Amazing Forex Strategy allways attcah timeframes of the data in
the chart, i.e, hourly,daily,weekly,monthly,etc as the basic princiles
of technical analysis. And now when you are about to trade which
one do you use to determine trend ? Winning opportunities exist
in any time frame but we must customize settings of technical
analysis for each time period.
On weekly chart, the scale interval on the time axis is one week.
On the monthly chart, corresponingly every bar shows price action
for one complete month.
It is obvious that in order to cover a longer period of time and to be
able to analyze long-term trends, we have to compress the price
behavior.
Weekly chart, for example, can determine a period of five years and
more, the monthly chart can determine twenty years or more. This is
how we can manage to see far ahead of her-/himself and that is how
she/he can assess the market in terms of the long-term opportunities,
which are really valuable while using or applying technical analysis.
Studying price chart very important for deep analysis and It is wise
to start by analyzing long-term charts and then move slowly to
short-term charts. There is less "noise" on the long periods, that is
why graphic models, basic trend lines
and different levels of support or resistance are seen more clearly.
If we start studying short-term market, later on, as the volume of
analyzed data expands, we will have to reconsider the conclusions
several times at least. In the long run, short-term results may even
change completely after long-term charts have been studied.
If we want to analyze longer periods first, we can establish where
the market is in terms of a long-term perspective. After that,
we could then turn to chart studies which cover shorter periods
of time. That is how profesional traders go from "macro" to "micro"
analysis. At the final stage of the analysis, we determine the point
of "entry into the market", i.e., the point of opening a position.
The shorter the last analysis stage is, the more precisely one can
determine this entrance point.
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes.
Thursday, May 17, 2007
Strategy + Discipline = More Pips
This Strategy try to teach you that you don’t have to take a pill in order to be a great trader. You just need to focus on some simple tools.
What Is a PIP ?
You know what a pip is already. For purposes of this article,
we’re drawing it as a yellow cube. Do you know that most forex traders spend their careers chasing after pips.
Have you ever watched the market and wondered why the harder you tried, the more quickly the pips distanced themselves from you? I remember when I first started trading that the market would move away from me and I would begin to think: it’s moving.
Why is it moving away from me? Couldn’t it just as easily move in my direction? For a while, I made money on gut decisions. I’d make some progress, a few pips or more a day, but never really understand the signals. For instance, I’d make a profit just barely, and watch in horror /relief as the market swung the opposite way right after I exited the trade. Or I’d enter a trade, lose a bunch of pips, and then exit the position at a loss – only to watch the market swing back in my favor.
Only, of course, the position was closed and all I could do was sit there and watch.
Until you’re no longer impressed with pips – no longer frightened by them, nor infatuated by them, not in love with them, no longer simply hating them – they won’t give you the time of day. The acquisition of pips is your only goal in the currency market.
But pips are fickle and if you pursue them full of emotion, you’re going to get burned. You must be able to calmly make a plan, stick to it. But I could do none of those things.
My emotions took hold of me and turned me into an idiot.
It’s the same for pips. We all want them. We all want as many of them as we can get. But some of us are willing to risk everything for just a few of them. We’ll chase after them like a 12-year old boy. And you know what? They don’t give a damn about you and me.
This strategy will present a plan for learning about pips, where they’re going, what they’re about to do, and then arm you with a strategy that once implemented, can take a lot of the emotion out of trading.
Your goal will be to:
1. Enter positions as soon as a particular signal is given.
2. Exit the position as soon as a particular signal is given.
The payoff will be:
1. The emotion should be gone from the trading. You will enter and exit trades with discipline and focus.
2. You’ll get about 20 pips on the good trades. There will be many more good trades than bad ones.
Attitude is 99% of Trading
Developing the right attitude about your trading is most of the work. Once you get your attitude (your discipline) under control, you’re going to have more pips than you know what to do with.
So much has been written about this that you’d think that you’ve already heard enough about it. I’ve written about it elsewhere, too1, but I’ve got to stress that no technique or strategy is worth more than the discipline you have to implement it.
The 5/13/62 strategy requires discipline. This is the most powerful personal characteristic you can acquire. Period. It will earn you more money and success than any other attitude or personality trait. If you’re low on discipline, please take the time to consider what I’m saying:
In trading, discipline simply means two things:
1. Enter a position as soon as a particular signal is given.
2. Exit the position as soon as a particular signal is given.
If you do not acquire discipline, this system will not work for you. No trading system will work for you. But this isn’t a book about discipline. In fact, this book assumes that you have discipline, or you’re willing to acquire in order to implement a profitable trading system.
So, for the purpose of this discussion, and for the testing of this strategy, please be disciplined – even as you practice.
EMAs are the core of the 5/13/62 Strategy
Exponential Moving Averages (described in more detail below) are at the core of tis strategy. From the beginning you should understand that I didn’t invent the 5/13/62 strategy. At least I don’t think I did.
There are some extras that I add in, but essentially, all of this information is available elsewhere. That said, I believe that most of the people that write about forex have a way of putting you and I to sleep.
So maybe this is the first time you’ve heard about it, but in any event, I’ll try to keep it interesting.
If the chart above doesn’t make any sense to you, even with the legend, then here’s a brief explanation:
1. When the 5 crosses below the 13, and both of them cross below the 62, it’s possibly a good sell signal.
2. Inversely, we can assume that the opposite is true: when the 5 crosses above the 13, and both cross above the 62, it’s a buy signal.
What is EMA ?
Moving averages are the average value of the price of a currency pair, over a certain period of time. A 5-day moving average for the EUR/USD would be the average price of the EUR/USD over a 5 day period.
You can base the average on the closing, opening, or other price. Each time the MA is calculated, the earliest period is dropped and the latest period is added. In this way, the average price fluctuates according to the fixed time period.
The exponential moving average (EMA) puts the emphasis on the most recent prices, and less emphasis on the older prices. Sometimes you won’t see much difference between the EMA and the Simple Moving Average, which does not weigh any price
more than another.
Do I just look for the
crosses?
I have backtested (and so have many, many others) simply buying when the signals cross above and selling when the signals cross below.
There are even companies that build trading robots that will
automatically buy and sell when these signals are given. But, as much as I’d like to say differently, it’s not that easy.
There are all types of false signals (crosses that happen but that don’t turn profitable).
Here are some other principles of this strategy, divided in three sections: entering the trade, staying in the trade, exiting the trade. The principles of each section will help you maximize your gains and minimize your losses.
But first, a quick look at the tools you’ll need.
Charting
You can use the free charting software that comes with your
account – but I’ve not been impressed with anyone’s offerings. Some dealers don’t allow you to show more than 2 EMAs on a single screen.
Some do, but the process of charting them is difficult or unreliable.
The 30 minute chart
I have used the 15 minute, 30 minute, 1hr, 4hr, daily … even the weekly chart. You can really use anything longer than 15 minutes. I recommend starting with the 15 minute or the 30 minute, so you will see more opportunities in a shorter period of time.
The 5 and the 13 alone
Chart the 5, the 13, and the 62 period Exponential Moving Averages.
Part I: Making the Trade
Below you’ll find the principles behind making good trades. And avoiding the bad ones. These are guidelines. Good trades based on these guidelines are the result of applying them enough times that you begin to get a feel for the market.
I want to emphasize that you can change these rules. You can manipulate them. You will be most successful when you make this “your own,” by adjusting so that you feel most comfortable.
Holidays and other bad days
Try not to trade on holidays, especially U.S. holidays. It’s best to stay out of the market on those days and catch up on time with your family, see a movie, adjust the metal rod that was placed in your back, insert a metal rod in your back, or fire up the barbie-q and roast some weenies. Or you can back test your strategies. It’s also best to never,
ever, ever, enter a trade past 14:00 GMT on a Friday.
On holidays and late on Fridays, the market is unpredictable and might not move enough to give you any profit. Or it might move 50 points in one direction just for the heck of it, and then move back. Of course it might move a zillion pips, but that’s the exception rather than the rule. Then you’re stuck in what might become a losing position, but meanwhile, you’re losing money to premiums/interest paid to your
broker. This is a good time to shove a metal rod into your spine.
Please take my advice and just stay out of the market, with this system, at these times. You may lose some opportunities, but you will lose (also) the chance of getting trapped in a motionless or unpredictable market.
Other systems, long term systems in particular, can work okay late on Fridays and on holidays. But that is the subject of another ebook. One, incidentally, that I have not written yet.
Trading on the 5 and the 13
You should be prepared to buy anytime the 5 crosses above the 13. You should also be prepared to sell anytime the 5 crosses below the 13.
You should be prepared to do this even if they do not simultaneously cross the 62.
This does not mean that you take the trade immediately. It means that you are aware that a trade might be coming.
Is the 13 crossing the 62?
