Wednesday, January 27, 2010

London Breakout Strategy

This London Breakout Strategy was based on price breakout of the trendline. Using no basic indicators but trendline. This strategy using 1 Hour chart timeframe and recommended pair to trade were GBP/USD and EUR/USD. Other pairs may also be used to tested. This London Breakout strategy was claimed has a win ratio of over 90%. Before you go with live account is recommended to use a demo account until you are familiar with this strategy.

London Breakout Strategy Chart

Trading setup:

For this Forex system to work properly a trader needs to know the basics of drawing trend lines and be able to identify support and resistance lines.

Our working range includes 5 candles: from midnight to 04:00 EST (including the 04:00 candle). Optional: draw a midnight vertical line for visual aid.

With those 5 candles look for valid swing high and swing low of the price. Draw a downtrend trend line connecting a found swing high to the most recent swing high of the previous days (make sure the last one is a valid high to draw a downtrend trend line through it). Do the same for a swing low: connect it to the most recent swing low of the previous days, make sure you are putting in the right trend line using the rules of drawing uptrend trend lines.

If a trader sees, for example, no swings high in the 5 candle range, that means there will be no downtrend trend lines this morning.

The Entry is on the break of either one of the two trend lines and is immediate without waiting for a current candle to close. A protective stop is placed just above/ below the candle that broke the trend line.

Profit target:

Usually the whole trade will unfold within the next three candles (count in the candle that broke the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade, after that we will exit the trade with whatever profits are made.

Main rule - Using S/R + timing:

Profit target is going to be the nearest level of support or resistance according to the S/R lines.
If, however, after only one candle this target is reached, it suggests a very strong market, we would therefore stay in the trade and set our goal for the next support/ resistance level. We would also choose the second S/R level as our profit goal if the first S/R level appears to be close to our entry point.
We have three candles to trade after the breakout, thats why we can trade calmly and allow our goal to shift to the next S/R level.

It is at the traders absolute discretion whether to set the target at the nearest S/R level and exit the trade once the target is hit or use 2 or 3 consecutive candles.

Another simplified option would be with fixed targets and timing. For example, EUR/USD target = 20 pips - spread. GBP/USD = 40 pips - spread. These are only suggestions. For other currency pairs you will need to back or forward test. Thats it! Properly applied this London breakout strategy is more than 90% effective.


Sunday, January 3, 2010

Basket Trading Strategy

This is a very simple forex strategy method and it is all base on price action, indicator free trading and it is done manually. First you have to open a demo account (Indicator Account –IA) and make sure that the broker you choose have the ff. pairs (must have) in their platform:

Most brokers have the following Pairs.

If you are using the IBFX Platform below are your pairs to Hedge:

The first seven pairs is set 1 and the second is set 2. These pairs will hedge each other. Fresh start this method at the very beginning of the week, this will give you a good look at the pairs as weeks goes on. Set 1 trade them SHORT and set 2 trade them LONG. No SL and no TP. As much as possible run a script (attached) so as to maintain correct timing in opening them. Click twice the profit column of your terminal so as to make the positive profit pairs stay at the top and the negatives stay at the bottom or vice versa. Initially the order of this pairs is a mess, let it run for a day or two and you will notice the pairs will start to make a proper order. All the buys will stay at the bottom and all the sells will occupy the top or vice versa. It like putting to rest the dirty bottled water and it will start to settle down after a certain period and all the dirt to the bottom and the clearer water at the top.

About a day or two, all the buys (if negatives) will stay below and the sell (if positives) will be at the top. Now the indication that you should watch is, ideally the bottom 7 slots should be occupied by the negatives, the first pair in the negative that crosses the boundary of positive and negatives is the pairs we are concern. If one of the negative jump to slot 8 (counting from bottom) there is also a corresponding positive that will jump to slot 7. This is one of our signals. We can trade those two pairs that jump out of boundary. There are ways of watching and trading this pair as they start jumping slots. I called this method the Jumping Pairs Technique. There are also numerous variations associated with jumping pairs that I will discuss later in the thread. Another profitable method of trading is the trading of 14 pairs straight Buy or Sell, criteria of which I will also discuss in the later part of the thread.

You should have another account where you real trading will be executed. You can trade the two pairs that jump out. If the pair that jumps up is LONG then trade the two breakaway pairs LONG or vice versa. I also trade the next two pairs that jump of the boundary. I limit myself to just 4 pair’s max 5 pairs being traded at one time. The profit is up to you, what I do is when the pair I’m trading retreats a slot or 2 slots then I close it. Or sometimes I just leave and the Profit Protection EA does the watching of the trade.

Remember do not touch your demo account as this will serve as your indicator and keep it running all the time and just check it once in while for any jumper pair and then trade them.

On the attached terminal copy, you can see the breakaway pair USDCAD and was traded and make some pips on it. Consequently the other pair GBPUSD also jump 1 slot down and can also be traded Long as well.

1) this method is manual.. Again manual... Indicator is fine.
2) I am trying to avoid any EA being made out of this system, indicators are welcome.
3) To those who will benefit from this method, my only request is to GIVE CREDIT TO WHERE CREDIT IS DUE this is given unselfishly free. Pipscorer/Trader101

Source : Forex TSD