Wednesday, January 24, 2007

Part Time Wealth Building Trading System

This forex trading strategy which is great for people who work full time but want to build a very lucrative part time forex trading addiction into full time profession from the comforts of their job:

1. 30 Min chart

2. 5 Period SMA

3. 45 RSI

4. 21 Average True Range (This is a volatility metrics to help determine lot size)

5. Use a 50 PIP stop.

Get Long (buy) position when the price exceeds the SMA by 5 PIPS for the first time and the RSI is greater than 50. Get Short (sell) position when the price fall below the SMA by 5 pips for the first time and the RSI is less than 50. The target for this system is always 200 PIPs (which I am currently enjoying with the GBP/USD).


The ATR is used to determine lot size. Lot size or Money Management is by far the most important concept to trading.

Happy Trading,

Tkimble (from

Part Time Wealth Building Trading System (Scalping)

Weekly Forex Scalping Strategy

Weekly forex scalping system is very simple. Create a weekly chart on your forex chart. Place trades 50 PIPS above or below the close for the previous week. Use 30 PIP trailing stops. No profit targets. Let the trade run for the entire week and close during the final 30 minutes of the market for the week. The great feature of this system is that more often than not the weekly trend will establish itself and stay in tact from the Monday or Tuesday of the trading session for that week.

GBP/USD Example:
Previous weekly close: 1.9597
Buy: 1.9647
Sell: 1.9547

The following rule is a bit different than most trading systems of this style:
If the "Buy" is executed, move the sell up to the previous weeks close (1.9597 in this case). If the "Sell" is executed, move the buy down to the previous weeks close (in this case likewise 1.9597)

These two rules permit a more robust and agressive entry after losing trades.
Recommend volatile markets (USD/CHF, GPB/USD, etc.)
Here is the current trade that I am in using the GPB/USD:

This system averages approximately 150 pips per week in the GBP/USD market without any intervention. I am a big believer that most people over trade the market. This system will minimize your trades by its very nature.

Daily Scalping

Daily trading rule are as follows:

1. Create daily chart on any pair

2. Enter Buy/Sell order upon Sunday or Monday open at 2400 GMT. Order should be consistent with previous days trend (i.e; Previous day up, Place "Buy" market order, Previous day down, enter "Sell" market order at open)

3. Place opposite side trade 40 PIPS aways from initial market order (i.e.; if initial order was a Buy Place immediate Sell side order 40 PIP away from initial market entry)

4. If same trend for three consecutive days, place next days open order opposite of previous three days trend. i.e; If Monday, Tuesday and Wednesday were up days, Thursday would be a Sell order.

5. Use 40 PIP stops on all orders.

6. Close between 2300 GMT and 2400 GMT.

7. Repeat trade rules at 2400 GMT.

No straddling the price entry. Enter market immediately with 40 PIP reversal companion order.

Happy Trading,

Tkimble from

Tuesday, January 16, 2007

Pivot Point Trading

Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.

The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels.

The pivot level and levels calculated from that are collectively known as pivot levels.

Every day the market you are following has an open, high, low and a close for the day (some markets like forex are 24 hours but generally use 5pm EST as the open and close). This information basically contains all the data you need to calculate the pivot levels.

The reason pivot points are so popular is that they are predictive as opposed to lagging. You use the information of the previous day to calculate potential turning points for the day you are about to trade (present day).

Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade.

If you would rather work the pivot points out by yourself, the formula I use is below:

Resistance 3 = High + 2*(Pivot - Low)
Resistance 2 = Pivot + (R1 - S1)
Resistance 1 = 2 * Pivot - Low
Pivot Point = ( High + Close + Low )/3
Support 1 = 2 * Pivot - High
Support 2 = Pivot - (R1 - S1)
Support 3 = Low - 2*(High - Pivot)

As you can see from the above formula, just by having the previous days high, low and close you eventually finish up with 7 points, 3 resistance levels, 3 support levels and the actual pivot point.
If the market opens above the pivot point then the bias for the day is for long trades as long as price remains above the pivot point. If the market opens below the pivot point then the bias for the day is for short trades as long as the market remains below the pivot point.

The three most important pivot points are R1, S1 and the actual pivot point.

