The Fruit - A Powerful Trading Strategy [Archived]

[immy]

Some pictures that may shed some more light on how to catch them lovely fruits.

[immy]

@Peter

[immy]

Noise and Volatility? Can we avoid them on Higher Time Frames such as Daily or Weekly?

There are time frames that create and experience the "noise" of the market between the Daily time frame and the M1 time frame. When you look at a daily chart there is no noise. (That is not entirely true for all instruments though generally higher time frames are smoother) but as you drop to lower time frames you will see that noise. Noise on charts is defined in two ways. It refers to the high volatile periods where you see either big long bars/candles with high range but no consistent pattern or momentum in one direction. Lower time frames create spikes of price action that does not create lovely smooth patterns. Another form of noise is more dangerous (or perhaps equally dangerous but then again nothing is dangerous but using the word just to put some emphasis ) which is the quite periods where there is no real action. Time is unstoppable so the charts keep scrolling but without real change in price on the vertical Y axis against the ever scrolling horizontal x-axis of time dimension. So there is a serious lack of "ticks" "data" or lets call it by the correct name "Chaos" that could result in creating patterns. Not Chaos in the general sense of "chaos on the streets". But in terms of Science of Chaos. Higher form of organisation, "new incoming information" = Chaos.

Common sense prevails, if there are no traders actively trading anything, what pattern is there for you to see? if there is no technical pattern your edge does not exist. Yes there is another type of pattern, its that "no one is really interested at the moment" so we should join them and don't trade. However a new trader a novice might not understand this and keeps trading the m1 chart not knowing, there is no body to trade with it. Its Christmas day the shops are closed and the high street is empty. but here we are trying to buy something... hehe

So as you drop from D1 to H4 , you start seeing some spikes, but not that big relative to other price bars on h4, as you drop further to h1 you see days where you have very big H1 candles, (news events plus sudden flurry of buying or selling) and as you drop to m15 you see real spikey price action. (on some charts not all, here I'm only referring to Wheat Chart)

Its different for each instrument but the theme is the same. Until you drop to m1 you then see many sessions where you see spiky long candles as well good looking trends with a mix of low volatility to dead periods as well. This is true for Dax or other high volatile pairs but not for Wheat in these charts below.

The law of fractal geometry states that it is possible to see similar pattern on any other time frame, whatever you see on am m1 chart, all the patterns that you see on there are very possible to be seen on Daily time frame as well. The only problem is it will probably take your life time to repeat. We get to see literally every possible pattern there is that Chaos can throw at us on m1 because it prints so many candles. The amount of data is vast. e.g. the number of candles I see during my 2 hrs dax session may be 60-100 bars/time periods. if I translate that to Daily chart it would take me 3-6 months to see that kind of action. Imagine that. One morning on m1 = 3 months of watching a daily chart. wow.

However some instruments are just not worth trading on lower time frames. e.g. most of the commodities do not have sufficient ticks to create lovely m1 charts. You need at least 30-50 ticks average per candle to create good charts.


An Example of a perfect fruit campaign.

Wheat Daily Chart. Price is going up and up and up until finally it takes that last gasp up and creates a fruit short. You take the fruit and market goes into gator's mouth creates an AIMS level inside gator, that's your first add on. it then continues down goes out the other side of gator and creates another AIMS level.That is your 2nd add on and after this just simply wait for exit on green line.

Fruit-with-good-angle.png

Below: An example of a Dead Chart. Very low price activity. no volume, no volatility, no momentum. plus spread as a comparison of the average wave length per time frame is a factor that we must all consider. if your spread is 5 and average wave range of that time frame is 5, you will never make money. You can see that market is trend down as per gator but the difference between price and spread just does not workout. Comparatively on Dax you will never see a whole one minute where nothing happens. 1 volume does not exist on Dax and on many currencies.

08-02-2015 13-59-41.png

So Why Intra Trade?
When you're trying to trade intra-day i.e. time frames shorter than D1, what you're doing is that you want to get in and out within the same day. So you want to break down that daily bar and trade within it. Now if you'd like to trade with an edge you need to identify a pattern. And you know that a pattern, a technical chart pattern actually represents real behaviour of mass traders so you have to find if the same behaviour pattern that would happen on a daily chart would happen repeatedly on a 5 minute chart as well.

Let me give you a typical elliott wave example.
Just like buyers start buying and create wave one which is usually followed by up to 62% retrace off the high of wave 1 and sometimes even 100% retrace which is followed by more buying, this time strong buying impulse, that turns into a proper wave 3, and then at the top of wave 3 buyers start taking profits by closing all or parts of their positions. This is perceived as an opportunity for those sitting on the sidelines waiting for price to pull back so they can get a better price. Price has been going up strongly new buyers are still there and they have been waiting on the sidelines so they can buy at a better price and when that happens it goes into wave 5 where all of the buyers finally get exhausted and the sellers enter the market. The sellers perception is opposite. they perceive it as the best time to sell now that price has gone disproportionately high.

Trading intra day, You are believing that this buying pattern will happen on any time frame. That the same trading behaviours will cascade into any lower time frame. Whether consciously or unconsciously the activities, the trading decision based on euphoria, greed, fear, sound or bad analysis or whatever the reasons behind them, all the trading decisions for whatever reasons taken will form a pattern on a micro level that would visually appear and create almost identical patterns on your lower time frame charts just like it did on Daily or weekly charts representing mass trading activities. This is how we started trading intra day. We found that intra day charts can give you the same patterns. So why not live a faster life.

And that is what it is. This is what we believe in. Trading behaviours cascade exactly into the same patterns on charts on any time frames. And it gives us an edge. but there are limitations such as spread and range of the instrument of your choice. So , here are the rules for choosing intra day time frames.

