Spuds Stochastic Thread Theory

[aipkmazku]

1 Attachment(s) Up before I had been given the honor of owning a moderated forum I have been very reluctant to share the following advice as it would no doubt be really confusing if I included it below one thread. It is also a lot of work and not like that I have too much on my plate . However, to keep sitting on this understanding isn't helping you. . .so I've choose to launch it now.

I will warn you this is a stheory which demands a lot of thinking and focus on detail. To exchange it properly requires first studying some or all of the patterns and what they mean and then making sure that the pattern is the pattern. I also say that I believe I have about 70% of it figured out, so that is why I call it a theory. The last 30% I haven't figured out is driving trades through little reversals....it does not hurt me but makes for more work in a trade.

The good news is there are some simple standard patterns which I'll clarify first that are extremely simple to see. . .you can even see some of these stone cold drunk (not that I recommend trading this manner ). The simple patterns don't come up too often so understanding how to exchange all of the patterns will certainly boost both entrance and exit success. However, if an simple pattern appears. . .might as well trade it, eh!

I'll get us started from the simple patterns and this will enable you to look at the patterns yourselves.

The Stochastic Thread Theory was first formed from expanding Escalator into Pips. The theory was that if 4 time frames lined up, then what would occur with 18 stochastic lines on a single time period?

For this we exchange on just 1 chart. I recommend the 1H or 4H since we would like to take advantage of the greater pip moves over time. I like the 1H as it fits my patience level better. I suggest starting out to the 4H since you will have more time to study the threads at close. The 30M and shorter time frames will be hard to trade since they don't leave much time for thought.

To set up this we need a 1H chart and 18 stochastic %K lines from 6 to 24. . .so 6,7,8,9,10,11,12,13,14,15,16,17,18,19,20,21,22,23, 24 all in 1 indior window. (So every stoch is 6,3,3; 7,3,3 etc )

Colour 6 to 13 thin blue - these are our lesser time period stochastcis and will be called LTFS (Lower Time Frame Stochastics).

Colour 14 thick red - 14 plays an important part and you're probably going to see why I switched to 14,3,3 once you see this. This is our Base Stochastic and is called naturally the BS line. So when it let's us we can declare, That dang BS line frees me up! With all honesty.

Colour 15-24 are thin red lines and are called HTFS (Greater Time Frame Stochastics)

Only in case you're wondering, this is MTF stochastics it is simply not using different price charts but different stochastic periods.

What you should have is a wonderful rainbow in your chart such as the one below.

[aipkmazku]

I know what you are thinking. . .that it looks like an MA Rainbow. Ok, get that from mind right now....because we must think threads and ropes not pretty colored rainbows.

As all of us know a rope is made up of lots of thinner tools which are made up of even thinner ropes and so on until the threads comprise the string which makes up the rope....gawd it seems just like a Barney song!

Well when it requires a purple Dinosaur to remind one we are speaking about ropes and threads so be it. Just do not not think of another think that's in the sky and has quite a few colours.

The reason we talk about ropes and threads is since our trading is going to be centered around when the rope divides into threads and the threads converge into a rope. Interestingly enough when the rope detangles and also the threads get loose is a sign of chaos like we expect when threads come loose and get all tangled up. After the threads become straightened up we've got a very wonderful trade window.

If we take a look at the previous chart I posted we can observe the rope fray but the threads stay fine and combed (divide apart and also in order) while the price increases.

[aipkmazku]

I promised easy..so here it's. Like I said we can exchange these in a drunken stuper and ought to create a few pips.

It is easy..trade the rope. When all the stochastics converge together we'll see one thick line and that's when we exchange.

See the chart below, go back after we see that the summit. Usually we'll have only one summit and usually it will be in the more sold or over purchased area... but the peaks all look pretty much the same.

Subsequently we simply comply with the trade until our rope begins to unravel.

That is the simplest of patterns as well as the best to exchange. . .go figure trading can be quite so easy.

[aipkmazku]

Just in case you're wondering why you're about to be overrun with threads, principles, combs and fishnets for terms allow me to clarify my family has a long line of sea captains and fishermen (I am neither but I am beginning to construct custom classic wooden ships as a hobby/business for the enjoyment/challenge/fruion of doing this ).

Ahh. . .can't be this easy. Well a few things to watch will keep us on track.

Combs and Fishnets
When a rope unravels it either unravels in a nice uniform of threads and we simply take a comb and comb out the threads to maintain the threads from tangling so that we may place them back into a rope. Using this method rope naturally keeps going and is not a tangled mess.

On the other hand when the rope unravels along with the threads get tangled we start to get a fishnet of threads and these spell turmoil as we can't untangle them with a comb as well as our rope usually has to be cut.

So, if we have a nice combed impact we could remain in our trade and when we start to see a fishnet we better get out of this transaction. See chart below.

Now astute traders as all of us are we could see that entering following a peak is going to get us some pips and waiting too long isn't. So watch for those peaks and greatest if you get in on the very first peak, not the second one.

[aipkmazku]

As requested here's a template for MT4.
https://www.nigeriaforextrading.com/...1106334844.tpl

[aipkmazku]

Understand why this is a concept. . .that dreaded 30% I have not figured out yet.

Once we move from comb threads to a new rope generally something will occur. That issue that is usual is a price reversal. So don't wait for a peak if you find a new rope. . .trade when all (all) that the stochastics converge.

Occasionally we simply can't have a reason to get a change in direction like on this particular chart. Having said that, if we stuck with the trade until the fishnet occurred we wouldn't have lost much if anything.

Like I said, this begins to take some thinking and studying and paying attention to those threads. It gets way far more intriguing but I think for now I'll give you this to mull over for a while, it is a good start.