The general idea behind trading pivot points is to look for a reversal or break of R1 or S1. By the time the market reaches R2,R3 or S2,S3 the market will already be overbought or oversold and these levels should be used for exits rather than entries.

A perfect set up would be for the market to open above the pivot level and then stall slightly at R1 then go on to R2. You would enter on a break of R1 with a target of R2 and if the market was really strong close half at R2 and target R3 with the remainder of your position.

Unfortunately life is not that simple and we have to deal with each trading day the best way we can. I have picked a day at random from last week and what follows are some ideas on how you could have traded that day using pivot points.

On the 12th August 04 the Euro/Dollar (EUR/USD) had the following:
High - 1.2297
Low - 1.2213
Close - 1.2249

This gave us:

Resistance 3 = 1.2377
Resistance 2 = 1.2337
Resistance 1 = 1.2293
Pivot Point = 1.2253
Support 1 = 1.2209
Support 2 = 1.2169
Support 3 = 1.2125

Have a look at the 5 minute chart below

The green line is the pivot point. The blue lines are resistance levels R1,R2 and R3. The red lines are support levels S1,S2 and S3.

There are loads of ways to trade this day using pivot points but I shall walk you through a few of them and discuss why some are good in certain situations and why some are bad.

The Breakout Trade

At the beginning of the day we were below the pivot point, so our bias is for short trades. A channel formed so you would be looking for a break out of the channel, preferably to the downside. In this type of trade you would have your sell entry order just below the lower channel line with a stop order just above the upper channel line and a target of S1. The problem on this day was that, S1 was very close to the breakout level and there was just not enough meat in the trade (13 pips). This cab be a good entry technique for you. Just because it was not suitable this day, does not mean it will not be suitable the next day.

The Pullback Trade

This is one of my favorite set ups. The market passes through S1 and then pulls back. An entry order is placed below support, which in this case was the most recent low before the pullback. A stop is then placed above the pullback (the most recent high - peak) and a target set for S2. The problem again, on this day was that the target of S2 was to close, and the market never took out the previous support, which tells us that the market sentiment is beginning to change.


As I mentioned earlier, there are lots of ways to trade with pivot points. A more advanced method is to use the cross of two moving averages as a confirmation of a breakout. You can even use combinations of indicators to help you make a decision. It might be the cross of two averages and also MACD must be in buy mode.

In the example below the market passed through S1 and then retraced to the S1 line again. It then formed a channel. At around this time we had a cross of the averages, MACD signaled buy and there was a breakout of the channel line. This gave a great signal to go long with a target of the original pivot line.

Mess around with a few of your favorite indicators to help determine an entry around a pivot level but remember the signal is a break of a level and the indicators are just confirmation.

We haven't even got into patterns around pivot levels or failures but that is not the point of this lesson. I just want to introduce another possible way for you to trade.

Good Trading
Mark McRae

Monday, January 15, 2007

The Tlatomi Method

In nahuatl (aztec language), tlatomi means ''to win money''

1 - 4 Hour chart (This system works best with GBP/USD, GBP/JPY)
2 - NonLagMa_v4
● Filter=20
● Color=1
● ColorBarBack=0

● Allbars=0
● Otstup=30
● Per=9.0
● Don't forget to change the colors also (0=blue-1=red)

FX Sniper's Ergodic_CCI_Trigger
● pq=4
● pr=8
● ps=5
● trigger=4

Enter long when :
1 – a blue dot appears
2 – the ergodic CCI crosses up the trigger line ( blue line crosses up the red one )
3 – NonLagMa color changes to yellow
Enter short when :
1 – a red dot appears
2 – the ergodic CCI crosses down the trigger line ( red line crosses down the blue one )
3 – NonLagMa color changes to yellow

Exit when a new dot appears (red if you are long and blue if you are short). This method gives you mecanicals trades. Don't hesitate to transform them into a discretionnay trade after because you can see things that the system can't. Sometimes, it will be the difference between a 30 pips trade and a 300 pips trade. Once you move your stop to breakeven and add a trailing stop – you can't wait alittle more time to see what the market wants to give you. Stop In general, I look for previous daily Resistance-Support but I don't have only one method for my stops. You can also looks for the high or low of the previous bar.

Price enter :
The price enter is the open price of the candle or bars where the NonLagMa is yellow.

