The Seventh Wave | Foreign exchange EA download-MT4/MT5 resources-MetaTrader 5 resources
This system was inspired by ES Trader's "Trading System Using Relative Strength" topic and I would like to thank him for his hard work in developing his idea.
As I read through the post, it seems to me that some people get amazing results while others suffer huge losses before these trades get any better, if they ever do!
I started thinking about the process of building those giant 2000 point baskets and it dawned on me that maybe relative strength wasn't the way to go. I don't want to disrespect the original clue or system in any way because I believe it has merit, but in my opinion the relative strength of the last few 4 hour candles tells you, the relative strength of the last few 4 hour candles. It doesn't tell you what happens next. The theory I understand is that if currency
So I started using a micro account with a small test account of £30 and within two weeks I had £250. This does sound like an incredible percentage gain, but don't forget that on those first few trades, my account was severely overexposed by percentage. I think I've proven, at least to myself, that it's possible to take a series of trades with the trend and then have them all go your way, giving you some nice, huge gains.
After some trial and error, I established some preliminary rules that I believe are worth following until I or someone else can come up with something better.
First I want to clarify what exactly I do. Basically, I look at each pair in turn at certain times of the day and decide whether I think that pair will move up or down. If I can't make a decision based on the information I have, I won't trade. If I think it's going to go up, I buy, if I think it's going to go down, I sell. To this day I have been using a 200 pip trailing stop. I then let the trades develop over the next few hours, on losing or breakeven trades I close them, on winning trades I manually trail stops behind support and resistance levels.
Even though I'm actually using a daily chart, certain times of the day tend to be around the 4 hour candle close. I like to trade first thing in the morning (UK) so I can use the overnight moves to establish direction and provide some movement throughout the day. I also like to place trades at night and let them develop overnight.
As a direction, I use the support and resistance levels plotted on the weekly chart and zoom out to find the most important round numbers (credit to Business Members for this technique) as well as the 100 SMA, 50 SMA and 3 SMA for typical prices. The last one is from a book I read called Pivot Point Ma and I found that I really liked this approach. Basically, I trade based on the immediate trend, which means the direction the daily chart is moving over the past few days rather than the longer term, but I do prefer to trade in the direction of the overall trend. Sometimes a pairing, while generally unpopular, still offers opportunities.
The way it works is that typically you will experience some retracements as the spread clears and the trade settles. I have yet to see a basket trade drop more than £30 for me, and when the trade goes well basket trades can be hugely profitable, with the largest trade being just over £100.
In folklore, the seventh wave is always the largest. Science has proven that when two different waves move in the same direction at the same time, you get a larger wave that often catches people off guard and often sweeps away people and cars alike on harbor walls and docks. This is how your equity moves when you trade large amounts. As trends unfold, your assets will ebb and flow, some rising and some falling. If you watch your asset move, you will see that it rises with the ebb and flow and falls back with the flow. When all trends on all your currency pairs move in the direction of the trend, you will see what I mean about the seventh wave, and your equity will increase dramatically, sometimes in just a few minutes.
Enough of the poetic stuff. Like I said, I grew a small test account from £30 to £250 in two weeks, just opening a basket of trades based on trends, so I thought there must be some merit to this style of trading that warrants further discussion. With the wonderful long weekend just around the corner, let’s discuss it. I welcome questions and comments.
I thought of some further clarification. Starting today I am reducing my trailing stop to 100 pips because although I have been using the daily charts I am not really trading daily moves and I am looking for a quick move in my direction to make a nice profit on some smaller trades. I use an EA called "Equity Guard" to control risk, with a trailing stop just to provide an extra layer of safety if the Equity EA doesn't work for any reason. Starting today I decided to use 10% of my account in each basket and use 1 micro lot for every 30 pounds in this 10%, so for my 250 pounds account I shouldn't be trading at all but I know to risk 1 micro lot. If the account is £600 then I will be risking £60 so use 2 micro lots. As mentioned before, I have yet to see a basket of stocks lose more than £30 on a stock move, and I'm fine with the upside, but I believe that if your basket loses £30 (any other currency, you'll have to work out a suitable level for yourself), it's better to use a Stock Protection EA to close all open trades and take a profit on all trades if your open trade stock gain reaches £50. This is because, while you may have a basket that has the potential to go a long way, I have seen huge profits eroded by holding positions for too long. When a profit appears, it's better to grab it and start over than to give it up and regret it.
Another thing worth mentioning is that you can adjust your basket if it doesn't work out well. I wouldn't do this too often, but maybe every 4 hours to see how the trades are going and abandon the bad trades and maybe open more trades that look better. Remember, your losses and gains are calculated based on your overall equity, so abandoning losing trades will only affect your balance, not your equity.
I've typed it all out now, but if I think of anything else I'll post it. In order to understand the basics of the original system, I recommend reading the Relative Strength Trading thread. This will give you an idea of what I'm doing and why I'm just using trends instead of recent strengths/weaknesses.
I will post the EA as well as some useful indicators that I developed with the help of some of the people mentioned at the time.
I'm looking for some good ideas to improve this idea, just because I've made a ton of money in the past few weeks doesn't mean it can't be improved. I'll also be posting a chart or two soon to show the types of entries I'm taking and when I open the next basket I'll try to post it here.
After reading this, I should mention that I did not consider trades in the same currency nor limit the volume of trades I made. If all AUD pairs say buy, I'll buy them all; if all EUR pairs say sell, I'll sell them all. I haven't embraced the idea of buying some euro pairs because they are rising and selling others because they are falling. This is something that needs to be addressed and rules put in place, maybe it's better to only trade one currency in one direction at a time?
