Strategies group (5)
Strategy 30
Be prepared to watch the price constantly. Monitoring the price is not an easy job.
Trade the most active hours – London and New York.
EUR/USD 5 min
GBP/USD 5 min
(optionally may also trade AUD/USD)
SAR (0.01, 0.1) – on the chart
SMA 8 – on the chart
MACD (5, 8, 9) + SAR (0.01, 0.1) on this MACD
SAR defines whether we go short or long. We will take only one type of trades according with SAR signals.
Whichever SAR gives earlier signal – we take it. (Sometimes it can be “chart-SAR”, sometime “macd-SAR”)...
Trading Rules:
When we talk about “trend change” we mean small tiny trends that are actual for us scalpers on 5 minute chart. We do not want to know what is going on 15 min, hourly or even more so daily chart.
With the first SAR dot appearing on the opposite side (the trend has changed) open one “trial” position Stop loss -12 (spread not included), Take profit +5. Once profit target has been hit – look for the best that current price can offer and open three equal orders. Stop loss for all orders is -12 pips (without spread), profits will be taken next way:
1st order – close in 5 pips and later constant re-entry-scalping with rules described below.
2nd order – close on 14th (or 18th) SAR dot (whichever SAR got first 14 dots – just count them) – this gives us some some relief that we have scored something. Also you may not wait till certain number of dots and just close second order where you fill it is a good gain to secure.
Another option: if you are familiar with waves and know what price retracement means, look to close 2nd order after the first, at most second clearly noticeble retracement and once the price has recovered and gave a strong move forward.
3rd – this order remains open and it is our constant relief that we are always earning something as long as both SARs are in agreement that the trend is alive. We close 3rd order only with the first SAR dot (any of 2 SARs) appearing on the opposite side signaling of a reversal.
Or if you feel it is enough for you – do not hesitate and close it earlier! We trade both currency pairs at once. In total we run 6 open orders maximum.
EUR/USD and GBP/USD have over +90 in correlation which means they move simultaneously almost always. It helps to anticipate good or bad signs watching two pairs at once.
If with the first “trial” entry we have loss, open next “trial” position only when both
SARs have agreed on the trend. (You may always wait for 2 SARs to be in agreement before entering any trade, but then sometimes you will miss most of the price move).
Now let’s move to our order # 1 which is going to be reopened to scalp the market with 5 pips in profit. Stop loss will remain -12 pips. Profit target +5 pips.
Once hit 5 pips and we are on the same candle (price bar) set limit order on the same candle half way from the current price (this is not to be calculated, just approximately, also you may check previous candle extremes and set order accordingly). In other words, “half way” means half of the candle’s current body while the candle continues moving up and down). So, set half way below (for uptrend)/above (for downtrend) the recent price – what we want here is for the price to pull back, fulfill our order and bring us another 5 pips on the same spot. If it does not retrace – we will not worry as we have our two other orders gaining profits for us. If a new 5 min candle appears, then project (visually) possible future retracement/pullback close to 8SMA and set limit order there – in other words, make your limit order “sit” on the tip of 8EMA line). Reposition your limit order with each new candle.
Now let’s play around 8 SMA. The price really “knows” this SMA.
a) If most of the candle has closed above (uptrend)/below (downtrend) 8 SMA for the first time – buy/sell accordingly. b) For uptrend when price touches 8 SMA for the first time from above and current candlestick closes above or on 8 SMA – buy, but only if MACD’s histogram is not sloping down and about to cross 0 line or already below 0 line. If conditions are not met – sit and wait...
...And wait for the same MACD’s histogram to go below 0 line with the new candle and create a sharp turn (usually) or a rounding turn (not often). Enter on the close of the current candle after the sharp or rounding turn is spotted. c) Constantly watch the price approaching SAR dots as once they meet – SAR indicator will signal for the change of the trend with the new dot not matter what, therefore if spotted – prepare to exit – do not wait for the SAR as it will redraw signal only in 5 min interval – valuable time can be lost. Instead watch the price, find the best “offer” and exit early with minimum loss.
If one currency pair is showing change in trend – e.g. got signal on SAR indicator, but the other does not – exit on both anyway. Pairs move simultaneously. So the other reverse signal is on its way to appear. You may find at times that EUR/USD pair usually moves slightly ahead of GBP/USD.
d) If the price for the first time has breached 8 SMA and closed on the opposite side – start watching closely the next 3 candles: if it comes back, closes on your side and goes in your favor – OK, but if price comes back, closes on your side and soon after goes and “attacks” 8SMA again and closes on the opposite side – exit with all you orders at the first suitable moment, because it is a strong (about 80%) sign of the trend reversal. Once again the safest mode is:
If two SARs are in disagreement – stay out. Once both are telling the same thing – get in.