Ergodic_CCI :
The signal is stronger when the FX Sniper's Ergodic_CCI_Trigge is above 300 or under -300.

NonLagMa :
''The non-lag MA does turn yellow/non yellow while the current candle/bar is still forming ... so I wouldn't enter a trade until the end of the current candle confirms that the yellow section doesn't switch back to a non signal. So remember wait till the candle is fully formed until entering a potential trade!!!!''

To be more conservative means less profit but also more safety.
The order : I don't take a trade when the cross happens before the dot or when the cross happens after the nonlag. So, I wait for a dot then for the cross and then for the nonlag.
It doesn't matter if the cross and the nonlag happen at the same time but like i said earlier, the cross should never happen after the nonlag.

Swing Trading Strategy

This is a strategy that can be used on any timeframe, but personally, I prefer the hourly or 4 hours charts. The objective is to buy pullbacks during an uptrend and sell pullups during a downtrend.

1) Plot a 144 period moving average, triangular, exponential, weighted, adapted, whatever. Type of MA has no big importance, we use it to provide a price level only.
2) Plot pivot highs/lows
3) Plot a Laguerre RSI with default values (weighted close, .62) (not necessary, can be used as additional confirmation)

4) If price is above the MA we look to go long, if below, we look to go short
5) Draw a fib retracement (with 38.2, 50, 61.8 and 78.6%) level on the last significant swing
5) Wait for market to return back to the MA (important there should be at least 2 pivot highs during a pullback or 2 pivot lows during a pullup, see below)

6) Draw a tentative trendline through pivots highs/lows. This trendline should not be penetrated until price reaches the MA (otherwise you should cancel and replace)

7) Enter after a break of the trendline, after rebound on fibo/MA level (Laguerre RSI can be used for confirmation)
8) If long set the stop 1 pip below the most recent pivot low, if short set it 1 pip above the most recent pivot high (don't forget to include spread, if needed)

9) Immediately after taking the position, draw a new fibo retracement (38.2/50/61.8/78.6) on the last pullback/pullup

10) Trailing stop rules:
When price reaches 38.2%, set stop at breakeven
When price reaches 50%, set stop 1 pip below (if long) or above (if short) 38.2% level
When price reaches 61.8%, set stop 1 pip below (if long) or above (if short) 50% level
When price reaches 78.6%, set stop 1 pip below (if long) or above (if short) 61.8% level
When price reaches 100%, set stop below (if long) or above (if short) 78.6% level
If price breaks the 100% retracement, then set stop 1 pip above/below previous bar's high/low (note, if the 78.6% stop is closer, then don't move the stop)

Source By Mike

Saturday, January 13, 2007

Key Features for Shaping a Forex Day Trade

Until recent years, the opportunity to put on a trade was governed by the cycle of day and night. But a unique characteristic of Forex trading is its round the clock sequence of trading. Starting Sunday when the sun rises in Asia, until Friday late afternoon, when the New York markets close, Forex trading is available. So the question arises, what is a Day trade in Forex, if technically Forex is a continuous week of trading? To answer that question we do not need to delve into the nature of human circadian biorhythms. One has to be arbitrary. We can effectively define a Forex day trade as a trade that is completed during the waking hours of a trader. A day trade might also be considered a trade initiated and completed within the trading hours of either the Asian, European, or United States equity markets. One more criteria for calibrating when your Forex Day trading starts can be when you grab that first cup of coffee!

Your State of Mind is a Critical Factor
One of the differences between a beginning and a more experienced trader is their mind-set. In the mind of the beginning Forex trader is the ever present thought: What should I trade today? How do I get my 10 PIPS? In contrast, the more experienced Forex trader is looking to answer a different set of questions- Which pair offers the best opportunity for a winning trade? The beginner wants to jump in, score and get out. The more experienced Day Trader wants to wait for the market to come to them. The beginning trader perceives the Day Trade as a reprieve from analysis, whereas the more experienced trader knows that the trade itself is a result of analysis.

The search for your next Day trade starts ironically by looking backward in time.
We start by looking for the location where the price is probing or testing a pattern; a key Fib Resistance or Support area; trend line or moving average. In a real sense, your next day trade takes its shape days, and sometimes weeks, before the decision to trade. For example, if a currency pair is approaching a key Weekly 61.8% Fibonacci level, while another currency pair is simply moving between Fib levels, the pair that is nearer the Fib levels should take priority. It offers a greater trading opportunity because when prices are at these Fib locations, they are more likely to result a real change in sentiment and trend patterns.

