Trade description - January 13, 2010 (Stop Grabber Trade)

Sive Morten

Special Consultant to the FPA
Messages
15,979
Trade Description
January 13, 2010

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13-01-2010. Buy EUR/USD 1.4466 s/l 1.4430 (0.8 lot)
Result – “817.60$” (closed at 1.4568)


Stop Grabber Trade

This is a kind of trade that I’ve not described before. It’s a bit specific. This trade was made on the EUR/USD hourly chart. As you remember in my recent weekly research, I’ve made a forecast about the EUR/USD rising. The context for rising is beyond the scope of this description, but the source of the movement was an expectation of worse Payrolls data. So, this up move had happened, the market has reached Confluence resistance area 1.4550-1.4560 and hourly target XOP=1.4546 at 1-hour chart and entered consolidation:

EUR/USD hourly#1
PT100113-1.jpg


This consolidation was very tight, market stayed above 1.4440 level with some attempts to break it down (Wash and Rinse) but it holds. The daily trend is up, so my position was to buy on retracement to 1.4460 with s/l just below 0.382 level at 1.4443. In the beginning my plan was exit at Confluence area at 1.4550. If the market suddenly breaks through 1.4460 then it definitely will go much lower and there was no need to place a farther stop. Besides, I can trade greater volume in this case. So, what are the inputs:
Daily trade is up, there is no overbought;
Market does not retrace deep – even not reaching 0.382 support at 1.4443.
Market has shown Wash and rinse of 1.4460 support level.
So, it means that it just consolidates for an additional up move.

EUR/USD Hourly #2
PT100113-2.jpg


EUR/USD Hourly #3
PT100113-3.jpg


So, where is a stop grabber? Here it is:
EUR/USD Hourly #4
PT100113-4.jpg


To recognize it we need a MACD Predictor. MACD Predictor is a derivative from the ordinary MACD indicator and shows the price at which MACD lines will cross. (this crossing coincides with crossing of MACD Predictor and price lines). So, as you know, the crossing of MACD lines tells us about trend change, but we need to wait for a confirmation, i.e. close of current bar, to confirm MACD crossing and, hence, a trend change.
If we use MACD Predictor instead of MACD for trend change we need that price will close below MACD Predictor line (this is for down trend). And now look at the above graph – before the Stop grabber bar trend was bullish (price is above MACDP line), then price moved below MACDP line and gave an unconfirmed signal that trend has turned bearish. Then price has reversed back and closed above MACDP line showed up trend again. So, traders who have opened a short position based on unconfirmed signal were locked in a bad situation and start to buy for closing. Market-makers see that and add power to move the market higher to reach stops that are marked on the chart. The ordinary target for such kind of signals – previous highs that are surrounded with stop orders. When the stops were grabbed I closed the position. Besides, there were an Overbought on hourly and the market has reached a 0.382 major resistance from the whole down move. But it does not mean that market will not be able make another up move. It was a short-term trade.
In general it’s possible to use Stop grabber as a separate signal to trade, or as a confirmation. In my case it was a confirmation that the market intends to make an up move. Stop grabber just helps me to estimate my target – previous highs with stops around it.
 

Propheteer

Private
Messages
12
this is great

all of this information is great, it makes a lot of sense, but also takes more than a day to really dig it , if anyone had a full comprehension of this graphs, please let me know what you think.
thank u FPA
 

Sive Morten

Special Consultant to the FPA
Messages
15,979
is there a MACDP available for MT4?
Unfortunately not, but this is not a tragedy.
The point is you can use a simple MACD instead. But it demands more attention because you should check for crossing during unconfirmed signal and you should catch it.
MACDP is just more comfortable. And it more suitable for explanation.
 
Last edited:

pipperray

Recruit
Messages
3
Unfortunately not, but this is not a tragedy.
The point is you can use a simple MACD instead. But it demands more attention because you should check for crossing during unconfirmed signal and you should catch it.
MACDP is just more comfortable. And it more suitable for explanation.

thanks for that!
 

Sive Morten

Special Consultant to the FPA
Messages
15,979
Is there a MACDP available for Ninja Trader?

Hi, Ronan
I'm not sure. But it is possible, because NT is a relatively new trading platform.
Genesis Trade Navigator has this indicator, It also exist for Omega TS (but I do not know is it free or not).
 

heavenis4her0

Recruit
Messages
4
Great lesson sive, i am just wondering, can i make MACDP using moving average on MT4?, what the setting for hourly chart?
 
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