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Strategy 29
Here is a very basic overview of a role of a Stochastic indicator in the Forex trading. Knowing exactly what to expect from Stochastic, if you ever plan to add it to your own system, will affect trading results dramatically. For this trading method:
Currency pair: Any.
Time frame: Any.
Indicator: Stochastic (14, 3, 3)
faster moving Stochastic Entry rules: Buy when the line crosses above and up over slower moving stochastic line.
Exit rules: Sell when the opposite situation (next crossover) occurs and right after that open an opposite position. It is again recommended, once the first touch of Stochastic lines (possible future crossover) has been spotted, to wait until the following price bar on the chart has closed and only then take actions.
Advantages: can give entry and exit rules, easy to use.
Disadvantages: Stochastic is a lagging indicator – with this lines crossover system it can create a lot of false signals. Traders may want to change Stochastic regular settings for each particular currency pair to eliminate as many false signals as possible. Stochastic crossover system is good when used in combination with other indicators.
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Strategy 28
Forex systems which adopt a Stochastic indicator for monitoring the price provide some very good tips about the situation on the market for traders that are willing to see it.
Currency pair: Any.
Time frame: Any.
Indicator: Full Stochastic (14, 3, 3)
Entry rules: When Stochastic has crossed below 20, reached 10, and then crossed back up through 20 – set BUY order.
Entry rules: Sell when Stochastic has crossed above 80, reached 90, and then crossed back down through 80.
Exit rules: close trade when Stochastic lines rich the opposite side (80 for Buy order, 20 for Sell order).
Advantages: gives quite accurate entry/exit signals in well trending market.
Disadvantages: needs periodical monitoring. Stochastic is suggested to be used along with other indicators to eliminated entering on false signals.
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Strategy 27
Time Frame: 1hour
CURRENCY PAIR: Eur/Usd Gbp/Usd any other
Indicators: RSI with Period (2) placed on RSI with Period (12)
To setup rsi simply place the rsi(12) on your chart normally then drag
the rsi again and place it on top of the rsi(the setting12) and enter
of MT4 platforms two.This works in.
RULES:
*Enter Buy When Rsi(2) cross Rsi(12) from below and heading upward
*Enter Sell when Rsi(2) cross Rsi(12) From above and heading downward.
Take Profit: 20 pips
Stop loss: 30pips or Swing High /Low
But sometimes you catch up with really big trends.(when i suspect a
big movement i use a trailing stop with a high tp)
This system has so many potentials because it can be used on 5mins,
10mins,15mins,1hour,4hours and daily chat with eur/usd and Gbp/usd.
Hence i need experts like you to look into it and make recomendations,
with refrence to how i can filter the fakeouts.
Sometimes the rsi cross would occur but before the candle formation
finishes the cross would dissapaer.
MY RECOMMENDATIONS:
Because you will see a lot of whipsaw and when the short RSI closes across the long RSI you would have missed a lot of good moves. You need to add default fisher. If you are trading the 60min for example: When fisher is green (BUY) wait for 2 RSI to go below the 12 and the fisher still BUY in 1hr and 4hr then look for BUY entry. I trade one BUY per one set of 1hr green fisher. The chart below shows example of 2 BUYs and 1 SELL.
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Strategy 26
Ready to dedicate your midnight hour to Forex trading? This strategy can be your winner.
Trading strategy setup:
Currency pair: GBP/USD or any other.
Time frame: 1 day.
Indicators: None.
Trading Rules:
This system is based on the fact that most of the time you won't find same size candles for 2 consecutive days on a daily chart. What does this mean for us – only one thing: the price is moving steady either up or down with almost no price "noise" which is always present on smaller time frames.
Entry:
At 00:00 (your local time) or rather: according to the time set on your trading platform, with newly formed daily candle find highest and lowest price of the day for the previous daily bar.
If the price bar (including shadows) is less than 90 pips long we will not open new trades the next day. (This is our requirement for GBP/USD pair, it can be changed/adjusted for other currency pairs)
If the previous day bar turns out to be an Inside bar,
be cautious about entries the following day. While an Inside bar candle implies a good breakout opportunity the following day, it can also be a dual whipsaw breakout - a break in both directions - the most unwanted scenario for our trading system.
If we've chosen to trade the next day, set a Buy Stop order at the top of the previous day candle — the highest price +5 pips, and Sell stop order at the bottom -5 pips.
Put your stop loss order for a Long entry at the lowest price of the previous day -3 pips.
Put your stop for the Short order at the top of the highest price of the previous day +3 pips.
These additional pips for entries and stops can also be adjusted once you learn the behavior of a chosen currency pair over the time.
