VKR's 4HL INTRADAY/SWING TRADE SETUP
- Thread starter veluri1967
- Start date
I hope you are querrying about 4 weeks rule. Its best for Nifty undoubtedly. Start from this week. Take High and Low of this week. Then, next week's high and low. Then third week's high and low. Then, 4th week's high and low.
Now, the time for 5th week. Take CLOSE of 5th week.
I will explain by example.
1st week - H 5000 L 4889
2nd week - H 4987 L 4918
3rd week - H 5012 L 4890
4th week - H 4987 L 4879
Of these 4 weeks Highest High is 5012 and Lowest Low is 4879.
Now, consider 5th week's close as 5013 which has broken Highest High of last 4 weeks. So, you should buy Nifty above 5013 on next monday.
Suppose, if 5th week's close is 4878 which has broken Lowest Low of last 4 weeks. So, you should sell Nifty below 4878 on next monday.
Suppose, if nifty closes at 4979 on 5th week, then it has not broken any limits. So, no trade on next monday.
If you understood how to take positions, then I will explain you how to square them off.
Now, the time for 5th week. Take CLOSE of 5th week.
I will explain by example.
1st week - H 5000 L 4889
2nd week - H 4987 L 4918
3rd week - H 5012 L 4890
4th week - H 4987 L 4879
Of these 4 weeks Highest High is 5012 and Lowest Low is 4879.
Now, consider 5th week's close as 5013 which has broken Highest High of last 4 weeks. So, you should buy Nifty above 5013 on next monday.
Suppose, if 5th week's close is 4878 which has broken Lowest Low of last 4 weeks. So, you should sell Nifty below 4878 on next monday.
Suppose, if nifty closes at 4979 on 5th week, then it has not broken any limits. So, no trade on next monday.
If you understood how to take positions, then I will explain you how to square them off.
The Four Week Rule - A Simple One That Gives You Huge Profits Potential
By Kelly Price (Based on Richard Dochanian's Theory)
Here is a simple forex trading system that is easy to understand and apply and has influenced some of the top traders of all time. Don't be fooled by its simplicity it works. Let's look at it.
The 4 week rule is one of the simplest technical analysis systems of all time and it may not be trendy or flavor of the month, with a lot of forex traders who think complicated is better - but don't think that because its simple it doesn't work - it does.
Richard Donchian was a true legend and one of the most influential trend followers of all time he spoke and wrote profusely on the subject of trading and has influenced some of the greatest names in trading including trading legend Richard Dennis.
The four week rule has proved to be an effective building block on which many successful trading systems are based.
It's based on the following assumptions about market behavior:
1. The strongest trending moves start from new market highs NOT market lows.
Those people who think buy low sell high is a great way to make money are wrong. If you don't buy breakouts from new highs, you will miss some of the best trends - period.
2. A trend in motion is more likely to continue than reverse.
We all know this is a basic building block of technical analysis and there is no better trend than one that is making new highs
3. A four week cycle is the dominant cycle in trading.
This can vary at times of course but the four week cycle is highly effective.
The original rules were used for trading commodities and can be summarized by:
Cover short positions and buy long whenever the price exceeds the highs of the previous 4 calendar weeks.
Liquidate long positions and sell short whenever the price falls below the lows of the previous 4 calendar weeks.
The original system being devised for commodities was designed to use a stop and reverse so the trader was always in the market with a position.
In a non trading market it can get whipsawed a solution to this problem is to enter on the 4 week rule (the breakout), and to exit on a shorter time period such as 1 or 2 weeks. With this system, a four week "breakout" would be needed to initiate a new position, but a one or two week signal in the opposite direction would mean liquidation of the position.
The trader then remains out of the market until the next new four week breakout is registered.
Why It Works
This system is based on sound technical principles with signals that are mechanical and clear-cut. It is trend-following so a trader is virtually guaranteed to be on the right side of every trend.
It also follows the often quoted trading wisdom - "let profits run, while cutting losses short". Another advantage is fewer trades, which means less time being spent looking at the market and finally you don't even need a computer!
People often say technology helps - but for many traders its a hindrance they think being clever will make them money, well consider this 95% of traders lost 100 years ago and the its the same ratio before yet computers today are more powerful than the one mission control used to land man on the moon!
Don't be fooled by simplicity it can be very profitable.
Being a trend-following system, it is not going to catch market tops and bottoms ( but how many systems do that though?) however, the 4 week rule works as well as any other trend-following system but with the benefit of incredible simplicity.