Finding your next Day trade is a result of applying some key decision rules. The actual trigger conditions for the trade will wait for the right confirming moment. However, the chart below outlines the logical steps that go into shaping a Day trade. This chart describes two key steps in arriving at a trading decision. The first step is to answer the question- What is the major trend direction? The trader needs to observe the big picture in getting this answer and assess Weekly, Daily, and 4 hour patterns. The next important step is to decide what will be the direction of the next trade. Will it be a buy or sell? By choosing the direction of your next trade, you are not predicting the market at all. You are waiting for the market to come to you!

Number of Trading Opportunities Per Day Depends on Finding Patterns
An attractive aspect of the Forex market is plethora of opportunities to trade during a day. Let's try to quantify how many good opportunities does the Forex Day Trader have on a given day? A sensitivity analysis would show that we have 6 Big Currency Pairs (EURUSD, GBPUSD, USDCHF, USDJPY, USDCAD, AUDUSD).

At least 2 commonly traded crosses (EURGBP, and EURJPY). This provides 8 currency pairs to provide opportunities for the Day trade. When each currency pair's chart intervals are examined carefully for an evolving trading signal, we have geometrically increased the potential for trades. A Day trade in Forex can often provide more opportunities to trade than available capital in an average account. The trader need not rush to trade, but choose among competing opportunities.

A good rule of thumb for the beginner Day Trader to spot trading opportunities is to use the 4 hour time interval. It represents a decent amount of time for prices to evolve wider ranges that are tradable. During a 4 hour period, currency pairs often exhibit ranges that provide the enough PIP distance between Resistance and Support. to achieve Day trading goals.

So if we estimate that we can expect 2 opportunities per currency pair during any given 4 hour period, we can expect 16 trading opportunities that can justify putting on a trade. If we take extreme rationing of these opportunities and select only 1 trade per 4 hour period per currency pair, we have more than enough to allow a person to take Forex Day trading as a serious opportunity. A common occurrence is a cluster effect where the action in one currency pair cascades across all of them and, suddenly, almost at the same time, there are numerous opportunities! The distribution of trading opportunities, however, is not random, and patience in waiting for the right opportunity is a worthy skill to acquire.

Pulling the Trigger

Putting on the trade, after all, is what the analysis leads to, but it is not a spontaneous event. While there is no single rule of action on what a price trigger is, we can narrow conditions to be such that the trade is reasonable and can be supported by a combination of technical factors. For example, in the chart below, the price is probing the lower channel line and a trade going long would coincide with a confirmation that the position is oversold. Notice that in the example below, Relative Strength Indicator is breaking its own trend line. This is a very useful confirming tool when oscillators are used in technical analysis.

During any given day in Forex Trading, patterns emerge inviting a trade. The skilled trader waits for a high probability trade where confidence is high that the trade will work. Contributing to confidence may very well be the trader's own psychological mind set and optimism. Ultimately, the Profit and Loss Chart will demonstrate whether one is engaged in wishful thinking or a winning game. Whether one looks for a quick grab of profits that will pay for a dinner date, or for a trade that makes the month's mortgage payment, Day trading Forex has embedded in its market patterns, the potential for achieving a variety of trading goals. Forex Day trading offers a range of opportunities but there is an entrance requirement- The Forex trader who wants to be successful needs to come armed with a box of tools, and a set of rules.

by Abe Cofnas

Bunny Girl (BGX) System

Bunny Girl Siytem use is the famous one in forex online trader, her system has been used by many trader in forex online trader. This is her setup;

Chart Setup
· 30 minute, candlestick
· WMA 5
· WMA 20
· WMA 100
· RSI 14

Go Long
· WMA5 Crosses above WMA20
· WMA5 and WMA20 above WMA100
· RSI signals divergence or is above 50

Go Short
· WMA5 Crosses below WMA20
· WMA5 and WMA20 below WMA100
· RSI signals divergence or is below 50

· Use a filter to eliminate frequent stops and catch the trend at the right time
· EURUSD: 25 points plus the bid/ask spread
· Other recommended pairs: 30 points plus the bid/ask spread
· These filters can and do change
· Cancel the trade if the filter price has not been reached before 5 minutes remaining on
the 30 minute bar.
· Filters on other pairs can be determined (see "Advanced Topics")

· If bull cross, place a buy stop order at the filter+spread.
· If a bear cross, place a sell stop order at the filter+spread.
· When the filter price is reached and the order engaged, place a stop loss at about the original crossing. (Can goas much as pips away on the other side of the crossing.)