The next part of the system is to watch for the 13 to cross the 62.Whether above or below (long or short positions), you’re in good territory. At these times, it might be a very, very good opportunity.
I want you to also focus on the fact that the pair, after this crossover occurs at the pink circle, return to hit the 62 EMA again – and this is an excellent time to sell the pair all over again. This means that if you miss the original trade, it’s totally acceptable to enter the trade when the pair
rises up and hits the 62.
This works for long and short trades – the 62 EMA will act as a dynamic level of support and resistance.
Stops and limits
Last of all, do the following:
1. Set a stop-loss at 20 pips beyond the 62 EMA.
2. Trail the trade by 20 pips (using a trailing stop loss), or:
3. Set a profit target at a recent high or low (something that creates a double top or double bottom).
During the Trade
Lots can happen during the trade. Here are some things to consider and remember during the trade.
Set it and forget it?
believe that anyone that tells you to “Set it and forget it” is appealing to your desire for quick, easy profits without any work.
Right now, I would like to appeal to your desire for quick and easy profits without any work. I will do this by telling you that if
you choose a recent high/low as your profit target, or a trailing stop, then you can walk away.
Initial volatility
At the beginning of the trade, you might see some initial volatility.
This means that after the candle closes, you might see the next candle go opposite from where you want it to be. Don’t get overly concerned about this. You need at least 20 pips of free room to let the trade gather momentum.
And remember what I said (not about the rock band): the pair might rise up or fall down and hit the 62 EMA. This is just another opportunity to get in the trade if you did not already (or add to your position).
Part III: Exiting the Trade
We already covered this, because you set the limit at a recent high or low, or you set a 20 pip trailing stop.
Let the system exit the trade for you, based on your stops and limits.
Most forex dealers will guarantee stops and limits, so you’ve got little to worry about.
That’s it!
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes.
What Is a PIP ?
You know what a pip is already. For purposes of this article,
we’re drawing it as a yellow cube. Do you know that most forex traders spend their careers chasing after pips.
Have you ever watched the market and wondered why the harder you tried, the more quickly the pips distanced themselves from you? I remember when I first started trading that the market would move away from me and I would begin to think: it’s moving.
Why is it moving away from me? Couldn’t it just as easily move in my direction? For a while, I made money on gut decisions. I’d make some progress, a few pips or more a day, but never really understand the signals. For instance, I’d make a profit just barely, and watch in horror /relief as the market swung the opposite way right after I exited the trade. Or I’d enter a trade, lose a bunch of pips, and then exit the position at a loss – only to watch the market swing back in my favor.
Only, of course, the position was closed and all I could do was sit there and watch.
Until you’re no longer impressed with pips – no longer frightened by them, nor infatuated by them, not in love with them, no longer simply hating them – they won’t give you the time of day. The acquisition of pips is your only goal in the currency market.
But pips are fickle and if you pursue them full of emotion, you’re going to get burned. You must be able to calmly make a plan, stick to it. But I could do none of those things.
My emotions took hold of me and turned me into an idiot.
It’s the same for pips. We all want them. We all want as many of them as we can get. But some of us are willing to risk everything for just a few of them. We’ll chase after them like a 12-year old boy. And you know what? They don’t give a damn about you and me.
This strategy will present a plan for learning about pips, where they’re going, what they’re about to do, and then arm you with a strategy that once implemented, can take a lot of the emotion out of trading.
Your goal will be to:
1. Enter positions as soon as a particular signal is given.
2. Exit the position as soon as a particular signal is given.
The payoff will be:
1. The emotion should be gone from the trading. You will enter and exit trades with discipline and focus.
2. You’ll get about 20 pips on the good trades. There will be many more good trades than bad ones.
Attitude is 99% of Trading
Developing the right attitude about your trading is most of the work. Once you get your attitude (your discipline) under control, you’re going to have more pips than you know what to do with.
So much has been written about this that you’d think that you’ve already heard enough about it. I’ve written about it elsewhere, too1, but I’ve got to stress that no technique or strategy is worth more than the discipline you have to implement it.
The 5/13/62 strategy requires discipline. This is the most powerful personal characteristic you can acquire. Period. It will earn you more money and success than any other attitude or personality trait. If you’re low on discipline, please take the time to consider what I’m saying:
In trading, discipline simply means two things:
1. Enter a position as soon as a particular signal is given.
2. Exit the position as soon as a particular signal is given.
If you do not acquire discipline, this system will not work for you. No trading system will work for you. But this isn’t a book about discipline. In fact, this book assumes that you have discipline, or you’re willing to acquire in order to implement a profitable trading system.
So, for the purpose of this discussion, and for the testing of this strategy, please be disciplined – even as you practice.
EMAs are the core of the 5/13/62 Strategy
Exponential Moving Averages (described in more detail below) are at the core of tis strategy. From the beginning you should understand that I didn’t invent the 5/13/62 strategy. At least I don’t think I did.
There are some extras that I add in, but essentially, all of this information is available elsewhere. That said, I believe that most of the people that write about forex have a way of putting you and I to sleep.
So maybe this is the first time you’ve heard about it, but in any event, I’ll try to keep it interesting.
If the chart above doesn’t make any sense to you, even with the legend, then here’s a brief explanation:
1. When the 5 crosses below the 13, and both of them cross below the 62, it’s possibly a good sell signal.
2. Inversely, we can assume that the opposite is true: when the 5 crosses above the 13, and both cross above the 62, it’s a buy signal.
What is EMA ?
Moving averages are the average value of the price of a currency pair, over a certain period of time. A 5-day moving average for the EUR/USD would be the average price of the EUR/USD over a 5 day period.
You can base the average on the closing, opening, or other price. Each time the MA is calculated, the earliest period is dropped and the latest period is added. In this way, the average price fluctuates according to the fixed time period.
The exponential moving average (EMA) puts the emphasis on the most recent prices, and less emphasis on the older prices. Sometimes you won’t see much difference between the EMA and the Simple Moving Average, which does not weigh any price
more than another.
Do I just look for the
crosses?
I have backtested (and so have many, many others) simply buying when the signals cross above and selling when the signals cross below.
There are even companies that build trading robots that will
automatically buy and sell when these signals are given. But, as much as I’d like to say differently, it’s not that easy.
There are all types of false signals (crosses that happen but that don’t turn profitable).
Here are some other principles of this strategy, divided in three sections: entering the trade, staying in the trade, exiting the trade. The principles of each section will help you maximize your gains and minimize your losses.
But first, a quick look at the tools you’ll need.
Charting
You can use the free charting software that comes with your
account – but I’ve not been impressed with anyone’s offerings. Some dealers don’t allow you to show more than 2 EMAs on a single screen.
Some do, but the process of charting them is difficult or unreliable.
The 30 minute chart
I have used the 15 minute, 30 minute, 1hr, 4hr, daily … even the weekly chart. You can really use anything longer than 15 minutes. I recommend starting with the 15 minute or the 30 minute, so you will see more opportunities in a shorter period of time.
The 5 and the 13 alone
Chart the 5, the 13, and the 62 period Exponential Moving Averages.
Part I: Making the Trade
Below you’ll find the principles behind making good trades. And avoiding the bad ones. These are guidelines. Good trades based on these guidelines are the result of applying them enough times that you begin to get a feel for the market.
I want to emphasize that you can change these rules. You can manipulate them. You will be most successful when you make this “your own,” by adjusting so that you feel most comfortable.
Holidays and other bad days
Try not to trade on holidays, especially U.S. holidays. It’s best to stay out of the market on those days and catch up on time with your family, see a movie, adjust the metal rod that was placed in your back, insert a metal rod in your back, or fire up the barbie-q and roast some weenies. Or you can back test your strategies. It’s also best to never,
ever, ever, enter a trade past 14:00 GMT on a Friday.
On holidays and late on Fridays, the market is unpredictable and might not move enough to give you any profit. Or it might move 50 points in one direction just for the heck of it, and then move back. Of course it might move a zillion pips, but that’s the exception rather than the rule. Then you’re stuck in what might become a losing position, but meanwhile, you’re losing money to premiums/interest paid to your
broker. This is a good time to shove a metal rod into your spine.
Please take my advice and just stay out of the market, with this system, at these times. You may lose some opportunities, but you will lose (also) the chance of getting trapped in a motionless or unpredictable market.
Other systems, long term systems in particular, can work okay late on Fridays and on holidays. But that is the subject of another ebook. One, incidentally, that I have not written yet.
Trading on the 5 and the 13
You should be prepared to buy anytime the 5 crosses above the 13. You should also be prepared to sell anytime the 5 crosses below the 13.
You should be prepared to do this even if they do not simultaneously cross the 62.
This does not mean that you take the trade immediately. It means that you are aware that a trade might be coming.
Is the 13 crossing the 62?
The next part of the system is to watch for the 13 to cross the 62.Whether above or below (long or short positions), you’re in good territory. At these times, it might be a very, very good opportunity.
