Chandelier Stops Useful or Not?
March 8, 2011
I’ve been using Chandelier stop indicators on most of my charts for a long time, but are they useful and should they be followed? Or are they just another lagging or repainting indicator for MT4 that is not worth the space on your forex chart?
The Chandelier Stop indicator comes in many trading platform and is designed to measure the the current volatility of the market; traders like Chuck LeBeau have lauded the indicator for being the basis of some of the purest of trend-following systems that can really help you gain in Forex trading. Without getting into specifics, the exact permutations that account for the plotting of Chandelier Stop indicator on your charts can vary but are generally as follows.
Long Chandelier (blue): CS=HH-X*EMA(Range, Length)
Short Chandelier (red): CS=LL+X*EMA(Range,Length)
HH stands for the highest High since the indicator last changed from a Short(red) to Long(blue) setup, while the inverse is true for the opposite, LL is the lowest Low since the indicator last changed from Long(blue) to Short(red). EMA in the equation stands for the exponential moving average based on another factor you can input. The X quotient in the equation and Length are determined by us the trader depending on how tight or how wide you want the chandelier stop to be. I’ve noticed a tighter chandelier stop on a lower time frame can spell disaster getting you into trades this way and that with little pips earned if at all, so the truest way to profit with this method is to use it on higher time frames with tighter settings or lower time frames with wider settings, more on that later. The creators of the software even allude to this by giving the recommendation to us when we are in the long term trading methods the best values for X in is 2.5 to 4.0 and the Length is from 10 to 20. I’ve done many many studies on which time frames and settings are best with Chandelier stop indicators but I can only recommend to you all to try this on your own as well, it only takes a few moments out of your day to find the best settings for each currency pair for the chandelier, which can vary from pair to pair.
March 8 AUD USD Going Down Some More?
March 8, 2011
It’s hard to assess where the pair is going based on the fundamentals and technical analysis before us, but we seem to have run out of buyers for the moment, I am looking to short this pair as soon as a few things line up on my charts. Here’s what I’m looking at now:
Gold reapproaching record highs, again.
March 7, 2011
This week I am very interested in seeing the sentiment for pushing Gold higher than it is at this point, due to the law of supply and demand you’d think all of the talking heads on TV’s predictions would finally come true and we’d see a massive breakout for Gold. This has yet to happen, but I’m keeping a close look at the price of Gold in relation to Oil and in turn relation to the USD this week.
Any comments are greatly appreciated on your thoughts about the direction of gold.
EURUSD Week Ending March 4
March 4, 2011
EURUSD ended another week way up versus the USD, touching 1.4000 briefly before meeting heavy resistance, next week I’d expect to see it continue the uptrend barring any significant news out of the middle east. If you see in this chart, a 4 hour chart, you can easily find long opportunities on dips of the moving average or the Heiken Ashi Smoothed indicators. Good stuff all around if you are long EURUSD.
Forex Trade: EURAUD 300 Pips in 3 hours
March 8, 2009
Want to show you all a great trade from last week on the EURAUD which shot up over 300 pips in 3 hours. Forex has its ups and downs, sideways movements, stale markets… well, not with this pair on Friday. I’ll point your attention to the ever-useful Rainbow MMA Crossover template as seen on this FXDD Meta Trader 4 chart. At around 7:50 GMT the pair crosses over from a downward trend, to an upward moving trend as evident with the “flipping of the rainbow.” If you are trading just that indicator alone, you would have made anywhere from 250-300 pips in a few hours, exiting near any one of the resistance points, motnhly daily, or even fibonacci target lines.
I did not enter this trade, merely watched it fly into the statosphere, kicking myself after each resumption of the upward trend after each pullback occured. Darn, maybe next time I should have a little more confidence with this pair, even though my spread is 6 pips.