Stop Loss
· 5 pips beyond the cross (or bounce) price

Trading Around Daily Open
Daily Open = open price at 00:00 GMT. Make sure there is room enough for profit targets between filter (entry) price and daily open. If the cross is on one side of the daily open and the filter is on the other, than this is OK to trade. Additionally, the best signal to receive is when multiple pairs are crossing at the same time.

It's simple but poweful. Try this !

Friday, January 12, 2007

Profitable Sidus Method

I started to adapt the systems with my onw rules. The biggest advantage of the Sidus method is that it is not necessary for adding extra filters. Whipsaws will occor, but less frequent. This system made my trading very profitable as it easy to understand, easy to implement and easy tofind the right entry-points.

Profitable Sidus Method

What do you need?
- 1H (of 30MIN, but you wil get wore whipsaws) candlesticks/bar charts
- 18 EMA & 28 EMA (put them in red)
- 5 WMA (in blue) & 8 WMA (in yellow)

The 18 EMA & 28 EMA are two red lines who form a tunnel, these will help you to determine the startof a trend and the end of a trend (Long term).
The WMA & 8 WMA will show you when to enter a trend, they will also help you to see the strenght of the trends (Short term)

Entry Signals
You should only open a position, when the red tunnel is extremly narrow or crossed !
LONG: 5 WMA & 8 WMA cross the red tunnel upwards. If the 5 WMA also crosses the 8 WMA upwards, then the signal is extra strong.
SHORT: 5 WMA & 8 WMA cross the red tunnel downwards.If the 5 WMA also crosses the 8 WMA downwards, then the signal is extra strong.

Exit Signals
Signals that show the end of the chosen trend:
- Long: The price has reached a top and 5 WMA dives under 8 WMA (Close position)
- Short: The price has reached a bottom and 5 WMA jumps above 8 WMA (Close position)

Always close your position when boundry’s of the red tunnel cross eachother or when they become so narrow that they are one! This is a clear sign of a trend reversal. After you see this, close your position and open a new postion in the other way (If you were long, close, open a short postion)

When in a trade and the 5 WMA & 8 WMA cross the red tunnel -> Pay attention! As long as the redtunnel boundy’s doesn’t cross eachother there is no problem, but often this is a sign that they will!

Basic rule
Enter a position were the red tunnel boundry’s cross and exit that position when they cross again!!! Always use a stoploss - I recommend a 10-15 pip stoploss !!!

I want to thank Vegas, Bunnygirl and all the nice people of ForexFactory for their great inspiration.

By : Sidus

Swing Trading with Fibo

This system is inspired by a guy called Vegas so i must give credit where it is due but also he outlined this as a model and also said that he does not "mind" that the system i am about to describe is let out in the open. Becuase this is a model its not a complete system but with your help i think there is room for improvement to what already is so far as i can tell a profitable system.

The orignal concept used 1 Hour bars using different SMA but for ease of use and increased profit ratio some of us looked at the 4 hour model to which i will describe here. The benift of 4 hours is you get a good nights sleep, can go out during the day for many hours and so basically are not tied to the PC all day. 4h also provides a balanced blend between the short term intraday 15m 20m 1h time and longer daily and weekly cycles so we are still capturing a good portion of the market swings.

Its uses a 55 SMA as its core. This is not a random picked number its a fibo number sequence and has been found to follow on almost any time frame the general movement of the market.

Overlayed on the same chart are fibo number sequence lines where we take profit. In case you didnt know for newbies reading this the sequence is 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, and higher.
However it has been noted that in the case of euro it will only deviate from the 55 SMA out 233 pips away before it has to retrace. There are some rare spillage exceptions but this is a rule of thumb. Other pairs like cable and some volatile crosses will go to 377 pips away from the 55 SMA and retrace. So the basis of the system is we buy as soon a we are above the 55 SMA and Sell below it.