I want you to also focus on the fact that the pair, after this crossover occurs at the pink circle, return to hit the 62 EMA again – and this is an excellent time to sell the pair all over again. This means that if you miss the original trade, it’s totally acceptable to enter the trade when the pair
rises up and hits the 62.
This works for long and short trades – the 62 EMA will act as a dynamic level of support and resistance.
Stops and limits
Last of all, do the following:
1. Set a stop-loss at 20 pips beyond the 62 EMA.
2. Trail the trade by 20 pips (using a trailing stop loss), or:
3. Set a profit target at a recent high or low (something that creates a double top or double bottom).
During the Trade
Lots can happen during the trade. Here are some things to consider and remember during the trade.
Set it and forget it?
believe that anyone that tells you to “Set it and forget it” is appealing to your desire for quick, easy profits without any work.
Right now, I would like to appeal to your desire for quick and easy profits without any work. I will do this by telling you that if
you choose a recent high/low as your profit target, or a trailing stop, then you can walk away.
Initial volatility
At the beginning of the trade, you might see some initial volatility.
This means that after the candle closes, you might see the next candle go opposite from where you want it to be. Don’t get overly concerned about this. You need at least 20 pips of free room to let the trade gather momentum.
And remember what I said (not about the rock band): the pair might rise up or fall down and hit the 62 EMA. This is just another opportunity to get in the trade if you did not already (or add to your position).
Part III: Exiting the Trade
We already covered this, because you set the limit at a recent high or low, or you set a 20 pip trailing stop.
Let the system exit the trade for you, based on your stops and limits.
Most forex dealers will guarantee stops and limits, so you’ve got little to worry about.
That’s it!
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes.
Guess the price movement ?
If you are an active trading you must have "lovely pairs" where
you know their charecteristics and movement. And that's why a
professional traders suggested to trade one or two pairs for new
traders. We need to know deeply aboy the pairs so that we feel
familiar with them.
I brought up this item because I have one lovely pair - Brit/USD.
On a certain time I don't need to use any technical strategy
in order to trade Brit/US. Normally I will make big pips when I
found that condition but the trading might be taking 3 days until
10 days. Therefore, I will make more than 200 pips.
What is the condition to focus ?
It's very simple; Whenever Bri/USD in at the extreem highest or
lowest I would go LONG or SHORT. Three days ago when
Bri/USD at 2.0125, It's already at extreem area ( you can see
the daily chart).Then I took SHORT position, with Stop Loss =
100 pips.
Now on April 21.2007 Brit/USD is at 2.0021 and next few days
It might be going down and down . Now I've profited 100 pips right ?
What you have to remember is that Stop Loss must be higher to
anticipate the price. Just like three days ago I saw that the price
was at 2.0125 and if the price went up again up to 50 pips higher,
we were still save because the Stop Loss is 100 pips.
Don't panic if you put higher Stop Loss, you can reduce your lot
size when you trade on this lucky condition, so that you will not
lose much money if the price go against your direction.
I always trade on this condition. Do you still remember last Month
when Bri/USD was at 1.9200 level ? Can you imagine your winning
percentage if you trade at the time ? You must have got a big fish !!.
I hope you can get what I am trying to explain here. I never studied
Forex at the university and I never know how to create a program or
excellent strategy but I can find a lot of free amazing strategies out
there and I can profit from them.
You don't have to know a lot of theory.....you re not going to be a
lecturer or teacher but just to make
pips and pips and pips..that's all. Never try to search for holy grail..
but you can adjust any strategy to be your holy grail.
Happy trading,
Krisman
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes.
you know their charecteristics and movement. And that's why a
professional traders suggested to trade one or two pairs for new
traders. We need to know deeply aboy the pairs so that we feel
familiar with them.
I brought up this item because I have one lovely pair - Brit/USD.
On a certain time I don't need to use any technical strategy
in order to trade Brit/US. Normally I will make big pips when I
found that condition but the trading might be taking 3 days until
10 days. Therefore, I will make more than 200 pips.
What is the condition to focus ?
It's very simple; Whenever Bri/USD in at the extreem highest or
lowest I would go LONG or SHORT. Three days ago when
Bri/USD at 2.0125, It's already at extreem area ( you can see
the daily chart).Then I took SHORT position, with Stop Loss =
100 pips.
Now on April 21.2007 Brit/USD is at 2.0021 and next few days
It might be going down and down . Now I've profited 100 pips right ?
What you have to remember is that Stop Loss must be higher to
anticipate the price. Just like three days ago I saw that the price
was at 2.0125 and if the price went up again up to 50 pips higher,
we were still save because the Stop Loss is 100 pips.
Don't panic if you put higher Stop Loss, you can reduce your lot
size when you trade on this lucky condition, so that you will not
lose much money if the price go against your direction.
I always trade on this condition. Do you still remember last Month
when Bri/USD was at 1.9200 level ? Can you imagine your winning
percentage if you trade at the time ? You must have got a big fish !!.
I hope you can get what I am trying to explain here. I never studied
Forex at the university and I never know how to create a program or
excellent strategy but I can find a lot of free amazing strategies out
there and I can profit from them.
You don't have to know a lot of theory.....you re not going to be a
lecturer or teacher but just to make
pips and pips and pips..that's all. Never try to search for holy grail..
but you can adjust any strategy to be your holy grail.
Happy trading,
Krisman
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes.
Do you make Profit ?
So far did you make profit in your trading, I hope
you did If you haven’t make any profit during your
trading I can conclude that you hadn’t found the one
that suits you.
As I always say that there is no “holy grail” for all
traders But one simple strategy can be a real holy grail
for somebody. The difficult thing is only to choose
which one suits you among thousands of system / strategy.
Therefor, I still want to give you a time to choose
and practice some of them. In this short writing I give
you also A very simple strategy that I assume you can
make profit.
Let’s practice :
10 Minute Chart Day Trading Method
Please note: If you wish to trade this method on 5 minute
charts, you will need to double all of the indicators.
The (5 period WMA would be charted as 10, the RSI would
be set at 28 etc...)
Description: An intraday trend following trading method,
using the following indicators:
• 5 period WMA
• 10 period SMA
• Slow Stochastic (5,3,3)
• RSI (14)
• MACD (default)
Rules: Add the above indicators to your 10 minute chart.
Only take trades between 8AM-12PM EST and/or 2AM-4AM EST.
BUY the exchange rate when the 5 WMA crosses up past
the 10 SMA and the Stochastic is signalling up, RSI > 50
and the MACD histogram >0 and MACD averages crossed up.
SELL the exchange rate when the 5 WMA crosses down past
the 10 SMA and the Stochastic is signalling down, RSI<50
and the MACD histogram <0 and MACD averages crossed down.
Stop-Loss Level: 20 pips
Happy trading
you did If you haven’t make any profit during your
trading I can conclude that you hadn’t found the one
that suits you.
As I always say that there is no “holy grail” for all
traders But one simple strategy can be a real holy grail
for somebody. The difficult thing is only to choose
which one suits you among thousands of system / strategy.
Therefor, I still want to give you a time to choose
and practice some of them. In this short writing I give
you also A very simple strategy that I assume you can
make profit.
Let’s practice :
10 Minute Chart Day Trading Method
Please note: If you wish to trade this method on 5 minute
charts, you will need to double all of the indicators.
The (5 period WMA would be charted as 10, the RSI would
be set at 28 etc...)
Description: An intraday trend following trading method,
using the following indicators:
• 5 period WMA
• 10 period SMA
• Slow Stochastic (5,3,3)
• RSI (14)
• MACD (default)
Rules: Add the above indicators to your 10 minute chart.
Only take trades between 8AM-12PM EST and/or 2AM-4AM EST.
BUY the exchange rate when the 5 WMA crosses up past
the 10 SMA and the Stochastic is signalling up, RSI > 50
and the MACD histogram >0 and MACD averages crossed up.
SELL the exchange rate when the 5 WMA crosses down past
the 10 SMA and the Stochastic is signalling down, RSI<50
and the MACD histogram <0 and MACD averages crossed down.
Stop-Loss Level: 20 pips
Happy trading
Debt Management
www.trapped.co.uk |
Forex Strategy - F
Point : 69
Beware of holiday situations like the long July 4th weekend. Trading tends to be thin, and it is difficult to produce meaningful pivot points. Best to just go golfing, and forget about it. There's nothing that says you have to trade every day. Get a life.
Point : 70
If you are having trouble with your entry points, I suggest you try waiting until you see a hammer or a spinning top, and then pull the trigger. You may wait a long time, but at least you will be sure of getting a good entry point, as these particular candles are powerful precursors to a shift in price direction. Have a look at any chart and see how many of these candlesticks you can pick out. You might be surprised at how many there are. For more information on these bar formations, please read my August, 2003 edition of my newsletter: www.tradingsmarts.com/newsletter0803.htm Obviously, if you click on that link after August 1, 2003 the newsletter will be there. Before then, it won't.