[aipkmazku]

1 Attachment(s) Below is a 1H chart with numerous thread patterns. Each area is explained in detail.

1. Notice how as the stochastics attain a summit and turn all the other stochastics start to converge and if they hit on this convergence they simply are wrapped into the rope. I call this a clam shell. That's because we almost always have combed stochastics prior to this phenomenon happening and it resembles a piece of clam shell.

2. From 1 the consolidation into a rope is fast and the threads are combed again. The major problem with this trade is that we had a large upward spike right after the rope shaped. But when we followed the concept and remained in the trade we'd have been alright to the end. This illues the importance of following a trade to the finish as use the stochastic patterns as your guide. If we're analyzing the stochastics we ought to be thinking of an entrance right after the summit and price surge. We've got a well combed stochastic after the summit to follow down.

3. We can observe the clam shell pattern better here. Notice how all the stochastics hit the rope and converge. Look closely and see that each successive greater stochastic is converging into the up movement of the lesser time period stochastics.

4. Here is the point where the concept might appear to be in issue but if we follow the principles of the concept and stick at the trade since the stochastics remained combed then we ought to come out ahead in the end or at least break-even.

5. This is the end. It's a fishnet and original sign of the fishnet we ought to be seriously thinking of getting out. If we've entered our commerce too early in 1 and also late from 4 and remained until the fishnet revealed, we'd have had hardly any in losses. If we were trying to ch some fixed TP, we probably made it kept it between 5-20 pips. The truth is that not each trade is going to profit us pips therefore we would like to be certain that our losses are small. Here is the strength of the concept, losses are small when we follow the principles of the concept. Small losses 30% of the time and 70% wins will make us a wonderful heap of pips.

6. Is the end of the fishnet. Notice that the time period stochastics have all converged and can't even be seen. This is a fantastic early entry prospect.

7. The conservative approach is wait patiently to get the rope and this is where we definitely input the brief trade. Keep in mind that we want to maintain the 80/20 rules in use particularly for ropes. Albeit we aren't necessarily looking for the entire rope to stick to the 80/20 principles but when we see a picture like 7 and 6 we know we could probably follow this into an over sold position if the pattern holds together and doesn't clam shell or fishnet on us.

This really is a lot tougher to see and comprehend at first glance. However, the important thing to notice here is the way the stochastics respond when they turn and converge (in 1 and 3). . .it is similar to the lineup strikes a brick wall....talk about a wall of resistance

[elaoxmsexxa]

woaaaa. . .nice job man...
a revolutinary. . U gonna change tradin future...
lets go for this now...

[aipkmazku]

Remember how I said we'd discover how significant the 14,3,3 stochastic is? Well now you're going to know the significance behind it. In all honesty, I don't have any idea mathematically why this works really well, but it does. This pattern is so common it is the reason why I use 14,3,3 so much.

The chart below shows us a nicely combed stochastic pattern. Notice that the stochastics are all lined up in order from 6 to 24 as they are split apart.

Price always follows the shortest stochastic movement....to a certain level. This some level is the tricky part since it could possibly be 1 pip or it may be 20 pips or longer. A sustained trend is created when each successively longer stochastics follows exactly the lowest stochastic. So 6 turns followed by 7, then 8, then 9, and so on.

Since these stochastics turn they converge and create what I call the wall. Nothing gets beyond the wall (or quite far beyond it).

Now, look at the chart below. Watch the 14 stochastic is formed up on by the wall. That is no coincidence. You might think I looked high and low to get a 14 wall, but have a look and you'll see the 14 become the wall, the rope and basically what the Forex universe revolves around. Ok, I acknowledge not every wall is this crystal clear but they are darn close.

The issue is where can we begin to conclude we have a wall rather than the introduction of a fishnet beginning. Well, there is no definitive answer. We all know that as stochastics converge they form a rope and we want to exchange the rope. Thus, we need to make a rule that is suitable for our risk profile. I generally search for at least all the LTFS (lesser time period stochastics - the blue lines) to market and then watch what happens to the 14 as if my commerce develops....if everything converges like this, I love my commerce. Occasionally I'll only wait for 3 LTFS to converge and turn.

Another point to watch out for is anything sneaking beyond our wall. Our wall can not stand up indefinitely and will eventually break down, so any break in the wall is a get out of this transaction move.

Notice too in this chart how the LTFS flip around. At first they create the wall they then remain within the walls on the left side as our crimson wall sticks together. The bue stochastics from left to right are 6,7,8 and 9. . .in other words our leading indiors to get a scale are stuck on the interior of the wall which means until they break through the walls our price will keep rising.

Again notice how we achieve the price peaks because the blue lines again cross through our red wall at the over purchased place. The top indiors 6,7,8,9 have all broken through our walls and price can now be lead to drop. This of course takes us back to what level will the price drop.

This wall created a 120 pip move so playing the game like me, we would get out at any sign of a LTFS break through of our red wall. Our pip profit would only depend on where we entered.

We are braver and ride the red rope but always remember that it will be the LTFS that lead the price move....to a certain level.

[aipkmazku]

So this leads us to a rule we ought to fix in our thoughts because this rule is as solid as gravity.

The LTFS Interior Interior Principle

When we've got a climbing red wall (the red line HTFS) and the blue line LTFS are on the left (inside) of this red wall, then price will go up to a level so long as this remains true.

When we've got a falling red wall (the red line HTFS) and the blue line LTFS are on the left (inside) of this red wall, then price will go down to a level so long as this remains true.

Always exit when ANY blue line appears on the exterior of the red wall.
Exit when gloomy traces converge or start developing a new wall.