Now this is the clever part that makes nearly ALL moving average systems fail. Fibo numbers are well known retracement points and they are also excellent supp resistance areas so by taking a partial profit at 89, 144 and 233 use on euro we capture the main places a price is most likley to reach before it returns back to the 55 SMA line.

For pound and others the 3 fibo numbers used are 144, 233 and 377. OK so you might ask well how do i know what set to use on each pair? Easy plot these lines based on the 55 SMA then SHIFT and draw these fibo lines 144 pips 233 pips and 233 pips higher and lower off the SMA so the chart looks like wavy rail tracks both above and below the 55 SMA then look to see for a particular pair it will fit like a glove 98% of the time to the furthest price you can see on the charts over many months.

The age old problem is should we use filters to make sure the price goes over the 55 SMA to take a long or visa versa for a short. Vegas suggest that a 12 EMA is overlayed which needs to cross over the 55 SMA to take a long posi. I found 13 (fibo) JMA Jurik much better then EMA. If you dont know what Jurik JMA is then google it. I seen a thousand other filters can be used BUT anything you use will result is a delay and can miss major moves. It matters not if you CCI, EMA, mommetum RSI etc etc it will result in some moves being completly lost.

Just recently on MT they have a Moving Average Expert to play with as standard on new MT 4. That system just appears to wait for a complete bar close above or below the 55 sma and thats your signal. I was amazed how well this works. it needs no stops, no filters nothing. If it closes above we go long, a close below we go short.

Now we left the tunnel going long with say 4 lots. A the 1st fibo i take 1 lot profit at 89 fib, another lot at 144 fib and another lot at 233 fib. Because the price wont go futher then this 98% of the time we have locked in the entire range but the last lot is left open. This is becuase if the last lot is left open if we return to the 55 SMA its so small it wont really harm our profit but there is a chance the 55 SMA can begin to slope up at a steep angle and the price and the 55 SMA will run for hundreds of pips. So the last lot left open begins a free trade. This is the opposite of most conceptions where you think you should be adding to trades but we are reducing our risk by taking profits in fibo stages. In practice this is MUCH safer.

OK you hopefully have the basis of this system. Its a swing trader with partial profits but instead of saying TP at "normal" 30 50 or 100 pips we are using something of real mathmatiical substance of where the market is likely to stall at ie fibo points.

In practice a risk map needs to be defined the 55 SMA does get whipped. Most of the danger is in the crossing becuase we are fully loaded. An expert script on mt4 is really needed to find the initial risk value of the system eg i have 100k to start risk %= 30% will this blow the account??

Next most important i described taking 1 lot at each fibo but ideally this should be a % of the initial order eg 30% This is so we can scale in any size of account and compound growth.

So 100k cap start with 30% = 30k or 30 lots
fibo % is set to 30% TP so
30 lots - 30% = 9 lots TP on 1st fibo = 21 left
second fibo hit now 21 - 30% = 6.3 so round this to 6 leaves 15 lots
Third fibo hit 15 lots left - 30% = 4.5 round up to 5 = 10 lots.

These last lots are left runnning incase we trend hard but its likely also to return back to the 55 SMA but we havent gone back empty handed as profits have been taken yet we have left some open in case we catch a nice trend which happens about 10 times a year.

What i need to know is the optimal % of the TP order value that should be used. If any one can script this on MT4 the backtester has an automatic optimiser to find the max profit of any user varaible. My manual testing has shown that 30% may be fine and certainly a starting point.

Also one can see the greatist portion of the order is taken at the 1st fib. This is because the market ranges more at the 89 fib then it does trending so we lock in the greatest protion of the profit early rather then later. Incidently profit is only taken at each fib level once. If the market ranges between the 1st and 3rd fib level we only take profit only once the first time it was hit. Only a break across the 55 SMA clean on bar close reverses the trades and opens a fresh full lots order based on the initial capital % risk value.
by Bolt1