Point : 71
I just returned from a meeting with a group of young traders who have been at the forex for the past two and a half months. They are making steady progress, and I am extremely proud of them. I thought I would pass along their observations that may prove helpful to your own trading. They have backed off short-term trading, and are more into position trading the forex – using a longer timeframe – taking cues from the 1 hour chart. They also believe that signals that occur on that chart are more powerful than those on the 15 min. For example, a signal on the 1 hour would have more weight than an indication on the 15 min.
Basically, what they are saying is that you should wait on a trade for confirmation on the 1 hour chart before pulling the trigger, unless of course you see an ironclad setup on the 15 min chart. Trading is shades of gray ladies and gentlemen. These ideas are working for them. That doesn't mean to say you can't experiment on your own. If you do and find something that works for you, please let me know, and I'll share it with the rest of the gang.
Point : 72:
Clarification re Aug. 22/03 chart, thanks to Bill: Bill quite rightly pointed out in the chart for August 22/03 that there were hammers at 3:01 and between 5:01 and 6:01 that didn't take. My answer to him was that such a candle should be complemented by some other indication of a shift in price direction. For example, in the cases he cited above, price did not break the down trendlines - so, in effect, the hammers' supposed effect was nullified. To conclude, bar formations that should signal a change in price direction should be accompanied by other signals, including pivot points. In other words, what happens to price around a pivot point when you see a hammer? Does the pivot point support what the candle is saying? Thanks Bill for this.
Point : 73
I was recently asked where one could find volume figures for a currency. None of the popular sites carry it. Nor is it necessary as the Forex is a very liquid market. Volume is somewhat redundant anyway in that regard. You just need to use technical analysis to trade the Forex.
Point : 74
Pay attention to that news. I had been calling for an advance in the euro and Swiss franc and, sure enough, they both popped on bad unemployment news in the U.S. September 5, 2003. News is not noise in the Forex.
Point : 75
There are “talking” bulls and bears and there are “real” bulls and bears. The real ones are reflected in volume and open interest. But, these numbers are not available for inter-bank currency trading. However, they are reported for futures markets, which represent a good proxy for sentiment because they are primarily a vehicle for speculation.
Turning points in currency markets often coincide with extremes in open interest levels, which represent extremes in speculation. The key here is to watch for extreme levels and extreme changes in both open interest and volume to signal a possible change in trend.
Open interest numbers are of little use intraday. However, knowledge of a change in trend or extreme speculation in a particular currency based on open interest and volume can be valuable information for any trader in any time frame. That’s where an understanding of how COT works can improve your chances of detecting the underlying bias to a particular FX currency based on its futures counterpart, and anticipating its next move.
As at September 2/03, the commercial traders were extremely long with their net futures positions on the euro FX and the Swiss franc FX, versus the funds, which were extremely short. When you see such extreme divergence between these two camps, you know that price will probably follow the commercial traders’ lead.
The euro FX and Swiss franc FX represented good position trades to the long side at that time. A good buy-and-hold situation for position traders. Sure enough on September 5/03 we had bad unemployment numbers coming out of the U.S., and both currencies popped. Who could have guessed?
Point : 76
I think there is a misconception out there that you have to trade only the 15 min chart. You can also trade off the 1 hr and daily charts. It just lengthens the cycle. For example, when I called the euro and Swiss franc to rise, you could have taken a position on the daily chart and rode it up. That's all I'm saying. Likewise, you can wait to take a position until you see a valid entry point on the 1 hr chart. Etc.
Point : 77
For newbie traders, it is probably best to steer clear of Mondays, the day after a holiday weekend and end-of-quarters where there is a lot of position squaring going on.
Of course, there’s more to be learned about currency trading strategy in my original book on trading and the two e-books on trading the forex – available only at currency trading strategy You automatically get all three when you order at that link. If you are reading this page, you probably already have these books, and are reaping the benefits.
Happy trading
Beware of holiday situations like the long July 4th weekend. Trading tends to be thin, and it is difficult to produce meaningful pivot points. Best to just go golfing, and forget about it. There's nothing that says you have to trade every day. Get a life.
Point : 70
If you are having trouble with your entry points, I suggest you try waiting until you see a hammer or a spinning top, and then pull the trigger. You may wait a long time, but at least you will be sure of getting a good entry point, as these particular candles are powerful precursors to a shift in price direction. Have a look at any chart and see how many of these candlesticks you can pick out. You might be surprised at how many there are. For more information on these bar formations, please read my August, 2003 edition of my newsletter: www.tradingsmarts.com/newsletter0803.htm Obviously, if you click on that link after August 1, 2003 the newsletter will be there. Before then, it won't.
Point : 71
I just returned from a meeting with a group of young traders who have been at the forex for the past two and a half months. They are making steady progress, and I am extremely proud of them. I thought I would pass along their observations that may prove helpful to your own trading. They have backed off short-term trading, and are more into position trading the forex – using a longer timeframe – taking cues from the 1 hour chart. They also believe that signals that occur on that chart are more powerful than those on the 15 min. For example, a signal on the 1 hour would have more weight than an indication on the 15 min.
Basically, what they are saying is that you should wait on a trade for confirmation on the 1 hour chart before pulling the trigger, unless of course you see an ironclad setup on the 15 min chart. Trading is shades of gray ladies and gentlemen. These ideas are working for them. That doesn't mean to say you can't experiment on your own. If you do and find something that works for you, please let me know, and I'll share it with the rest of the gang.
Point : 72:
Clarification re Aug. 22/03 chart, thanks to Bill: Bill quite rightly pointed out in the chart for August 22/03 that there were hammers at 3:01 and between 5:01 and 6:01 that didn't take. My answer to him was that such a candle should be complemented by some other indication of a shift in price direction. For example, in the cases he cited above, price did not break the down trendlines - so, in effect, the hammers' supposed effect was nullified. To conclude, bar formations that should signal a change in price direction should be accompanied by other signals, including pivot points. In other words, what happens to price around a pivot point when you see a hammer? Does the pivot point support what the candle is saying? Thanks Bill for this.
Point : 73
I was recently asked where one could find volume figures for a currency. None of the popular sites carry it. Nor is it necessary as the Forex is a very liquid market. Volume is somewhat redundant anyway in that regard. You just need to use technical analysis to trade the Forex.
Point : 74
Pay attention to that news. I had been calling for an advance in the euro and Swiss franc and, sure enough, they both popped on bad unemployment news in the U.S. September 5, 2003. News is not noise in the Forex.
Point : 75
There are “talking” bulls and bears and there are “real” bulls and bears. The real ones are reflected in volume and open interest. But, these numbers are not available for inter-bank currency trading. However, they are reported for futures markets, which represent a good proxy for sentiment because they are primarily a vehicle for speculation.
Turning points in currency markets often coincide with extremes in open interest levels, which represent extremes in speculation. The key here is to watch for extreme levels and extreme changes in both open interest and volume to signal a possible change in trend.
Open interest numbers are of little use intraday. However, knowledge of a change in trend or extreme speculation in a particular currency based on open interest and volume can be valuable information for any trader in any time frame. That’s where an understanding of how COT works can improve your chances of detecting the underlying bias to a particular FX currency based on its futures counterpart, and anticipating its next move.
As at September 2/03, the commercial traders were extremely long with their net futures positions on the euro FX and the Swiss franc FX, versus the funds, which were extremely short. When you see such extreme divergence between these two camps, you know that price will probably follow the commercial traders’ lead.
The euro FX and Swiss franc FX represented good position trades to the long side at that time. A good buy-and-hold situation for position traders. Sure enough on September 5/03 we had bad unemployment numbers coming out of the U.S., and both currencies popped. Who could have guessed?
Point : 76
I think there is a misconception out there that you have to trade only the 15 min chart. You can also trade off the 1 hr and daily charts. It just lengthens the cycle. For example, when I called the euro and Swiss franc to rise, you could have taken a position on the daily chart and rode it up. That's all I'm saying. Likewise, you can wait to take a position until you see a valid entry point on the 1 hr chart. Etc.
Point : 77
For newbie traders, it is probably best to steer clear of Mondays, the day after a holiday weekend and end-of-quarters where there is a lot of position squaring going on.
Of course, there’s more to be learned about currency trading strategy in my original book on trading and the two e-books on trading the forex – available only at currency trading strategy You automatically get all three when you order at that link. If you are reading this page, you probably already have these books, and are reaping the benefits.
Happy trading
Forex Strategy - E
Point : 56
I have people asking me all the time why I don't post my trades in real time, or why they can't call me while I am involved in my own trading activities. The answer is quite simple. This page is dedicated to my belief in the old adage: "Give a man a fish, and feed him for a day - teach him how to fish, and feed him for a lifetime!"