1. The more volatile the pair the more suitable for lower time frames
2. The more less volatile a pair commodity or stock symbol the more suitable for higher time frames
3. You can only take advantage of trading off an m1 chart if the spread/commission is less than 2% of the average winner. If eur/usd only gives you 10 pips average winners with 3 pip spread its not a good bargain as compared to if it can give you 30 pip average winner with the same spread and commision by trading slightly higher time frame that is m15.
4. If you can trade a pair on m15 with easy 10-15 pip stop losses there is no need to trade it on m1. e..g if you try to go fixed lots and trade Dax30 on m15 the risk will go considerably higher since dax is highly volatile and it may require up to 35 pip stop losses on M15 which is quite high as compared to 10-15 pip stop loss on m1.

Below some examples of chop and spikes. It happens on all time frames. But the time it takes for spiky choppy period to start and end on a daily time frame may be weeks and months but it might be just a session or a day on m15 chart. or half an hour to hour on m1 chart or sometimes the whole day. If we consider a day is made of 8 hrs that would be 480 time periods/bars/candles. If a daily chart was to stay that long in choppy it would take 2 years. Now have you seen a daily chart stay in chop and tight range for 2 years? I have not but it is quite possible. Have you seen EUR/CHF?

Is chop a problem? and how do you avoid it?
yes it is a problem but there is a solution. Correct money management. The market can start with good momentum and volatility on any given day or start of a session or week or month depending on your chosen time frame. On higher time frames, you probably know or look for some "fundamental" reasons as well because the world events are sometimes quite obvious such as "lets destroy some foreign countries and steal from them" or "some oil rich country does not want to sell oil to us" or "some country with lots of gas don't want to sell us gas anymore " etc. or you may like to just ignore that and see what the patterns tells you. On any level if you're trying to predict, which most fundamental analyst mistakenly end up doing, as well as technical analysts, you will have a hard time. Staying in the now is the best. make your trading decisions on the data that is right now available to you. Yes you can predict as well but then you will have to manage your expectations correctly. You have to have a probabilistic mind set so that you know without a shadow of doubt that your prediction has a degree of certainty not absolute precision. Yes every time you spot a wave 3 there are higher chances that wave 5 might happen but the chances of it not happening are there as well. because anything can happen in the market.

So yes, we can avoid chop by "predicting it" e.g. wave 3 is followed by wave 4 and wave 4's are often choppy but not always. if you want to predict it you should know that there is a possibility it might reverse after end of 3 and form a new 3 on the opposite side. its quite possible since anything is possible. It is also quite possible that you were predicting a wave 3 and that ends up in choppy sideways market. How do we avoid it? Correct money management. We put stop losses an thats how we avoid it. So do you get me? you don't try to avoid chop, you avoid destroying your equity by using correct money management. If you have a choppy trading session and you lost some pips so what. There is next session, next day when you will make lots and lots of pips when market is nicely moving in one direction with good momentum and volatility.

[wiseambitions]

It would be interesting to compare the ADR versus broker spreads of a whole range of pairs.

I think we'd find wheat only really moves when there is geo-political impact on supply and demand, and this maybe only turns the market significantly a few times in a year, and only for perhaps 10 per cent of the price unless there is a lot of pressure on the market. I see no point hardly to getting involved except in higher time frames like h4 upwards. So it's a good example of something not well suited to intraday work.


The ones we are interested in for day trading are bound to come back to ones like the Dax which we noticed a year or two ago where for 1 or 2 pips spread you can get a 200 pip daily range and loads of chances to use the strategy.

[immy]

The Power of Target Zone 1 and Elliott Wave

[immy]

The Perfection of Target Zone 1

AGAIN

[mfnunez]

Hi Immy, here is my question, when you get a fruit signal do you open the trade on the brake of that candle or i have to wait for the candle to close before i open the trade.thank you

[immy]

Hi Immy, here is my question, when you get a fruit signal do you open the trade on the brake of that candle or i have to wait for the candle to close before i open the trade.thank you

hi

You get a fruit signal, and you put a po below the high or low of the fruit candle.

Lets suppose you have a buy fruit, you will put a PO 1 pip plus spread above the high of that candle and put your SL 1 pip plus spread below ( 1 pip below) the low of the candle
for sell fruit you put a po 1 pip plus spread (or just 1 pip below) the low of the fruit candle and put SL 1 pip plus spread above the high of the fruit candle.

At first I did not want anyone to trade it lower than h1 because you don't get enough time to put your PO but the again, if you wnat ot trade fruit you have to be quick. thats why m5 is the lowest on currencies. if you trade m5, you won't be able to trade more than 2 at all. on m1, even 1 is hard to manage. So best do it on h1 but if you so want come and join as on m1 dax! you're gonna love it!

The above is a repetition but I did it for you! Its all explained in the book and the first post of this thread!

cheers

[immy]

I will be posting my H1 Fruit TRades here on regular basis from now on.

YD USD/JPY had a Fruit signal. not hte best of angle but there was some .

UJ-Fruit Trade Nice.png

I also Took a Fruit signal but I took with a nice trick.

I took the fruit on GU when it went further up and reach near the top of Fruit where I would put my SL. So my SL was less than 15 pips. It did not work out, but if you catch things like this, at times you can catch big winners with very low potential risk. Rent 14.3 pips

[immy]

UJ created a nice Fruit but Rent. Angle was good, so was the bar. I should have stopped and reversed but my mind seem to have blocked that information from me then.

20-02-2015 13-57-39.png

Aussie created a nice one but rent on first, the second one seems to be working now.