Wednesday, January 10, 2007

Stryker Non Farm Payroll Strategy

Three things you can do when trading NFP (along with other data's associated with it)
  1. Don't trade at all that day
  2. If you have a live trade on for some certain time and its giving you at least above 80 pips in gains... place a breakeven s/l and let it run...worst come to worst it'll be a breakeven, otherwise you can easily add 150-200 pips to it, or even better you can hold the pair for longer term, as the real directional move after heavy consolidation (which is mostly seems to be the case prior to the NFP data). So now you can be sitting in the trend and enjoying awesomely
  3. This is what I do. Since NFP is the not the only data on board (there are others as well), so they could be mixed out (good and bad), and hence the scenario could be ugly.
So we have the good, the bad and eventually the ugly side of it as well. Add Federal Reserve Speech and you have perfect recipe for a disaster. Now watch the charts for some NFP data, as soon as it comes out… the first move that u c on the 5 mins graphs is usually the fake one. The real story kicks in the nxt 5 mins charts…. If the high of previous 5 mins is not taken out in the 2nd 5 mins graph, it usually means the top has been formed… I sell with my s/l above the high of previous 5 mins graphs. And my limit usually runs for 140-180 pips from there… risk/reward is beautiful…

However safer is still to watch the whole first 15 mins candle and then sell if the high doesn’t seems to be taken out… you probably won’t get a much better price, but still a good trade can be formed out. Vice versa if it’s shooting down initially.

A plus point being Federal Reserve Speech, where he needed to back bush upbeat comments about the dollar and the twin deficit and you can form a clue where it’ll eventually head…

The loss factor is still there. But if you compare R/R it’s worth a try to me…. And I do that almost every time. Sure I learned through bitter experience not to trade NFP, but this to me is much safer… and if it clicks, I just end up taking positions on other pairs as well w/o any prejudice. Of course when I’m in a very comfortable position in my original first pair and after a break of any major support/resistance on other pairs…. will i take positions.... at times ranging from 20-70+pips.....

EDIT: when watching the 5 minutes or the 15 minutes candles, keep in mind the close of the first initial candle needs to be way off from the high...... since its NFP and we are considering 5 minutes candles we cannot have a close to low below..... rememebr we are talking about NFP....
eg..... high on first 5 mins candle of euro was around 3040, the close was at 3027, however i think it dipped till 3015 on the first 5 mins on the first initial 5 min candles.... so a good sense that there is quite heavy selling interest that lies there.....
now the close was at around 3027.....on the first 5 mins candle. since i was out and didnot trade, i would have waited to short from around 3030/35 with s/l above 3058, since i was having first resistance showing at 3054...... my limits would have been initially around 2850/80 region.. s/l could still be 1 pip above the high of the first 5 mins candle....... but to my mental satisfaction, it would have been above 3054 resistance.

    Trade Using News: 5 Most Watched Indicators

    Currencies do not become weaker or stronger randomly. A large portion of a currency's value is based on confidence in the economic strength of the country. Economic strength is judged by certain key indicators that are closely watched in FX trading. When these economic indicators change, the value of a currency will fluctuate. A currency is a proxy for the country it represents and the economic health of that country is priced into the currency.

    Fundamental releases have become increasingly important market movers. When focusing on the impact that economic numbers have on price action in the FX market there are 5 indicators that are watched the most because of their potential to generate volume and to move prices in the market.

    Why Does Economic News Impact Short-Term Trading?
    The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data is released, it is vitally important to know what economists are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise of 0.3% in the Consumer Price Index, the Actual, is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for CPI to fall by 0.1%, the Consensus.

    Analyzing the longer-term ramifications of an unexpected monthly rise in prices can wait until after you've taken advantage of the short term trading opportunities presented by the data typically within the first thirty minutes following the release. Market expectations for all economic releases are published on our calendar and you should track these expectations along with the release date of the indicator.

    Average Pip Ranges
    1.Non Farm Payrolls - UnemploymentAvg. Move: 124 Pips
    2.FOMC Interest Rate DecisionsAvg. Move: 74 Pips
    3.Trade BalanceAvg. Move: 64 Pips
    4.CPI - InflationAvg. Move: 44 Pips
    5.Retail salesAvg. Move: 44 Pips

    * 2004 Data from DailyFX Research

    1. Non Farm Payrolls – Unemployment
    The unemployment rate is a measure of the strength of the labor market. One of the ways analysts gauge the strength of an economy is by the number of jobs created, and the percentage of workers unable to find jobs. Strong job creation is indicative of economic growth, as companies must increase their workforce in order to meet demand.Release Schedule: First Friday of the month at 8:30am EST