Plus, it would be very stressful and time consuming for me to take time away from my own work (and quiet time) to interact with a discussion forum. I am sure you will understand my position on this. I have customers in over 30 countries, and it would be a nightmare for me to react to each and every nuance that came along. A chat room is in our business plan, but at this writing, I don't have any idea of when that might happen. When it does, I will certainly give you lots of advance warning.
I teach people how to fish. I don't give them the fish. I can remember when I first learned how to trade. I had my mentor sitting right by my side each and every step of the way. Then one day he upped and moved, and changed cities. He actually moved to a remote and secluded island to get away from city life. Nice move for him, but it left me in a state of panic. How could I possibly survive on my own? I can tell you, ladies and gentleman, that I really learned how to trade when I had to do it on my own, and those were real drops of sweat rolling down from my forehead all over my face.
This is about you and the market, and you mastering your innermost psyche. Anybody can learn to trade the forex my way. But, what will get you every time is that little inner voice doubting your every move. And, then there's fear and greed that will bite you real hard too. It's the psychology of your mind that you must master. You must become disciplined and patient to a fault. You must react only to bona fide signals, that I teach here. Otherwise, you would be better off heading out to your local casino, and taking your chances there.
The forex is not about gambling. It is about running a business, where there will be gains and losses. Your every effort and constant struggle should be to get a grip on those times when price goes against you. You are in charge. You can get the upper hand on price by trading "smartly," and using good money management techniques, that I also teach here. You won't win every time. But, with my system, you should come out ahead seven out of 10 times. The trick is to limit your losses to small ones, and let your profits soar.
Getting back to going solo without an instructor at your side during each and every step of the way, I recall a friend of mine telling me how he learned to fly. After several practice flights with his instructor in the cockpit with him, they landed back at the airfield, and the instructor turned to Pal and said, "Now, it's your turn to take it up. I'm getting out. You're on your own buddy." Talk about anxiety and stress.
Well, Pal took off and landed all by his little 'ole lonesome. But, he was pale and his knees were knocking when he got out of the plane back at home base. He has soloed ever since. It's his passion now. There's something about being able to do it yourself, without a partner holding your hand all the time. It's called "confidence boosting." If you can fly or trade by yourself successfully, there probably isn't anything else in life you couldn't do equally as well. Actually, Navy pilots who land on aircraft carriers make the best traders. But, that's another story for another time.
I can tell you my friend learned more about flying in that one solo session than he did all the times his instructor went up with him. Same with trading. You can do it. Just believe it so. Dedicate yourself to becoming a master at it. Analyze, read, study, think. Ask questions. There is no such thing as a stupid question. Become passionate about your trading. Don't think of it as a get-rich-quick scheme. Do it because you love it. Do it as if you would do it anyway, even if you weren't making money. There has to be an element of fun in it for you. If it's all work, and no play, well you know the answer to that one.
Don't get me wrong. I am here to answer your questions whenever you need my help. I am dedicated to your success, and your happy times with your family. Nothing would give me greater pleasure than to get an e-mail from you telling me how this has turned your life around, and that you are now happily making money trading the forex my way.
Point : 57
Don't get hung up on reading bars when you think you have caught the major trend. Once the trend is unfolding, you then look for a place to enter - around a pivot point. You look to reading bars to signal a change in the direction of the major trend.
A double top in a downtrend means nothing. A double bottom does. So, a price rejection bar or double bottom in a major downtrend would signal a short-term reversal, and that's all. But, once you see the major trend unfolding – say, on the short side – you pretend you don't know how to spell the word long. Stick with the overall major trend that is unfolding.
These comments relate specifically to the beginning hours of London trading, which is when the major trend reveals itself.
Point : 58
You need to get to the point where, when you look at a chart without any visual aids, you see indications as to where price is going. This has to become "second nature." At that point, you can trade with ease. And, your stress level will go down, because you will be in control of the market, not the other way around. This only comes with practice, day after day. This takes patience, and staying power. You must hang in there until you get it. Winners never quit; quitters never win.
Point : 59
At first, if you are fearful, don't trade until you see what you consider to be an ironclad set-up that you are familiar with – an easy one. That may mean waiting out a session or two, but that's okay. There's no rush. I find with some people they seem to have to prove something to themselves or someone else. Some people think they have to scalp all day long for some reason that is beyond me. After all, you are in control. Take your time.
Relax. Enjoy it. Sooner or later, you will see a bona fide set-up that you recognize, and bingo you're in. When in doubt, do nothing. When there is no doubt, do something, do anything – pull the trigger.
Point : 60
Unfortunately, you will not always get all the signals you need to pull the trigger. After all, this is as much an art as it is a science. You cannot always be 100% sure that you are doing the right thing. If you wait forever to get all your ducks lined up, you may wait a long time. My favorite analogy goes something like this: Pretend you are sitting in your garage at home wanting to go to work, but you are waiting for all the street lights along the way to turn green before you pull out of the driveway.
Guess what folks? You'll never get to work. Same with trading. Sometimes, you just have to make an educated guess (based on the currency trading strategy recommendations contained at this site) and go with it. You won't always be right, but this isn't about being right. It is about making a decision, sticking with it, and reversing course if you have to. Accept getting stopped out as God's way of kicking you to a higher level. Just one more step to success.
Point : 61
Thanks to Tom for this: There are two choices to be made – LONG or SHORT when a certain point in the session(M1, S1, R2, Pivot ... etc.) is reached. The BASIC rule is BUY (go long) below the pivot in the S1, S2, M1, M3 zone and SELL (go short) above the pivot in the Zone R1, R2, M2, M4. Obviously it isn’t as simple as this and other indicators such as MACD divergence, reading bars, trends, and patterns all add to the question LONG or SHORT. Bang on Tom! Way to go!
Point : 62
I have said previously that you should make your buy/sell decisions around pivot points. However, for example, if price is meandering in between pivot points and then does a double top, that would lead me to believe that price is going down. So, there are times when you would want to make your move before waiting for a pivot point to be hit. Of course, there's nothing wrong with waiting for price to do so and then reacting.
Point : 63
Thanks to Harry for this one: He indicated that I sometimes refer to "price rejection." And, what does that mean. It simply means that a price reversal bar has formed, causing the bar in the middle to have a higher high than the bars on either side of it. The price bar in the middle is essentially a key reversal bar. And, what you have is a "swing change." That is, price is reversing course, and heading south. The same holds true when price is reversing and heading north. You then have the bar in the middle of the three-bar pattern with a lower low than the two on either side, and the one in the middle is the key reversal bar.
Point : 64
Repetition is the key to success in any endeavor in life, including trading the forex. The more you practice trade, the more you trade real money, the better you get. You just have to keep at it - over and over and over again. Persistence is the key. You're bound to get better at something if you do in constantly and don't quit. Don't let the market psyche you out. When you have a down day, just treat it as experience. Lessons learned. But, try to learn from your mistakes. Keep those journals going. If it's not written, it doesn't exist.
Point : 65
I get the impression that some of you are not paying enough attention to trendlines. They are very powerful. Price WILL change direction when it breaks the trend, regardless of what other indicators may be telling you. So, draw them, and let them be your guide. REMINDER: In an uptrend, as we saw June 25/03, as long as the trendline holds, buy the dips. In a downtrend, sell the rallies. In an uptrend, don't look to go short EVER! In a downtrend, don't look to go long EVER! Plain and simple.
Point : 66
Thanks to Stu G. for this one. I have been harping on using MACD only for divergence. But, Stu is right. I do on occasion, as I did June 26th/03, use MACD to confirm the trend. If the price trend has been consistently down over a period of time, then it could very well be that when price tries to go counter-trend, it may just be a retracement or a temporary move in the opposite direction. I usually like to stick with the major trend. In a downtrend, sell the rallies; in an uptrend, buy the dips.
Point : 67
I was asked by some of my readership what happened Friday, June 27, with all the wide-range bars on the 15-min chart. That was a tough day to trade, even for seasoned professionals. Lots of whip-sawing. Lots of stops got taken out. Trading patterns were dominated by end-of-quarter positioning. A good day to stand clear. So, be prepared for the next end-of-quarter, and the one after that, and the one after that, etc. Mark those dates on your calendar. Trading is as much about being organized and prepared, as it is about being good at it.
Point : 68
Marathon runners have only one thing on their mind when they are running – to cross the finish line. They NEVER look back. Same too with trading. You should focus on surviving for the long haul. Sure, you will stumble and fall. But, just pick yourself up, just yourself off, and carry on. Winners never quit, and quitters never win.
I have people asking me all the time why I don't post my trades in real time, or why they can't call me while I am involved in my own trading activities. The answer is quite simple. This page is dedicated to my belief in the old adage: "Give a man a fish, and feed him for a day - teach him how to fish, and feed him for a lifetime!"