Exit:
Now, when one of the orders is filled – stay in the trade for the whole day. At midnight with the new daily candle open, adjust your orders and stops according with the previous daily candle following the same routine; keep trading position open until you get +100 pips, then you may close current position to reward yourself. Rewarding is a very powerful tool, use it.
An alternative money management approach would suggest to enter with two trading positions, where the first one will be closed once we are +100 pips in profit, while the second one will be left to run till we get stopped out, thus allowing us to collect everything the market is willing to offer.
Close you current open positions (with either profit or loss) if a daily candle becomes a Doji candle or is almost a Doji. What we mean by "almost" is that for the true Doji you need open price = close price, while "almost Doji" can have some distance between open and close (but no more than 10 pips).
Also close your open trades if you've met a Shooting Star candlestick in an uptrend or a Hammer candlestick in a downtrend.
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Below is an example (no screen shot) to illustrate how we navigate in time:
On May 1st at 00:05am, we opened a daily chart and it was a downtrend.
We set our orders (both Buy and Sell) according to the previous candle (April 30th). The same day our Sell order gets filled. The day has passed and the price made some further progress down. At 00:05am, May 2nd with a new daily candle appearing we change our stop loss for a current Short position according to the high of the previous bar (from May 1st), from that point we can either continue to stay in the trade or lock in profits. Also we reset our Buy order which is now going to be just above the highest high of the May 2nd candle.
This system also gives an opportunity to be constantly in a trade and at the same time it requires very little observation and takes only 5 minutes a day to set all positions and forget about Forex till the next midnight. You will see losing trades with this systemfrom time to time – it is a part of any trading, but the overall result will be very positive.
Let’s look at the screen shot now and examine our trading in greater details:
Next is a detailed candle-by-candle explanation of the trading on the chart above.
We will number candles starting form 1, so number 1 is a circled candle.
1st candle (high – low = over 90 pips) which allows entries the next day. We set entry orders.
2nd candle – the price didn't get above or below the 1st candle, no orders filled. Midnight: the 2nd candle is over 90 pips long, we're going to reset orders according to the 2nd candle’s high and low. The second candle is also an Inside bar, so if we decide to trade, we should keep in mind that our risks at this stage will be higher. 3rd – our buy order is filled. Midnight: day ended negatively, but didn't trigger the stop loss, we keep our position open and adjust stop loss below the low of the 3rd candle and minus additional 3 pips. The 3rd candle is also less that 90 pips long and we wouldn’t trade the next dayexcept that for now we have already one position running.
4th – went in profit and we rewarded ourselves closing position at the end of the day with just over 100 pips (you can actually set your target lower than that, or use 2 entry orders as suggested above).
Choosing a profit target for the day becomes easier when you know a daily range average for a particular currency pair.
For example,
GBP/USD daily range average is 180-200 pips
EUR/USD daily range average is 110-120 pips
USD/JPY daily range average is 80-90 pips
USD/CHF daily range average is 120-130 pips
Taking about a half of it can determine your daily profit targets. Update: from now on to get data about Daily range average over the past month (20 days, excluding Saturdays and Sundays, you can use the following custom indicator for MT4: Daily_Range_Calculator.mq4) Attention: with 5 decimal platforms you have to disregard the 5th digit. On 4 decimal platform no adjustments needed.
5th – no previous candle boundaries. Midnight: candle #5 is less than 90 pips + it is an Inside bar, thus we are not setting any orders for the next day.
6th – we didn’t trade it and for a good reason– price managed to get below and above the previous candle’s high and low, which would have hit our stops, in worst case - twice. By the end of the day we reevaluate the charts and it is a good time to set trading as the price didn’t exceed new trades.
7th - entered Long, our stop loss was below the low of candle #6, this trade is a reward again – more than 150 pips, so we lock it in. At midnight we set new orders again.
We will have systems that will be able to easily allow tradesrunning their positions further relatively safe, but for this one it is important to lock your profits at least partially – the reason is that we move our stop order every day.
8th – no trading opportunities. Midnight: candle #8 is less than 90 pips + an Inside bar (IB) again, means we are not going to trade the next day.
9th - no trading and we were very right about it. Midnight: #9 candle is long enough for us to set targets for the next day. 10th – no orders triggered. Midnight: #10 candle is long enough, but is again an Inside bar, it is risky to trade, looking at previous days traders are now obviously indecisive about the trend. Decide per your own risk appetite. 11th – no trading, but if we did, the day would have ended with a small profit.
12th – no orders triggered. An IB again.
13th – no trading. At midnight set new pending orders.
14th - Bought, but closed negative for the day, although the candle was bullish. We stay in a trade.
15th – we are almost at break even, but nothing to earn, we stay in a trade, stop loss below the latest daily candle.
16th – we got stopped out (not a problem, you shouldn't be worried about such negative days), a short position is filled soon after on the same day. One day later it'll become profitable and so on...
