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Author Topic: TrendLine Trading with or without the Magic Wand  (Read 14708 times)

Online diyforexskills

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TrendLine Trading with or without the Magic Wand
« on: May 15, 2018, 09:03:48 AM »
I am starting this new thread with Donna's permission.

Even though most of my current trading is with EAs, and will continue to be, I have always maintained an interest in technical analysis and monitoring for the fundamentals. Principally for longer term trading on the Daily and H4 and looking for advance warning on the H1.

And so I am planning to embark on more manual trading but in a semi-automated fashion. After identifying good trade setups I will place entry and SL and TP conditions on the charts manually in the form of trendlines, at any angle, and then the Magic Wand EA (to be available soon) will read those trendlines and do the rest including being able to to load up on positions. Trendline based SL and TP will be movable during open trades as the trade structure develops.

So the purpose of this Thread will be about exchanging views on possible trade setups which would be enterable by placing the appropriate trendlines on the chart. eg entering a Buy on the bottom of an upward sloping channel and "naming" the TP as being the upper line of the channel. Or identifying a possible reversal, breaking a trendline and placing a TP trendline at a Fib retracement level.

Whether people use or not use the EA in executing and managing the trades will be immaterial. It is all about sharing ideas, and results, on price action based trade setups, focusing on the longer term.

Hope you will join in the discussion.

Andrew
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Online diyforexskills

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Re: TrendLine Trading with or without the Magic Wand
« Reply #1 on: May 16, 2018, 08:37:55 AM »
First intentions

So this is how I intend to analyse charts for possible setups that I might take.

1. I am going to use the Alligator indicator to check for trending (MAs aligned)and ranging (MAs criss-crossed) periods; and perhaps use the red or blue lines to trail my stops during trends.
2. I will use the MACD to see if possible trendline (TL) breaks are supported by bullish or bearish divergences (Normal and/or hidden).
3. I will check the Weekly for signs of dominant trend and any major Support and Resistance zones and any strongly signalling reversal candle if any.
4. I will trade on the Daily.
5. I will use the same chart setup to look at H4 and H1 charts for any early clues as to if and when price might be moving into ranging or trending mode.

I have applied this to the GBPUSD  Daily chart as shown below. Two trades that I would have taken if I had been doing this since mid-April.
And my intention as to where to set the next trendline for adding to my Sell position. When using the Magic Wand in future, we would label this TL as a SellStop and so when the line is touched/broken, the EA will enter a Sell trade.
In the second chart, H4, you can clearly see that this pair has been ranging and so we should be waiting for a breakout. The bounce from below of the MACD, shown in red box, is usually a good indication of further downward move.
At this stage I would set my SL at the level of the end of the red line of the Alligator indicator, and trail the SL rather than setting a TP. (I believe that this could well be the start of a Wave 5 from a cycle starting in 2014 in which case it would finish at around 1.2 or less. But maybe I am just being hopeful   :)  )
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Re: TrendLine Trading with or without the Magic Wand
« Reply #2 on: May 17, 2018, 05:13:09 AM »
Another day, so time to adjust

Some weak US data and a positive announcement re Brexit, helped to push up the GU a bit overnight (speaking from Australian time).

So my TL SellStop from yesterday did not get hit.

I am still of the view that the bearish trend will resume, so if I had my Magic Wand I would now place two TLs as shown in the image.

TL1 is a SellLimit roughly along the middle MA of the Alligator (SMMA 8 shifted by 5, Median price). So if price continues to rise I will get a Sell trade at a good price.

TL2 is a SellStop and so if price resumes its downward trend I will get a Sell trade at a possible slightly better price than if I use the standard entry point below the lowest wick.

At some point I will have to set a SL. I would do that with the Magic Wand TL along the blue line of the Alligator (SMMA 13 shifted  by 8, Median price) with SL to be actioned only on the close of the candle above the TL.