Plus, it would be very stressful and time consuming for me to take time away from my own work (and quiet time) to interact with a discussion forum. I am sure you will understand my position on this. I have customers in over 30 countries, and it would be a nightmare for me to react to each and every nuance that came along. A chat room is in our business plan, but at this writing, I don't have any idea of when that might happen. When it does, I will certainly give you lots of advance warning.
I teach people how to fish. I don't give them the fish. I can remember when I first learned how to trade. I had my mentor sitting right by my side each and every step of the way. Then one day he upped and moved, and changed cities. He actually moved to a remote and secluded island to get away from city life. Nice move for him, but it left me in a state of panic. How could I possibly survive on my own? I can tell you, ladies and gentleman, that I really learned how to trade when I had to do it on my own, and those were real drops of sweat rolling down from my forehead all over my face.
This is about you and the market, and you mastering your innermost psyche. Anybody can learn to trade the forex my way. But, what will get you every time is that little inner voice doubting your every move. And, then there's fear and greed that will bite you real hard too. It's the psychology of your mind that you must master. You must become disciplined and patient to a fault. You must react only to bona fide signals, that I teach here. Otherwise, you would be better off heading out to your local casino, and taking your chances there.
The forex is not about gambling. It is about running a business, where there will be gains and losses. Your every effort and constant struggle should be to get a grip on those times when price goes against you. You are in charge. You can get the upper hand on price by trading "smartly," and using good money management techniques, that I also teach here. You won't win every time. But, with my system, you should come out ahead seven out of 10 times. The trick is to limit your losses to small ones, and let your profits soar.
Getting back to going solo without an instructor at your side during each and every step of the way, I recall a friend of mine telling me how he learned to fly. After several practice flights with his instructor in the cockpit with him, they landed back at the airfield, and the instructor turned to Pal and said, "Now, it's your turn to take it up. I'm getting out. You're on your own buddy." Talk about anxiety and stress.
Well, Pal took off and landed all by his little 'ole lonesome. But, he was pale and his knees were knocking when he got out of the plane back at home base. He has soloed ever since. It's his passion now. There's something about being able to do it yourself, without a partner holding your hand all the time. It's called "confidence boosting." If you can fly or trade by yourself successfully, there probably isn't anything else in life you couldn't do equally as well. Actually, Navy pilots who land on aircraft carriers make the best traders. But, that's another story for another time.
I can tell you my friend learned more about flying in that one solo session than he did all the times his instructor went up with him. Same with trading. You can do it. Just believe it so. Dedicate yourself to becoming a master at it. Analyze, read, study, think. Ask questions. There is no such thing as a stupid question. Become passionate about your trading. Don't think of it as a get-rich-quick scheme. Do it because you love it. Do it as if you would do it anyway, even if you weren't making money. There has to be an element of fun in it for you. If it's all work, and no play, well you know the answer to that one.
Don't get me wrong. I am here to answer your questions whenever you need my help. I am dedicated to your success, and your happy times with your family. Nothing would give me greater pleasure than to get an e-mail from you telling me how this has turned your life around, and that you are now happily making money trading the forex my way.
Point : 57
Don't get hung up on reading bars when you think you have caught the major trend. Once the trend is unfolding, you then look for a place to enter - around a pivot point. You look to reading bars to signal a change in the direction of the major trend.
A double top in a downtrend means nothing. A double bottom does. So, a price rejection bar or double bottom in a major downtrend would signal a short-term reversal, and that's all. But, once you see the major trend unfolding – say, on the short side – you pretend you don't know how to spell the word long. Stick with the overall major trend that is unfolding.
These comments relate specifically to the beginning hours of London trading, which is when the major trend reveals itself.
Point : 58
You need to get to the point where, when you look at a chart without any visual aids, you see indications as to where price is going. This has to become "second nature." At that point, you can trade with ease. And, your stress level will go down, because you will be in control of the market, not the other way around. This only comes with practice, day after day. This takes patience, and staying power. You must hang in there until you get it. Winners never quit; quitters never win.
Point : 59
At first, if you are fearful, don't trade until you see what you consider to be an ironclad set-up that you are familiar with – an easy one. That may mean waiting out a session or two, but that's okay. There's no rush. I find with some people they seem to have to prove something to themselves or someone else. Some people think they have to scalp all day long for some reason that is beyond me. After all, you are in control. Take your time.
Relax. Enjoy it. Sooner or later, you will see a bona fide set-up that you recognize, and bingo you're in. When in doubt, do nothing. When there is no doubt, do something, do anything – pull the trigger.
Point : 60
Unfortunately, you will not always get all the signals you need to pull the trigger. After all, this is as much an art as it is a science. You cannot always be 100% sure that you are doing the right thing. If you wait forever to get all your ducks lined up, you may wait a long time. My favorite analogy goes something like this: Pretend you are sitting in your garage at home wanting to go to work, but you are waiting for all the street lights along the way to turn green before you pull out of the driveway.
Guess what folks? You'll never get to work. Same with trading. Sometimes, you just have to make an educated guess (based on the currency trading strategy recommendations contained at this site) and go with it. You won't always be right, but this isn't about being right. It is about making a decision, sticking with it, and reversing course if you have to. Accept getting stopped out as God's way of kicking you to a higher level. Just one more step to success.
Point : 61
Thanks to Tom for this: There are two choices to be made – LONG or SHORT when a certain point in the session(M1, S1, R2, Pivot ... etc.) is reached. The BASIC rule is BUY (go long) below the pivot in the S1, S2, M1, M3 zone and SELL (go short) above the pivot in the Zone R1, R2, M2, M4. Obviously it isn’t as simple as this and other indicators such as MACD divergence, reading bars, trends, and patterns all add to the question LONG or SHORT. Bang on Tom! Way to go!
Point : 62
I have said previously that you should make your buy/sell decisions around pivot points. However, for example, if price is meandering in between pivot points and then does a double top, that would lead me to believe that price is going down. So, there are times when you would want to make your move before waiting for a pivot point to be hit. Of course, there's nothing wrong with waiting for price to do so and then reacting.
Point : 63
Thanks to Harry for this one: He indicated that I sometimes refer to "price rejection." And, what does that mean. It simply means that a price reversal bar has formed, causing the bar in the middle to have a higher high than the bars on either side of it. The price bar in the middle is essentially a key reversal bar. And, what you have is a "swing change." That is, price is reversing course, and heading south. The same holds true when price is reversing and heading north. You then have the bar in the middle of the three-bar pattern with a lower low than the two on either side, and the one in the middle is the key reversal bar.
Point : 64
Repetition is the key to success in any endeavor in life, including trading the forex. The more you practice trade, the more you trade real money, the better you get. You just have to keep at it - over and over and over again. Persistence is the key. You're bound to get better at something if you do in constantly and don't quit. Don't let the market psyche you out. When you have a down day, just treat it as experience. Lessons learned. But, try to learn from your mistakes. Keep those journals going. If it's not written, it doesn't exist.
Point : 65
I get the impression that some of you are not paying enough attention to trendlines. They are very powerful. Price WILL change direction when it breaks the trend, regardless of what other indicators may be telling you. So, draw them, and let them be your guide. REMINDER: In an uptrend, as we saw June 25/03, as long as the trendline holds, buy the dips. In a downtrend, sell the rallies. In an uptrend, don't look to go short EVER! In a downtrend, don't look to go long EVER! Plain and simple.
Point : 66
Thanks to Stu G. for this one. I have been harping on using MACD only for divergence. But, Stu is right. I do on occasion, as I did June 26th/03, use MACD to confirm the trend. If the price trend has been consistently down over a period of time, then it could very well be that when price tries to go counter-trend, it may just be a retracement or a temporary move in the opposite direction. I usually like to stick with the major trend. In a downtrend, sell the rallies; in an uptrend, buy the dips.
Point : 67
I was asked by some of my readership what happened Friday, June 27, with all the wide-range bars on the 15-min chart. That was a tough day to trade, even for seasoned professionals. Lots of whip-sawing. Lots of stops got taken out. Trading patterns were dominated by end-of-quarter positioning. A good day to stand clear. So, be prepared for the next end-of-quarter, and the one after that, and the one after that, etc. Mark those dates on your calendar. Trading is as much about being organized and prepared, as it is about being good at it.
Point : 68
Marathon runners have only one thing on their mind when they are running – to cross the finish line. They NEVER look back. Same too with trading. You should focus on surviving for the long haul. Sure, you will stumble and fall. But, just pick yourself up, just yourself off, and carry on. Winners never quit, and quitters never win.
Forex Strategy - D
Point : 43
May 23 was supposed to be an M2/M4 day, given the up-close for the last session. But, the actual range came in at Pivot Point/R2. Trading is "shades of gray" ladies and gentleman. Pivot points are not cast in stone. But, they are usually pretty close.