    2. FOMC Interest Rate Decisions
    The Federal Open Market sets the discount rate, which is the rate at which the Federal Reserve Bank charges member banks for overnight loans. The rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board.Release Schedule: 8 meetings scheduled per year. Date is known in advance so check the economic calendar

    3. Trade Balance
    The balance of trade measures the difference between the value of goods and services that a nation exports and the value of goods and services that it imports. A trade surplus results if the value of exported goods exceeds that of imported goods, whereas a trade deficit exists if imported goods exceed exported goods.Release Schedule: Generally released around the middle of the second month following the reporting period. Check the economic calendar

    4. CPI – Consumer Price Index
    The CPI is a key gauge of inflation, as it measures the price of a fixed basket of consumer goods. Higher prices are considered negative for an economy, but since central banks often respond to price inflation by raising interest rates, currencies sometimes respond positively to reports of higher inflation.Release Schedule: Monthly - around the 13th of each month at 8:30am EST

    5. Retail Sales
    Retail sales is a measure of the total goods sold by a sampling of retail stores. It is used as a gauge of consumer activity and confidence as higher sales figures would indicate increased economic activity.

    Release Schedule: Monthly - around the 11th of each month at 8:30am EST

    Source by RefcoFX

    Monday, January 8, 2007

    Trading With Strategy

    Anyone who says you can consistently make money in foreign exchange markets is being untruthful. Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.

    Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side:

    Trade with money you can afford to lose:
    Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

    Identify the state of the market:
    What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.

    Determine what time frame you're trading on:
    Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term. This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

    Time your trade:
    You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.

    If in doubt, stay out:
    If you're unsure about a trade and find you're hesitating, stay on the sidelines.Trade logical transaction sizes:Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.

    Gauge market sentiment:
    Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

    Market expectation:
    Market expection relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.

    Use what other traders use:
    In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

    by ACM/Refco

    Sunday, January 7, 2007

    Hans123 Break Out System

    Simple Combined Breakout System for EUR/USD and GBP/USD
    Determine the 06.00 CET – 10.00 CET High Low on EUR/USD and GBP/USD
    Determine the 10.00 CET – 14.00 CET High Low on EUR/USD and GBP/USD
    Set BuyStop at High + 5 pips and SellStop at Low - 5 pips for both timeframes and both currencies

    Set Target Price at entry + 80 pips for EUR/USD and entry + 120 pips for GBP/USD
    Set StopLoss at entry - 50 pips for EUR/USD and entry - 70 pips for GBP/USD. If the other side of the breakout is within 50 pips for EUR/USD or within 70 pips for GBP/USD then the StopLoss will be that level (Longtrade: SL = Low range - 5 pips = SellStop; Shorttrade: SL = High range + 5 pips = BuyStop)

    Move the SL to breakeven after a gain of 30 pips for EUR/USD and a gain of 40 pips for GBP/USD

    If a certain position is taken and price turns agains you and it breaks the other side of the breakout channel then turn. If the breakout channel is broader then the stoploss first the stoploss will be hit. If the breakout channel is narrower then the stoploss then hitting the other side means that you have to turn your position. There is only one turn per time frame possible
    At 24.00 CET all orders expiring and close all trades at market. On Friday we do the same at 23.00 CET.This link displays the time in every major city in the world: I am using CET time (Amsterdam, Frankfurt).

    Results October
    2005:10/03 : -22 pips10/04: -61 pips10/05: -103 pips10/06: +168 pips10/07: +156 pips10/10: +135 pips10/11: +61 pips10/12: +108 pips10/13: +97 pips10/14: +274 pips10/17: +178 pipsTotal: +991 pips

    The results this month are extreme. In general the system gives you an average return of 600 pips a month from March 2005.

    On monthly basis the results are:
    March 2005: +721 pips April 2005: +940 pips May 2005: +296 pips June 2005: +857 pips July 2005: +1,352 pips August 2005: + 35 pips September 2005: -20 pips October 2005: +1,825 pips November 2005: +554 pips December 2005: +345 pips January 2006: +73 pips February 2006: -13 pips March 2006: +633 pips April 2006: +617 pips May 2006: +1,319 pips

    All calculations before October 2005 are done by hand, so it is possible that there is a small deviation. It is only to show the power of such a simple system.

    Source : Hans123