The advantage of using the Magic Wand TL to set entries is that we don't have to specify a particular price for that entry. Entry can be triggered anywhere along that TL. Same for TP and SL when we use sloping TLs. Hence we avoid the fear of missing out and by being too conservative when setting Limit orders.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #3 on: May 17, 2018, 09:49:47 AM »
A nice example

Just checking on the USDCHF pair which has been on a massive uptrend. So if we had been in that trade, would now be the time to take profit?

This is where I am hoping that looking at three timeframes will help us in the future, as shown in the image.

So when we dial down to the H4, we can clearly see the pause; and from H1 we can see how ranging it has been for a while.

Given the length of the trend, and these features on H4 and H1, I would set my TP/SL as shown on the red line of the Alligator, waiting for a close below the line. If price resumes its upward trend, I could always get in again; having banked a nice profit.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #4 on: May 18, 2018, 08:57:47 AM »
Magic Wand in action (testing phase)

I am currently testing the Magic Wand EA which I will be using to place and manage the trades.

I had set a Sell Limit trendline, and set the EA to add three scale-ins at -5, -15 and -25 to the initial trade on break of the trendline.

All four trades are at 0.01 lot.

Reason for using scale-ins is that we never know how close price will go relative to the trendline we set, and in this way we can get some better entries, and reduce potential loss should price go against us compared to if we had just entered with 0.04 lot on trendline.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #5 on: May 18, 2018, 01:25:16 PM »
Adding the Trendline SL

To continue the testing of the Magic Wand, I have now added a SL trendline to the chart, roughly along the middle MA of the Alligator.

So these two trades (see previous Post), will be closed if and when price at close of the Daily Candle, touches this trendline.

By selecting SL at Candle close, I am avoiding being stopped out too early because of a spike in price.

As the trade progresses, I will be able to adjust the SL trendline if I feel that is warranted.

All about staying in control and responding to the market.

Also shown is the fact that I have several other trades open, all bar one in profit. They were all entered on the basis of this system. And all at a miserly 0.01 lot. But when you have several, and you scale-in if in trend, you are still making money. And any "mistake" will not send you broke or break the bank. And you will be more likely to make rational decisions.
But as always, each to their own.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #6 on: May 19, 2018, 06:21:19 AM »
Setting a Take Profit Trendline with the Magic Wand

In yesterday's Post I set a SL trendline - which of course functions nicely as a TS.

But we can also add a TP trendline as shown in the first image. This takes advantage of the fact that price can overextend during a strong trend, moving well away from the mean. So why not try to capitalise on that to see if price overextends enough to trip our TP trendline. That way we can bank some nice profit and we can then always get back in, at a better price, when price retraces to the mean. This is nicely shown in a graphic form (second image) from Justin the Daily Price Action educator in his latest blog. He uses 10 and 20 EMAs rather than the Alligator SMMAs that I use, but the concept is the same.

https://dailypriceaction.com/friday-qna/forex-breakout?inf_contact_key=27314e77769a80a7a205a42b3fb253e3379869685d1d4338bda7378f2077b40d
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Re: TrendLine Trading with or without the Magic Wand
« Reply #7 on: May 21, 2018, 02:59:18 AM »
Weekenders

Some people don't have much free time during the week but can do some chart analysis on the weekends. And we can scan for any important news announcements over the weekend which might have an impact on market open. Problem is that we cannot set new trades or modify conditions for existing trades on weekends.

But we can with the Magic Wand.

So now we can just allocate some time on the weekend, analyse our favourite charts for setups, check for any news, and then use the Magic Wand to place our trades and refine exit conditions for existing trades.

I did that this past weekend. We had a successful royal wedding which I thought might push up the GU on Monday. So I set a BuyStop trendline for that. But we also had the news that China was going to buy more US goods; that could push up the USD and so put further downward pressure on GU. So I placed a SellStop below.

Then all I had to do was wait and see what the market will do this coming week.

