our target would still be 2:1 (20-30 pips) we would still make 4% although we would need less pips or smaller market movements…

I was a little septical about this, you know most people say that smaller timeframes are “noisy”… but I’m not so shore of that anymore.

I will share with you some of the set up I saw daily in the last days… all of them low risk/high reward:
(it’s the same thing I used to do in H4 just, I just changed the entry, now I focus on order flow and search some candlestick “patterns” for confirmation)

Does anybody trade this kind of setups?
Because I really believe that if I could trade those set ups in a constant basis my account would grow dramatically…
I’m still testing out this whole thing, let me know what you guys think of it!

<a href='' target='_blank'><img src=''/></a>

FinanSquare
Nov 05 2010 at 14:28
11 posts
<a href='' target='_blank'><img src=''/></a>

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FinanSquare
Nov 05 2010 at 14:29
11 posts
<a href='' target='_blank'><img src=''/></a>

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stevetrade (stevetrade)
Nov 05 2010 at 14:38
1408 posts
Looks good to me, some nice clear signals there on trending prices. It would be interesting to see some examples on a ranging market ( if you were to trade one ).

Stop loss of 10-15 pips might be a little tight. Prices can sometimes suddenly spike 10 pips or so and then revert back to where they were. I think that's what people talk about when they talk about noise on smaller timeframes. Using larger timeframes and larger pip values these sudden spikes don't have the same impact.


11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
FinanSquare
Nov 05 2010 at 17:09
11 posts
Hey Steve!

Actually I do not trade ranging markets, as I already said now I focus more on order flow, ranging markets have very low order flow, orders move price so if price doesn’t move strongly it means that there is no good order flow, simple logic…

About the stop loss, at first I also thought 10-15 pips was quite tight, but after a while I see that it can be very “conservative”… it’s all about the order flow (yeah I now, I repeat the same word a lot… haha) let me explain you my “theory”:

The Fx market moves more less 3.8 billons of USD daily, everybody know that…
Now, do you imagine how big an order has to be to make the price suddenly “spike” 5-10 pips?
HUGE! Ok, so who are the ones with the “power” to make that happen? Institutions… right? Now if those “spikes” are happening in the direction of a major trend, in an area where longer trend lines and support and resistance levels or even fibo retracements fall all together in the same line… I think the probabilities of the price “re-spike” and hit the stop loss set behind all the confluence is quite low… Not only because you have the “technical” aspects pointing to that direction but basically because you are like seeing the big institutions scaling in/out at the same price level. I don’t know if you get my point… think of it… for me it’s quite logic.
 I still testing it but so far I have been able to set tighter than 10-15 pips stop losses and so far so good, I had quite a surprising success.

Of course I do not find those opportunities every day but trading in lower time frames I get much more opportunities than in H1-H4… I think I’m getting kind of paranoid with all this order flow thing hahahaha! I think it’s the future of analytics… but I will keep on testing.

FinanSquare
Nov 06 2010 at 13:57
11 posts
I watched a video I found on YouTube, the guy trade basically the same way I do, just with a few differences: <a href='https://bit.ly/cWrD5M' target='_blank'>click here to watch the video</a>.
I really think that the concept of understanding order flow like the old school used to “read the tape” is very interesting…

I convinced that if we could combine this order flow “reading”, with the knowledge of how institutions “manipulate” the market and some technical aspects, the result would be a very powerful day trading strategy, and if applied with good money management, it could make grow our accounts dramatically.

What you guys think? Any ideas??

EliteUnderground (EliteUnderground)
Nov 07 2010 at 15:46
2 posts
I think you are on the right path there FinanSquare.

Learning order flow is something not many talk about because they are too busy chasing technical and mechanical systems.

Im still learning myself but i think order flow is something im going to look into more.

But what i like the most is the logic from trading lower TF's.

Have you noticed a big difference between results (%) from 1h-4h and now 5m-15m charts?

How long you been doing this, if u dont mind me asking? :)

cheers.

he who dares wins
FinanSquare
Nov 08 2010 at 11:01
11 posts
Hey flowrider!

Yep, many of us are great technical analysts, but as traders… we suck! hahaha!
Technical factors are important, but not everything is technical… price movements in any financial market takes place always when supply exceed demand or vice versa, supply and demand is “order flow” buying orders vs. selling orders…
So combining technical factors with “order flow” is very powerful.

Trading lower time frames is quite logic, right? and guess what, most of the institutional trading is made on low timeframes like M15…

The difference I have noticed is that I have much more opportunities, my return (%) per trade is basically the same than in H1-H4 but as I see more opportunities I’m able to trade more often which increases my total return at the end of the month.

I have been doing this for 2 months and a half… and still testing it.

EliteUnderground (EliteUnderground)
Nov 09 2010 at 13:07
2 posts
Yeah i see what you mean. I also agree with you about lower timeframe trading is where most institutions focus on IMHO.

I checked out that video and what he does makes a lot of sense.

Then i watched this video and started laughin hahaha when he compares trading timeframes to cars!



But it makes sense what he says.

It makes a lot of sense what you say about % returns from lower timeframes.

good stuff u got here Finansquare.

If you dont mind, how long have you been trading and do u have any more tips for someone like me?

cheers.

flowrider


FinanSquare posted:
    Hey flowrider!

Yep, many of us are great technical analysts, but as traders… we suck! hahaha!
Technical factors are important, but not everything is technical… price movements in any financial market takes place always when supply exceed demand or vice versa, supply and demand is “order flow” buying orders vs. selling orders…
So combining technical factors with “order flow” is very powerful.

Trading lower time frames is quite logic, right? and guess what, most of the institutional trading is made on low timeframes like M15…

The difference I have noticed is that I have much more opportunities, my return (%) per trade is basically the same than in H1-H4 but as I see more opportunities I’m able to trade more often which increases my total return at the end of the month.

I have been doing this for 2 months and a half… and still testing it.


he who dares wins
FinanSquare
Nov 09 2010 at 15:53
11 posts
HAHAHA! Thanks for your contribution! Great video, I will use that example to explain what time frames are all about… many people ask me that same question, what is the best time frame? I always said the one that makes you feel comfortable, but the car example is way better, thanks! This guy has very good stuff on his channel…

Yeah, it’s not that lower timeframes give us more % it’s just about having more opportunities.
I’m glad that you like my stuff… I wanted to sheer some quality info with the community not the same BS of EA’s and robots… trading is an art, I don’t consider myself a great artist but I do what I can… ;o)

I have been trading for almost 3 years.

Have you seen the film a good year? a good tip is to never pet a flaming dog…
Just kidding :o)!

What could I say… I think the most important thing for a trader is to work with a goal… it can be a number or whatever, but it’s important to have a goal that gives motivation, motivation is the first step to hard work and hard work is what bring success, so setting reasonable and achievable trading goals will tune your mindset and put you in very stable psychological and emotional state…
 
Persistence, patience, discipline…

By the way, what’s your trading style? Are you having good results? Do any body trade the same or similar way I trade???

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