The Proof
You might be saying that won't work - well go and try it on a strong trending currency market like the euro, Canadian dollar or Australian dollar and back test it and in a number of strong trending markets and you will see it does.
Don't be led to believe that if its simple it won't work - all the best forex trading systems are simple.
You don't get paid for being clever you get paid for being right - Period.
Today, traders always like to trade something different or obscure but if you want a simple system, by a trading legend, that's hard to beat - try Richard Donchian 4 week rule It's been part of some of the true great traders box of tools and should be in yours to.
********************************************
My suggestion to try a smaller time frame or if at all wish to try on Weekly, go for Options. Just my $0.02
By Kelly Price (Based on Richard Dochanian's Theory)
Here is a simple forex trading system that is easy to understand and apply and has influenced some of the top traders of all time. Don't be fooled by its simplicity it works. Let's look at it.
The 4 week rule is one of the simplest technical analysis systems of all time and it may not be trendy or flavor of the month, with a lot of forex traders who think complicated is better - but don't think that because its simple it doesn't work - it does.
Richard Donchian was a true legend and one of the most influential trend followers of all time he spoke and wrote profusely on the subject of trading and has influenced some of the greatest names in trading including trading legend Richard Dennis.
The four week rule has proved to be an effective building block on which many successful trading systems are based.
It's based on the following assumptions about market behavior:
1. The strongest trending moves start from new market highs NOT market lows.
Those people who think buy low sell high is a great way to make money are wrong. If you don't buy breakouts from new highs, you will miss some of the best trends - period.
2. A trend in motion is more likely to continue than reverse.
We all know this is a basic building block of technical analysis and there is no better trend than one that is making new highs
3. A four week cycle is the dominant cycle in trading.
This can vary at times of course but the four week cycle is highly effective.
The original rules were used for trading commodities and can be summarized by:
Cover short positions and buy long whenever the price exceeds the highs of the previous 4 calendar weeks.
Liquidate long positions and sell short whenever the price falls below the lows of the previous 4 calendar weeks.
The original system being devised for commodities was designed to use a stop and reverse so the trader was always in the market with a position.
In a non trading market it can get whipsawed a solution to this problem is to enter on the 4 week rule (the breakout), and to exit on a shorter time period such as 1 or 2 weeks. With this system, a four week "breakout" would be needed to initiate a new position, but a one or two week signal in the opposite direction would mean liquidation of the position.
The trader then remains out of the market until the next new four week breakout is registered.
Why It Works
This system is based on sound technical principles with signals that are mechanical and clear-cut. It is trend-following so a trader is virtually guaranteed to be on the right side of every trend.
It also follows the often quoted trading wisdom - "let profits run, while cutting losses short". Another advantage is fewer trades, which means less time being spent looking at the market and finally you don't even need a computer!
People often say technology helps - but for many traders its a hindrance they think being clever will make them money, well consider this 95% of traders lost 100 years ago and the its the same ratio before yet computers today are more powerful than the one mission control used to land man on the moon!
Don't be fooled by simplicity it can be very profitable.
Being a trend-following system, it is not going to catch market tops and bottoms ( but how many systems do that though?) however, the 4 week rule works as well as any other trend-following system but with the benefit of incredible simplicity.
The Proof
You might be saying that won't work - well go and try it on a strong trending currency market like the euro, Canadian dollar or Australian dollar and back test it and in a number of strong trending markets and you will see it does.
Don't be led to believe that if its simple it won't work - all the best forex trading systems are simple.
You don't get paid for being clever you get paid for being right - Period.
Today, traders always like to trade something different or obscure but if you want a simple system, by a trading legend, that's hard to beat - try Richard Donchian 4 week rule It's been part of some of the true great traders box of tools and should be in yours to.
********************************************
My suggestion to try a smaller time frame or if at all wish to try on Weekly, go for Options. Just my $0.02
My dear friend, there must be N number of systems floating around which will meet your requirement, though I am not aware of any thing specific. A few might be here on TJ also! Very frankly the profits that you get shall not depend on the system alone , the major role is played by "you" the trader in maintaining discipline, avoiding greed and fear!!! Its very easy to resolve to be disciplined but quiet difficult to maintain it in front of the trading screen.
Do look aound on this Forum, your need might be met!!!
All the best.
Do look aound on this Forum, your need might be met!!!
All the best.