Will the royal flush be trumped by the USD? At time of posting, not yet!
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Re: TrendLine Trading with or without the Magic Wand
« Reply #8 on: May 21, 2018, 08:32:52 AM »
Weekenders

Some people don't have much free time during the week but can do some chart analysis on the weekends. And we can scan for any important news announcements over the weekend which might have an impact on market open. Problem is that we cannot set new trades or modify conditions for existing trades on weekends.

But we can with the Magic Wand.

So now we can just allocate some time on the weekend, analyse our favourite charts for setups, check for any news, and then use the Magic Wand to place our trades and refine exit conditions for existing trades.

I did that this past weekend. We had a successful royal wedding which I thought might push up the GU on Monday. So I set a BuyStop trendline for that. But we also had the news that China was going to buy more US goods; that could push up the USD and so put further downward pressure on GU. So I placed a SellStop below.

Then all I had to do was wait and see what the market will do this coming week.

Will the royal flush be trumped by the USD? At time of posting, not yet!

.... but it has now, and trade has been entered. A little later than expected because i was driving home with laptop switched off. And since a trendline entry is not placed with the broker, but sits on the chart, we have to have the computer on 24/5 or use a VPS to ensure trades are entered and closed as set with the Magic Wand. Lesson learned.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #9 on: May 23, 2018, 02:01:10 AM »
An Asian session flutter

All is quiet on the asian front. My Daily trendline trades are nicely in profit at around $218. The TP and SL lines for these are in place but don't look like being hit soon. And so I am bored.

So time to switch to the M5 chart on the GBPAUD. Major trend is still down, so have set some lines for a breakout of the current range on that timeframe. Either a Sell Limit from the top of the range or a Sell Stop from the bottom. And of course a SL and a TP since we are trading on this short timeframe.

The setup is shown on the H1 chart.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #10 on: May 23, 2018, 06:22:41 AM »
An Asian session flutter

All is quiet on the asian front. My Daily trendline trades are nicely in profit at around $218. The TP and SL lines for these are in place but don't look like being hit soon. And so I am bored.

So time to switch to the M5 chart on the GBPAUD. Major trend is still down, so have set some lines for a breakout of the current range on that timeframe. Either a Sell Limit from the top of the range or a Sell Stop from the bottom. And of course a SL and a TP since we are trading on this short timeframe.

The setup is shown on the H1 chart.

Well that one ended in a loss. I had set the entry to include scale-ins at -ve pip distances; the SL trendline, which I moved a bit closer while the trades were open, closed all trades as shown for a $14 loss.  A reminder to me that during the Asian session, most pairs seem to drift up despite what the longterm trend may be.

I still have a few little gremlins that need to be fixed before I release the Magic Wand for a 2 months $10 trial, with the $10 counted towards the cost of a lifetime $79 licence later on.

You can do this type of trendline trading without the Wand, it's just that being able to set entries and exits with a sloping trendline is far more versatile then using pending orders which can only be placed horizontally, ie at one fixed price.
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Re: TrendLine Trading with or without the Magic Wand
« Reply #11 on: May 24, 2018, 05:16:50 AM »
Trading on the M1 with the Magic Wand

As part of the testing I had a little fun on USDJPY, M1 timeframe.

Three wins and one loss, using the scale-in feature. A mix of stop and limit entries and plenty of trendline adjustments as the trades progressed.

All looking good. And the trades entered on the Daily are all still in play and at $315 in profit. TP and SL trendlines are being used to manage the trades all of which are trending nicely with temporary short retracements at the "big round numbers".
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Re: TrendLine Trading with or without the Magic Wand
« Reply #12 on: May 24, 2018, 08:39:15 AM »
User Guide now available

In readiness for the launch of the Magic Wand EA trial, the User Guide can now be accessed from here
http://www.fxautotraderelite.com/resources/

By way of further illustration, two possible setups for trades on the Daily, can be seen in the image. The placing of the trendlines (the magic wands) will of course depend on your own view of market direction, bolstered by what the current trendlines and/or indicators of your own choice, are suggesting as possible options.