That day, the combination of Pivot Point and R2 achieved better than the average daily range for the Euro, well within the confines of logic behind my pivot point definitions. The central Pivot Point becomes a buy point (read, support), when it is breached to the upside convincingly, and so it became a reasonable starting point for price to commence its "range-finding mission" for the session. Likewise, R2 is a sell point (read, resistance), and so it was a viable target for selling pressure, as the Euro exhausted its "search" for the end of its range for the session.
The main point in all of this is that the full range for the Euro was achieved within the parameters of the pivot point logic and rules, which is the most important point to get out of all of this. By that I mean that the four pivot points below the middle pivot point are all "buy" candidates, and the four pivot points above the middle pivot point (including R2) are all "sell" possibilities. Achieving the full range, or more than that as was the case May 23, is what it's all about, more so than strictly adhering to the M1/M3 or M2/M4 windows of "buying" and "selling" opportunity.
I hope you are beginning to see the power of pivot points in action. You only buy and sell in and around them – not in between, which is what we call "NO MAN'S LAND." Not the place to enter trades. The only caveat here is where price forms patterns like we saw that day above R2 with the double-top/railway tracks combination. Such a reversal phenomenon, especially with two distinct formations occurring at the same time, cannot be ignored.
But, what is significant here is the fact that this "double whammy" took place after price had penetrated R2 to the upside, which to me looked like an exhaustion area – considering the fact that the last point of resistance had been broken. Then, you look for convincing evidence that price is going to continue its trek north, or do a u-e, as it did in this case, and head south.
There are important lessons to be learned in all of the charts I post at this site. So, please study them carefully. There are parallels, as I am sure you can see, between one session’s price action and that of the previous one. In fact, given the nature of currencies trending well, every day pretty much looks the same, except for different actual ranges and different low and high points (read, iterations of the nine possible pivot point lows and highs).
Price will always determine which set of pivot points it is going to work with, and that is why you always follow price's lead. That's also why I call price the "fifth indicator," and perhaps the most important one of the five I work with. By now, you will have learned more about the other four indicators, as you studied the previous currency trading strategy tips.
Please study the charts I post at this site on a daily basis, as they offer important clues that occur each and every day! If you understand what you see in those charts, you can't help but prosper with your trading on a consistent basis.
Point : 44
Don’t be greedy. I heard it said recently by one of my clients that he walked away from a session with only 150 pips in his pocket, and left a lot on the table. Boy, for somebody coming from the stock world, as he did, he should been thankful for his catch of the day. The point is, if you start out as a newbie looking to carve out only 20 pips per session, then anything beyond that is gravy, and it will surely come over time.
But, don’t forget the old adage, “Nobody can argue over profits in the bank.” If you see a profit, and want to take it, then do so, and be happy. You’ll live to see another day, and take some more profits. Just don’t always grab for the brass ring. This isn't about always hitting home runs. This is about having staying power, and taking one base at a time. When you have good reason to exit a trade, make your move, and be done with it.
Point : 45:
Former Cleveland Brown's coach, the legendary Paul Brown, taught his football players a systematical/methodical procedure of understanding tasks to attain successful results in face of unforeseen, variable difficulties.
So too with foreign exchange trading. Forex trading requires adherence to a set of currency trading strategy rules, which I have set out at this site.
A wide body of research in behavioral finance shows that traders consider the loss of $1 twice as painful as the pleasure received from a gain of $1. That's why they take more risks to avoid losses than to realize gains. They end up buying high and selling low, contrary to conventional wisdom. Follow my currency trading strategy rules, and you'll avoid getting a closely cropped haircut when the forex tanks on you, as it did May 28.
Point : 46
I had somebody ask me why I waited until 03:00:00am New York time to make my move, in the mean time missing potential in advance of that timeframe. The answer is quite simple. That is when London trading kicks in, and that is generally the busiest session on the forex. You will notice that is when the Euro usually starts its major trend to find its average daily range of 76 pips. Those pips are usually put in within the first 12 hours of trading. Check it out for yourself. It happens each and every day, over and over again.
Point : 47
"Ascending Triangle": Price forms higher lows, and looks like somewhat of a horizontal line on top and a rising lower trend line. This formation is normally bullish. You take its height at its highest point, and measure that distance from the upper line to obtain the upside target.
Point : 48
By combining "pivot point readings" with other signals – like divergence, multi-tops, trendline breakouts, triangular patterns, etc. – you can pretty much tell where price is going next. Normally, I would say that you should only enter trades in and around pivot points. But, given the large distances that can sometimes happen between pivot point areas, you then have to be on the lookout for other evidence of future price direction.
Like I keep saying, trading is "shades of gray." Nothing is always black and white in this business. Trading is as much an art as it is a science. That all said and done, when price does encounter a pivot point, you can see that that point has a powerful influence over price. So, always be on the alert for that next point of interaction with the next pivot point, as it will have a distinct bearing on what happens next.
Point : 49
If you are trying to catch the major trend that unfolds during the London hours, but are afraid of getting your entry point figured out correctly, wait to catch the next entry point, as the Euro "reaches" for its average daily range of 76 pips. The next entry point will occur in and around the next pivot point that price passes through. Or, you may catch price as it tries to retest the pivot point it just went through. That way, you won't run the risk of getting in too early, when the trend tries to unfold in early trading. Sometimes, price fakes you out, and goes in one direction for a while, and then reverses course, before finally picking its direction. My favorite saying is, "He/she who procrastinates wins." What you are giving up, of course, are those initial pips of the trend, which may amount to, say 30 give or take, but you are more sure of capturing the remaining 46, as the major trend of the session matures.
Point : 50
I would like to remind you that the pivot points above the central "Pivot Point" have a "sell" bias, and the pivot points below the central "Pivot Point" have a buy bias. These biases hold true unless price action turns a pivot point's bias from sell to buy or buy to sell – i.e., from resistance to support or support to resistance.
On June 6, 2003, you would have observed from price action that M3 held its bias, but the pivot points below the central pivot points were turned from buy, or support, points into sell, or resistance, points. Of course, price action determined this.
The other important point to make is that when the major trend reveals itself, as it did on that day (and does every day, within 12 hours of the start of trading for the session), you should think along the lines of the bias. That day's bias in early trading was "short." Meaning, you should have forgotten how to spell the word "long." Scalpers want it both ways, but that doesn't work in the forex – unless, of course, you want a short haircut. I say this because currencies trend well. Don't second-guess the trend until it reverses itself with bona fide signals. In other words, don't sell to soon, and don't buy too soon.
Point : 51
Keep those trading journals going! If you always trade the way you always traded, you'll always get what you always got.
Point : 52
There is nothing that says you have to trade often, or even every day. In other markets, most professional traders catch only three to four really great trades a week, if that! Not so with the Forex. Here, the timeframe is more like a day. However, if you don't see any "ironclad" trades, then don't trade. Turn if off and go golfing.
Slow down, and drive the speed limit. This isn't a race. After all, you are in control of the market, not the other way around. Don't feel pressured into doing something you feel uncomfortable about. Wait for those "perfect set-ups" to make your move. Same goes for those "bad-hair days." If you are feeling out of it, sit on your hands, or go do something else. Take charge of your trading life, before it takes charge of you, and your money.
Point : 53
I often get asked what parameters I use for MACD. I use the standard default settings. They work just fine. After all, all you should be using MACD for is divergence.
Point : 54
I have said it before that you should only trade in and around pivot points. The only exception to that rule is if you see a trendline breakout or a bar pattern, like price rejection, that gives a clear signal that price is about to reverse course. If price is in between pivot points, and you are not sure what to do, don't do anything! If there's nothing to do, don't do it. Patience is the hardest thing to master in the forex, or any market for that matter.
Point : 55
The major trend for the Euro usually starts revealing itself as the London hours kick in. Up to that point, price may "bait and switch" you into thinking it is going one way, when in fact it is setting up to go the other way. It can easily fake you out, before the London hours start to unfold. So, be patient and wait. Look for clues coming out of the previous session as to where price might be going ultimately. Did you see a "head and shoulders" pattern?
Did you see a triangle pattern? Do you see price trending in any one direction over a period of time. Do you see any divergence in MACD (on the 1 hr and 15 min charts)? Do you see any channels, where price is looking to break either way? Play Sherlock Holmes. A little bit of detective work will go along way before you dive into the new session. Like the Boy Scouts say, "Be prepared!"
Be in charge of your trading. Put your emotions in your hip pocket, and save them for later. Run your trading as if you were running a "bricks and mortar" business. Same principles and rules apply. No different. This is not about betting and gambling. This is serious business. After all, your hard-earned money is at stake. Protect it at all costs.
