Any good strategies on Trading?

[v555]

OK let’s roll !

Forex seems very complex - especially when you listen to the Forex mentors who make a lousy living out of their phony advises and never on the Forex itself - but in reality it’s pretty simple.

Let’s assume you’re a day trader, which is frankly the only way to make consistent money on the Forex.

First of all you need is an overall view of the pairs in terms of Time Units : 5′ 15′ 1H 4H DAY WEEK AND MONTH. It’s more comfortable with 2 screens but if you use MT4, you can switch very quickly from on TU to the other on the same screen.

Second, you only need 3 + 1 indicators : Exponential Moving Averages 55 and 200, the normal Bollinger Bands and if you find it, the Average Daily Range with no Sundays indicator on 20 days (available on the MT4 forums).

If you don’t find it, you can calculate it yourself easily by pointing out the daily range (top to bottom) of each day, on the 20 last days, an make the average. The usual pairs are pretty steady and unless some exceptional event that increase drastically the volatility of the moneys, you can take for granted that this ADR will last for a while.

Once you’ve got this, you point out the bullish pairs and the bearish ones.

We’ll assume that a bullish pair has at least its daily and weekly 55 EMA above the 200 EMA, and a bearish one, the opposite of course. Best if the monthly EMA’s are alike but this isn’t so obvious on the Forex to get all the TU EMA’s in line.

Il you seek to buy, you concentrate upon the first ones, if you want to sell, on the second.

You’ll get interested only when the price is above the 55 daily EMA if you buy, or under if you sell.

You’ll consider taking a trade looking up the 4H charts when the price breaks the upper Bollinger Band > North and closes above if you buy, or the lower Bollinger Band > South and closes under if you sell. But don’t take the trade right away. Wait for confirmation. You might wait between 4 hours and a whole day. When you get the confirmation i.e. the Bollinger Band is widening (the must is when the BB have been on a squeeze for a while) and that the price has gone higher/lower than the first signal candle, go down to the smaller Time Units, 5′ 15′ 1H and wait for a retracement that brings the price under the upper 4H BB or above the lower 4H BB, but not closing under (buy) or above (sell) the mid 4H Bollinger Band.

When you’ll notice that the 5′ or 15′ or 1H price (depending on the strength of the retracement) is heading again towards the expected direction and is breaking its Bollinger Band, you prepare your trade.

At that point you have to evaluate if the price isn’t to close to the peak of the Average Daily Range. Make sure that you’ve got between 1/3 to 1/2 of the ADR left to make your daily performance. This rule doesn't apply if the price bursts out of a 4H BB squeeze that has been going on for a while. In this case, the ADR can easily double or triple its performance.

You have also to check out the daily chart and evaluate if it doesn’t seem stuck in a range bound between almost horizontal Bollinger Bands. If the price is to close to a daily horizontal BB, don’t trade and wait to see if it opens the same way as described for the 4H BB. The best time to trend is when the daily BB are already opened in the right direction. But if the price has already gone to far above/below the daily BB, wait for the price to come back in the zone.

If you wake up late and see the price running madly in the right direction, don’t chase it ! Especially if you see a 1H candle opening and closing ABOVE/UNDER the 1H Bollinger Band (and probably the 4H BB also), WAIT for the next retracement with the same protocol ! (This figure is a good opportunity to scalp counter-trend but this is another story !)

A good trends on the 4H TU often last for a few days so it gives you lots of opportunities to trade WITH THE TREND. By the way, you’ll notice that everybody tells you to “trade with the trend” but nobody give you a clue on how to do so. Now, you’ve got the method !

Last recommendation : make sure there isn’t any important economical news that might impact your pair within the next 8 hours to 2 days. If so you’ll also have the choice to raise your stop loss to break even before the news.

WHEN ALL THESE PARAMETERS ARE ALIGN YOU MAY AT LAST TAKE YOUR TRADE !

The Stop Loss has to be fixed UNDER THE LOWER BOLLINGER BAND when you buy, ABOVE it when you sell. You’ll notice that it’s very far from the price (often between 1.5/2 ADR) so you’ll have a large security not to be wiped out buy a rumor and unexpected volatility, specially on the GBP pairs.

Therefore, and since the method is very secure, you can take a comfortable leverage and risk 5% of your capital. Weirdly, the Risk/Reward will often end up being 5/1 which is obnoxious regarding the traditional money management rules, but if you want to make money and at least 1% on each trade, this is how it works.

Besides, if ever the price is suddenly heading in the wrong direction and strongly breaking the mid Bollinger Band, you’ll have plenty of time to cut or lighten the trade before the stop loss.

As for the take profit limits you have the choice :

1/ The top of the ADR

2/ The contact with the extremity of the upper/lower BB

3/ The contact with the Upper/Lower daily, weekly or monthly BB

4/ The contact with the monthly EMA’s when they’re still above the price when you buy, or under when you sell.

However, the limit shouldn’t be fixed under 1% of your capital considering the risk.

Last but not least, if you really want to make money on the Forex with this technique, you’ll have to be EXTREMELY PATIENT AND DISCIPLINED.

This method works also with stocks, indices and about anything that can be traded.

Good luck and good trades !

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Thanks: Quora

[sunnyillion]

It's an OK strategy but you'll miss lots of great trading setup during this period but like you said "you’ll have to be EXTREMELY PATIENT AND DISCIPLINED" so I guess it's alright to miss few just to get one golden entry per week/month and profit from it rather than taking so many trades and keep losing.

PS: The ability to consistently generate a minimum of 10 pips in profit every month is a valuable skill for traders to develop. It can provide a reliable source of income and help traders achieve their financial goals.