Given that these are trades on the Daily, there is no need to set SL or TP lines at this stage. They will depend on which trendline is broken first and hence which trade we will be managing with the EA. Trendlines can be adjusted over the coming days as the patterns develop.
« Last Edit: May 24, 2018, 08:43:07 AM by diyforexskills »
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Re: TrendLine Trading with or without the Magic Wand
« Reply #13 on: May 25, 2018, 08:28:34 AM »
User Guide now available

In readiness for the launch of the Magic Wand EA trial, the User Guide can now be accessed from here
http://www.fxautotraderelite.com/resources/

By way of further illustration, two possible setups for trades on the Daily, can be seen in the image. The placing of the trendlines (the magic wands) will of course depend on your own view of market direction, bolstered by what the current trendlines and/or indicators of your own choice, are suggesting as possible options.

Given that these are trades on the Daily, there is no need to set SL or TP lines at this stage. They will depend on which trendline is broken first and hence which trade we will be managing with the EA. Trendlines can be adjusted over the coming days as the patterns develop.

Magic Wand EA is now available for trial

For just $10 you can now try out the Magic Wand EA to help with trendline trading. Expiry for the trial licence will be 31 July 2018. The $10 will count towards the full purchase cost ($79) if and when you decide to move to an indefinite licence.

The method I am using for this type of manual trading is outlined in Reply #2; and the rationale for it all is set out in Reply#1.

There is no fancy website for this trading tool, just this Thread. To get a copy of the Magic Wand, please send $10 to my PayPal account, sydap2003@yahoo.com.au   Pls make the payment as to a "friend" so that we don't incur payment processing fee. Half the payment will go to Donna as a contribution to maintaining the Forum from which we all benefit. The EA will be sent to you via email within 24 hrs and usually much sooner, ie whenever I am at my computer which is pretty often. Pls note that I live in Sydney Australia, and I do sleep at night.  :)
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Re: TrendLine Trading with or without the Magic Wand
« Reply #14 on: May 26, 2018, 03:52:01 AM »
First intentions

So this is how I intend to analyse charts for possible setups that I might take.

1. I am going to use the Alligator indicator to check for trending (MAs aligned)and ranging (MAs criss-crossed) periods; and perhaps use the red or blue lines to trail my stops during trends.
2. I will use the MACD to see if possible trendline (TL) breaks are supported by bullish or bearish divergences (Normal and/or hidden).
3. I will check the Weekly for signs of dominant trend and any major Support and Resistance zones and any strongly signalling reversal candle if any.
4. I will trade on the Daily.
5. I will use the same chart setup to look at H4 and H1 charts for any early clues as to if and when price might be moving into ranging or trending mode.

I have applied this to the GBPUSD  Daily chart as shown below. Two trades that I would have taken if I had been doing this since mid-April.
And my intention as to where to set the next trendline for adding to my Sell position. When using the Magic Wand in future, we would label this TL as a SellStop and so when the line is touched/broken, the EA will enter a Sell trade.
In the second chart, H4, you can clearly see that this pair has been ranging and so we should be waiting for a breakout. The bounce from below of the MACD, shown in red box, is usually a good indication of further downward move.
At this stage I would set my SL at the level of the end of the red line of the Alligator indicator, and trail the SL rather than setting a TP. (I believe that this could well be the start of a Wave 5 from a cycle starting in 2014 in which case it would finish at around 1.2 or less. But maybe I am just being hopeful   :)  )

Sometimes you come across an article that really gels with what you are doing and adds some further guidance. This article from the forexboat people did that for me today. It describes trendlines as dynamic support/resistance (as opposed to horizontal line which are fixed) and shows how you can use trendlines to really good effect. With or without the help of the Magic Wand to automate the entries and exits.

https://www.forexboat.com/use-support-and-resistance-with-price-action/?utm_source=Email&utm_medium=All&utm_content=Blog_Email_Img1&utm_campaign=Blog

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