May 23 was supposed to be an M2/M4 day, given the up-close for the last session. But, the actual range came in at Pivot Point/R2. Trading is "shades of gray" ladies and gentleman. Pivot points are not cast in stone. But, they are usually pretty close.
That day, the combination of Pivot Point and R2 achieved better than the average daily range for the Euro, well within the confines of logic behind my pivot point definitions. The central Pivot Point becomes a buy point (read, support), when it is breached to the upside convincingly, and so it became a reasonable starting point for price to commence its "range-finding mission" for the session. Likewise, R2 is a sell point (read, resistance), and so it was a viable target for selling pressure, as the Euro exhausted its "search" for the end of its range for the session.
The main point in all of this is that the full range for the Euro was achieved within the parameters of the pivot point logic and rules, which is the most important point to get out of all of this. By that I mean that the four pivot points below the middle pivot point are all "buy" candidates, and the four pivot points above the middle pivot point (including R2) are all "sell" possibilities. Achieving the full range, or more than that as was the case May 23, is what it's all about, more so than strictly adhering to the M1/M3 or M2/M4 windows of "buying" and "selling" opportunity.
I hope you are beginning to see the power of pivot points in action. You only buy and sell in and around them – not in between, which is what we call "NO MAN'S LAND." Not the place to enter trades. The only caveat here is where price forms patterns like we saw that day above R2 with the double-top/railway tracks combination. Such a reversal phenomenon, especially with two distinct formations occurring at the same time, cannot be ignored.
But, what is significant here is the fact that this "double whammy" took place after price had penetrated R2 to the upside, which to me looked like an exhaustion area – considering the fact that the last point of resistance had been broken. Then, you look for convincing evidence that price is going to continue its trek north, or do a u-e, as it did in this case, and head south.
There are important lessons to be learned in all of the charts I post at this site. So, please study them carefully. There are parallels, as I am sure you can see, between one session’s price action and that of the previous one. In fact, given the nature of currencies trending well, every day pretty much looks the same, except for different actual ranges and different low and high points (read, iterations of the nine possible pivot point lows and highs).
Price will always determine which set of pivot points it is going to work with, and that is why you always follow price's lead. That's also why I call price the "fifth indicator," and perhaps the most important one of the five I work with. By now, you will have learned more about the other four indicators, as you studied the previous currency trading strategy tips.
Please study the charts I post at this site on a daily basis, as they offer important clues that occur each and every day! If you understand what you see in those charts, you can't help but prosper with your trading on a consistent basis.
Point : 44
Don’t be greedy. I heard it said recently by one of my clients that he walked away from a session with only 150 pips in his pocket, and left a lot on the table. Boy, for somebody coming from the stock world, as he did, he should been thankful for his catch of the day. The point is, if you start out as a newbie looking to carve out only 20 pips per session, then anything beyond that is gravy, and it will surely come over time.
But, don’t forget the old adage, “Nobody can argue over profits in the bank.” If you see a profit, and want to take it, then do so, and be happy. You’ll live to see another day, and take some more profits. Just don’t always grab for the brass ring. This isn't about always hitting home runs. This is about having staying power, and taking one base at a time. When you have good reason to exit a trade, make your move, and be done with it.
Point : 45:
Former Cleveland Brown's coach, the legendary Paul Brown, taught his football players a systematical/methodical procedure of understanding tasks to attain successful results in face of unforeseen, variable difficulties.
So too with foreign exchange trading. Forex trading requires adherence to a set of currency trading strategy rules, which I have set out at this site.
A wide body of research in behavioral finance shows that traders consider the loss of $1 twice as painful as the pleasure received from a gain of $1. That's why they take more risks to avoid losses than to realize gains. They end up buying high and selling low, contrary to conventional wisdom. Follow my currency trading strategy rules, and you'll avoid getting a closely cropped haircut when the forex tanks on you, as it did May 28.
Point : 46
I had somebody ask me why I waited until 03:00:00am New York time to make my move, in the mean time missing potential in advance of that timeframe. The answer is quite simple. That is when London trading kicks in, and that is generally the busiest session on the forex. You will notice that is when the Euro usually starts its major trend to find its average daily range of 76 pips. Those pips are usually put in within the first 12 hours of trading. Check it out for yourself. It happens each and every day, over and over again.
Point : 47
"Ascending Triangle": Price forms higher lows, and looks like somewhat of a horizontal line on top and a rising lower trend line. This formation is normally bullish. You take its height at its highest point, and measure that distance from the upper line to obtain the upside target.
Point : 48
By combining "pivot point readings" with other signals – like divergence, multi-tops, trendline breakouts, triangular patterns, etc. – you can pretty much tell where price is going next. Normally, I would say that you should only enter trades in and around pivot points. But, given the large distances that can sometimes happen between pivot point areas, you then have to be on the lookout for other evidence of future price direction.
Like I keep saying, trading is "shades of gray." Nothing is always black and white in this business. Trading is as much an art as it is a science. That all said and done, when price does encounter a pivot point, you can see that that point has a powerful influence over price. So, always be on the alert for that next point of interaction with the next pivot point, as it will have a distinct bearing on what happens next.
Point : 49
If you are trying to catch the major trend that unfolds during the London hours, but are afraid of getting your entry point figured out correctly, wait to catch the next entry point, as the Euro "reaches" for its average daily range of 76 pips. The next entry point will occur in and around the next pivot point that price passes through. Or, you may catch price as it tries to retest the pivot point it just went through. That way, you won't run the risk of getting in too early, when the trend tries to unfold in early trading. Sometimes, price fakes you out, and goes in one direction for a while, and then reverses course, before finally picking its direction. My favorite saying is, "He/she who procrastinates wins." What you are giving up, of course, are those initial pips of the trend, which may amount to, say 30 give or take, but you are more sure of capturing the remaining 46, as the major trend of the session matures.
Point : 50
I would like to remind you that the pivot points above the central "Pivot Point" have a "sell" bias, and the pivot points below the central "Pivot Point" have a buy bias. These biases hold true unless price action turns a pivot point's bias from sell to buy or buy to sell – i.e., from resistance to support or support to resistance.
On June 6, 2003, you would have observed from price action that M3 held its bias, but the pivot points below the central pivot points were turned from buy, or support, points into sell, or resistance, points. Of course, price action determined this.
The other important point to make is that when the major trend reveals itself, as it did on that day (and does every day, within 12 hours of the start of trading for the session), you should think along the lines of the bias. That day's bias in early trading was "short." Meaning, you should have forgotten how to spell the word "long." Scalpers want it both ways, but that doesn't work in the forex – unless, of course, you want a short haircut. I say this because currencies trend well. Don't second-guess the trend until it reverses itself with bona fide signals. In other words, don't sell to soon, and don't buy too soon.
Point : 51
Keep those trading journals going! If you always trade the way you always traded, you'll always get what you always got.
Point : 52
There is nothing that says you have to trade often, or even every day. In other markets, most professional traders catch only three to four really great trades a week, if that! Not so with the Forex. Here, the timeframe is more like a day. However, if you don't see any "ironclad" trades, then don't trade. Turn if off and go golfing.
Slow down, and drive the speed limit. This isn't a race. After all, you are in control of the market, not the other way around. Don't feel pressured into doing something you feel uncomfortable about. Wait for those "perfect set-ups" to make your move. Same goes for those "bad-hair days." If you are feeling out of it, sit on your hands, or go do something else. Take charge of your trading life, before it takes charge of you, and your money.
Point : 53
I often get asked what parameters I use for MACD. I use the standard default settings. They work just fine. After all, all you should be using MACD for is divergence.
Point : 54
I have said it before that you should only trade in and around pivot points. The only exception to that rule is if you see a trendline breakout or a bar pattern, like price rejection, that gives a clear signal that price is about to reverse course. If price is in between pivot points, and you are not sure what to do, don't do anything! If there's nothing to do, don't do it. Patience is the hardest thing to master in the forex, or any market for that matter.
Point : 55
The major trend for the Euro usually starts revealing itself as the London hours kick in. Up to that point, price may "bait and switch" you into thinking it is going one way, when in fact it is setting up to go the other way. It can easily fake you out, before the London hours start to unfold. So, be patient and wait. Look for clues coming out of the previous session as to where price might be going ultimately. Did you see a "head and shoulders" pattern?
Did you see a triangle pattern? Do you see price trending in any one direction over a period of time. Do you see any divergence in MACD (on the 1 hr and 15 min charts)? Do you see any channels, where price is looking to break either way? Play Sherlock Holmes. A little bit of detective work will go along way before you dive into the new session. Like the Boy Scouts say, "Be prepared!"
Be in charge of your trading. Put your emotions in your hip pocket, and save them for later. Run your trading as if you were running a "bricks and mortar" business. Same principles and rules apply. No different. This is not about betting and gambling. This is serious business. After all, your hard-earned money is at stake. Protect it at all costs.
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