I've spotted a little something That im using as part of another trading system, but this technique looks promising to be used on the 5minute and 15minute charts for the Sea Wave system...
This is the way I will be trading the KG Sea Wave system from now on and i'd like to share this info with everybody for anyone who might find it useful, please correct me if im wrong here as im quite new to forex...
Add the zigzag v2 indicator from this thread into the charts, and another indicator called the ZigZag pointer alert into the system....Make sure you change the zigzag v2 indicator settings for the Price to 0 instead of 1...And please remember the zigzag should be taken with a pinch of salt as it can repaint so we're going to combine it with the ZigZag Pointer Alert indicator to place arrows on the top/bottom of the last zigzag leg when it gives us a signal....Look in the screenshots Below and you'll see what I mean exactly...We want to pay attention to the zigzag whenever an arrow is placed directly on the end of the zigzag. When we get a Red arrow ontop of a zigzag, this indicates a possible short, and when we get a Green arrow underneath the zigzag, this indicates a possible long.
Now....when the above conditions are met, we're not going to blindly enter the trade, i've found 2 things we can use as a simple filter to check for before entering a short or long possible on the 5m/15m charts...
1. When we get the ZigZag Pointer alert arrow either a red or green, like i said we prepare for a long or short depending on the arrow, and ONLY if the arrow is properly touching the zigzag line, if it prints the arrow further away, DO NOT prepare to enter a trade, just move on!
Now...once this criteria is met, we check to see if the signal we're getting, is on an important support or resistance area....make sure that the Zigzag arrow and the zigzag, are touching the Blue h1 support dotted line, or the green m15 Support dotted line...(These are the KG support/resistance indicator we've got on our Sea Wave charts for those of you who are using them still, they are important, dont neglect them). So basically we want the zigzag arrow, the zigzag leg to be touching properly, exactly on the Blue or Green dotted area's...
2. The next thing we're going to look for that will increase the chances of this signal is a simple candlestick pattern...We're ideally looking the candlestick with a wick touches the blue or green dotted area's when we get the zigzag leg with the zigzag pointer arrow on top...What we're ideally looking for is a candlestick with a long lower wick for a long situation, or a long upper wick for a short situation, ideally the wick needs to be larger then the Candlestick Body, this i would think would be a perfect signal...And im going to post the few signals I got yesterday just based on this criteria....
One thing I will add is, for extra confirmation flick into your 15minute chart from the 5minute chart to see what the signal you're getting looks like, if the candlestick has a long wick that is larger then the candlebody along with the rest of the criteria, i think you have a perfect signal there. Below are some charts to show you what I mean...
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Stop Loss And Take Profit Rules:
StopLoss: again depending on the pair your trading your stop loss will vary, your own personal discresion is advised, im still a newbie so Im not going to act like some expert, but a great stoploss that works fine is underneath the arrow when you get your signal, I would place stop loss about 5-10 pips underneath the arrow personally, this is for a long situation, for a short situation, place stoploss 5-10pips above the arrow signal.
Take profit, depending on how greedy or risky you want to be, set your take profit to a nearby support/resistance level on your charts, and watch price action and if price breaks through a support or resistance level, move your s/l to over break even and ride it out till the next target area!
Lastly...Dont forget for extra confirmation to use your Sea Wave histograms on the Trigger and Micro for confirmation, and I think we can have a successful scalping system for the 5minute and 15minute charts.
Please comment on my observations, and correct me if im wrong. I hope somebody can find my info useful
God bless and Happy trading