Saturday, March 15, 2008

Forex Moneymaker Trading System

Forex Moneymaker System is a trend following system. The Key components are 4 Indicators.

1. Heikin-Ashi : Visual Confirmation of A Trend or Consolidation. Confirms also when market is in a Range.
2. Stochastic & EMA34 : Indicates market momentum.
3. Aroon: Confirms Trend.
4. ATR : Indicates current market volume.

This system getting around 30 to 150 pips daily on eur/usd, usd/chf and gbp/usd. And get about 1, 2 or 3 signals in a 24 Hour period.

Here is the Moneymaker
Recommended to use Metatrader for my analysis, and use Alpari feed ( MetaTrader from Alpari site got the most accurate feed for metatrader, others are not reliable, You may try FXDD, heard they are good.

Get the following three custom indicators from metatrader yahoo group,
1. "Heikin-aishi MOD" indicator : Visual Confirmation of the Current trend and not ranging(Extremely Important).
2. Aroon horn : Confirms The Trend has begun!!
3. Detail Daily pivot : Plots the Pivot and Support/Resistance lines. Very reliable for setting Stoploss.

Setup Forex Moneymaker System
Get all the following indicators to the "Custom Indicator folder and fire up metatrader. Get 30 Minute eur/usd, usd/chf and gbp/usd Chart. plot the indicators as follows,
1. Heikin-aishi MOD, just load it up.
2. Load stochastic with default settings, i.e. 13,3,3 and Hi/Low, Simple setup. and Draw a Horizontal line on Stoc at level 50.
3. Aroon horn -no change just the default indicator.
4. ATR 14.
5. Load up 20,2 Bollinger bands(just for confirmation and for my another system).
6. Draw EMA 34(Red), 55(Blue) & 89(Green) on the Charts

Entry, Buy signal :
1. Heikin-Ashi Candle is a Blue Candle(i.e. Blue Hi/Low Leg inside the candle and candle is a Bull/Hollow Candle)
2. Stoc must be crossing from below the 50 line and just above 50 OR
2a. Current Blue Heikin Candle is just above EMA 34 AND Closed above EMA 34.
3. Aroon horn UP(The Blue line) is on the top and FLAT. i.e. on Indicator level 105.
4. ATR 14 is rising. Must be rising, ATR Level not important, But expect levels to be at 15 to 30 on most signals.

Go long on above Indicator confirmations. Note, On #2 use confirmation from either Stoc or EMA34, one will follow the other on usually the same candle or on the next 30M candle.

Stop :
It's a protective stop and for LONGS it is on 10 pip below the next support line of the current candle. Note, when you
load up "Detail Daily pivot" Custom indicator, it plots the daily Support/Resistance lines for you. I use them for my stops. Also for longs ADD Spread to your stops. If you entry bar on or close proximity to a S/R bar, then you may also use the next Support line +10 pips as your stop. Note stops must be 30+spread or above. i.e. 30 to 65 pips(Usually).

Trailing Stop at B/E on 30 pip profit, Profit at 50 -->get stop to 20, 70-->40, 100-->80 etc.

Exit :
when trailing stop gets hit. If it's a false signal then Stoc crossed down from above the 50 line and/OR aroon up bar crossed the down bar(When u'ar long). if I am in front of the PC then EXIT on plain simple consolidation. When price bars are in consolidation ATR should be dropping.

Sell Signal : Just opposite of above.
I've used this system with eur/usd, usd/chf extensively. I also use it with gbp/usd, but some times I get my stops hit due to high volatility of this pair. I've tried demo with other pairs like Eur/Jpy & Eur/Gbp(Works 65% of the Trades), Aud/Usd & Usd/Cad (works at least 55% of the time). The % results are not backtested but from my actual trades on them.

Another Entry Technique
Use a 5 Minute chart entry on the retracement after the signal occurred. You may have to do this for Gbp/Usd if you get whiplashed.

With this system at least 60% of the time you loose 20 ~ 50 pips of the current trend u'ar following, But I feel it's required to make sure the trend has begun!! I wait for Aroon Up/Blue Line to be On top and Become Flat to go long.

Note on the Daily pivot :
IF price bounce from Daily pivot(If entered close to pivot point), you must get your stops to B/E otherwise look for exits. This is especially applicable for GBP/USD. if your trade is away from daily pivot then look for continuation away from the pivot.

By gfxtrader from