Monday, September 22, 2008

A few words on MM Stall level

Just took a quick snapshot on EURUSD to illustrate the MM stall level.

On two recent occasions, EURUSD reached MM stall level, bounced and came back to hit the major MM support/resistance level. This is a particular setup quite common in fast markets, especially when the pivot level seems unusually soft. Note however that prices sometimes do not come back to the major levels and bounce directly from stall level (H&S, C&H etc.).

How to approach a volatile market?

I have repeated again and again that our toolset is self-adaptable and universal. However all physicists will tell you any filter has a suitable frequency spectrum and you have all seen your usual oscillator going haywire on a spike (high freq.) or on a standstill (zero freq.).

What happened last week is unique, and warrants looking at a few settings, which will revert back to normal in a few days or weeks.

MM ShowMe: We generally use a Frame64 value of 2 i.e. a 128bars lookback period. I recommend temporarily a value of 1 (64 bars).

Swing2: We generally use a value of 0 (for regular swing traders) and 1 for scalpers or fast swing traders. We now increase it to 1 for regular or 2 for scalpers. Note 2 is the max. value for this indicator.

MTFS (aka AdLag64StoK_MTF) increase acceleration and realtimeness factor. Your discretion is needed here. A value of 0.25 for acceleration should do fine in many cases. Realtimeness can be upped to 2 or 3, but one should not overdo it as this can induce a Dorie effect (cf. Nemo) i.e. neglect the historical part of the pattern a bit.

The rest remains unchanged.
Note however that these proposed changes are 100% optional. I personally haven't changed anything to my own charts. Let's not forget that one can also move to a faster time frame set, or stay on the sideline for a while. Nothing with taking a break...

Good trading to all,