Anyway, that's enough, looking forward to collaborating with anyone interested in seeing what we can put together.
As I read through the post, it seems to me that some people get amazing results while others suffer huge losses before these trades get any better, if they ever do!
I started thinking about the process of building those giant 2000 point baskets and it dawned on me that maybe relative strength wasn't the way to go. I don't want to disrespect the original clue or system in any way because I believe it has merit, but in my opinion the relative strength of the last few 4 hour candles tells you, the relative strength of the last few 4 hour candles. It doesn't tell you what happens next. The theory I understand is that if currency
So I started using a micro account with a small test account of £30 and within two weeks I had £250. This does sound like an incredible percentage gain, but don't forget that on those first few trades, my account was severely overexposed by percentage. I think I've proven, at least to myself, that it's possible to take a series of trades with the trend and then have them all go your way, giving you some nice, huge gains.
After some trial and error, I established some preliminary rules that I believe are worth following until I or someone else can come up with something better.
First I want to clarify what exactly I do. Basically, I look at each pair in turn at certain times of the day and decide whether I think that pair will move up or down. If I can't make a decision based on the information I have, I won't trade. If I think it's going to go up, I buy, if I think it's going to go down, I sell. To this day I have been using a 200 pip trailing stop. I then let the trades develop over the next few hours, on losing or breakeven trades I close them, on winning trades I manually trail stops behind support and resistance levels.
Even though I'm actually using a daily chart, certain times of the day tend to be around the 4 hour candle close. I like to trade first thing in the morning (UK) so I can use the overnight moves to establish direction and provide some movement throughout the day. I also like to place trades at night and let them develop overnight.
As a direction, I use the support and resistance levels plotted on the weekly chart and zoom out to find the most important round numbers (credit to Business Members for this technique) as well as the 100 SMA, 50 SMA and 3 SMA for typical prices. The last one is from a book I read called Pivot Point Ma and I found that I really liked this approach. Basically, I trade based on the immediate trend, which means the direction the daily chart is moving over the past few days rather than the longer term, but I do prefer to trade in the direction of the overall trend. Sometimes a pairing, while generally unpopular, still offers opportunities.
The way it works is that typically you will experience some retracements as the spread clears and the trade settles. I have yet to see a basket trade drop more than £30 for me, and when the trade goes well basket trades can be hugely profitable, with the largest trade being just over £100.
In folklore, the seventh wave is always the largest. Science has proven that when two different waves move in the same direction at the same time, you get a larger wave that often catches people off guard and often sweeps away people and cars alike on harbor walls and docks. This is how your equity moves when you trade large amounts. As trends unfold, your assets will ebb and flow, some rising and some falling. If you watch your asset move, you will see that it rises with the ebb and flow and falls back with the flow. When all trends on all your currency pairs move in the direction of the trend, you will see what I mean about the seventh wave, and your equity will increase dramatically, sometimes in just a few minutes.
Enough of the poetic stuff. Like I said, I grew a small test account from £30 to £250 in two weeks, just opening a basket of trades based on trends, so I thought there must be some merit to this style of trading that warrants further discussion. With the wonderful long weekend just around the corner, let’s discuss it. I welcome questions and comments.
I thought of some further clarification. Starting today I am reducing my trailing stop to 100 pips because although I have been using the daily charts I am not really trading daily moves and I am looking for a quick move in my direction to make a nice profit on some smaller trades. I use an EA called "Equity Guard" to control risk, with a trailing stop just to provide an extra layer of safety if the Equity EA doesn't work for any reason. Starting today I decided to use 10% of my account in each basket and use 1 micro lot for every 30 pounds in this 10%, so for my 250 pounds account I shouldn't be trading at all but I know to risk 1 micro lot. If the account is £600 then I will be risking £60 so use 2 micro lots. As mentioned before, I have yet to see a basket of stocks lose more than £30 on a stock move, and I'm fine with the upside, but I believe that if your basket loses £30 (any other currency, you'll have to work out a suitable level for yourself), it's better to use a Stock Protection EA to close all open trades and take a profit on all trades if your open trade stock gain reaches £50. This is because, while you may have a basket that has the potential to go a long way, I have seen huge profits eroded by holding positions for too long. When a profit appears, it's better to grab it and start over than to give it up and regret it.
Another thing worth mentioning is that you can adjust your basket if it doesn't work out well. I wouldn't do this too often, but maybe every 4 hours to see how the trades are going and abandon the bad trades and maybe open more trades that look better. Remember, your losses and gains are calculated based on your overall equity, so abandoning losing trades will only affect your balance, not your equity.
I've typed it all out now, but if I think of anything else I'll post it. In order to understand the basics of the original system, I recommend reading the Relative Strength Trading thread. This will give you an idea of what I'm doing and why I'm just using trends instead of recent strengths/weaknesses.
I will post the EA as well as some useful indicators that I developed with the help of some of the people mentioned at the time.
I'm looking for some good ideas to improve this idea, just because I've made a ton of money in the past few weeks doesn't mean it can't be improved. I'll also be posting a chart or two soon to show the types of entries I'm taking and when I open the next basket I'll try to post it here.
After reading this, I should mention that I did not consider trades in the same currency nor limit the volume of trades I made. If all AUD pairs say buy, I'll buy them all; if all EUR pairs say sell, I'll sell them all. I haven't embraced the idea of buying some euro pairs because they are rising and selling others because they are falling. This is something that needs to be addressed and rules put in place, maybe it's better to only trade one currency in one direction at a time?
Anyway, that's enough, looking forward to collaborating with anyone interested in seeing what we can put together.
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