Peaks and Valleys (Trading Naked)

Open up a line chart with average price on your ONE HOUR chart. Be sure to pick a color you like! Try and make the zoom pretty far out so you won’t be so distracted by the noise. What you want to look for are MAJOR peaks and valleys. What determines a “major” peak or valley is really up to the trader, but to me, it’s a noticeable change in direction.

Near where the orange arrows are pointing are examples of valleys, and blue arrows point to peaks. The arrows are a bit inaccurate, but it’s the best I can do so bear with me. One could probably set a minimum wave size in terms of pips to determine whether or not a peak or valley would be “major”.

How to Make Pips With Peaks and Valleys

Peaks
• Place BUY orders 3 to 5 pips above each major peak (S/L = 50 pips + spread, no T/P).

When in a PEAK trade (LONG)
• Move your S/L along with each new valley point that exists (most recent valley point).
• Also, continue to place BUY/SELL orders as you go with the new peaks and valleys.

Valleys
• Place SELL orders 3 to 5 pips below each major valley (S/L = 50 pips + spread, no T/P).

When in a VALLEY trade (SHORT)
• Move your S/L along with each new peak point that exists (most recent peak point).
• Also, continue to place BUY/SELL orders as you go with the new peaks and valleys.

What we are effectively creating are trades that have a set allotted risk (50 pips) but have unlimited potential to grow (assuming the trend is your friend).

An Example
Pretend you’ve just woken up one fine morning, and this is the chart you have in front of you. Using Peaks and Valleys, what would I do? By the way, this is a live trade.


Most recently, we have 2 peaks at about the same price range. I usually do the higher of the two when it comes to peaks, and lower when it comes to valleys. We also have those two recent valleys right next to each other. No need for two orders in the same price range, so just do one BUY order by the highest recent peak, and one SELL order by the lowest recent valley. So what happened after we set up the orders? Well, truthfully, I went to sleep, but also we had a successful trade:

As you may or may not see, the pending BUY order I had placed earlier has now been triggered. As I woke up this morning and checked my chart, I realized that I had missed a long opportunity denoted at the green arrow. I also moved my S/L to the next valley just after the green arrow pointing to the peak, AND put in a short order for when/if my S/L is hit. This to me is a sign that the current trend has stopped producing higher high’s and low’s, and MAY be headed south instead.


Kevin Harvell
kharvell @ Forex Factory

Pivot Point Squeeze Technique

The following forex trading system is a system based on constricted volatility followed by a breakout which co-insides with pivot points.

Forex indicators used:

Bollinger bands with MA of 18 and deviations of 2 through to 4.2
incrementing by 0.2
Bands 2 – 2.4 Purple
Bands 2.6 – 3 Pink
Bands 3.2 – 3.6 Red
Bands 3.8 – 4.2 Green

MACD with settings:
Short term MA: 5
Long term MA: 13
Signal number periods: 1

Bollinger Bandwidth with settings:
MA periods: 18
Standard deviation: 2


Indicator Settings

Trigger level
Horizontal line at a value which is determined by currency pair EUR/JPY ~ 0.0056

Pivot Deviation
Distance from a pivot point in which the signal is still valid - 14

MACD Threshold
Threshold of the deviation of the MACD that signals an exit - 6.2


Making sense of it all
The Bollinger bands are used to visually see the volatility of the underlying security. When they narrow, it shows that the market is not sure which way to push price. I.E no-one is buying or selling with urgency. When there is a lot of traders in the market to sell, you will see the market drop and the Bollinger bands increase in bandwidth. It is the same with an up-trending market as well.

It is the breakout of this constrictive time of the market that I use to enter the market. If this breakout is close to a pivot point, it makes the trade setup even more positive.


Entering a trade
The first thing to look for is the narrowing of the Bollinger bands. When the Bollinger bandwidth crosses under the trigger line, you want to keep an eye out for a low on the histogram followed by an increase in bandwidth. This is a signal that it maybe breaking out and that is the entry point. Enter the market long if the MACD is trending up or short if it is trending down. Put more simply, trade in the way that the market is breaking away.

When I enter a position, I enter a wide stop loss as the EUR/JPY can be volatile and go in the other direction before it trends in the predicted direction.


Exiting a trade
When the MACD histogram is starting to turn in the opposite direction of the trade with a certain threshold of this turn, it can signify an end to the rally. The threshold must be set at a level which is not too sensitive as to make you exit a longer profitable trade but not too lenient as to give much of your profits back. Experimenting with this level is the only way to know which is best for different pairs.

Another way to plan your exits is to stage out at differing pivot levels. Say you enter a trade when it breaks down from the Pivot point. You would exit say half your lots at the 1st support line and then move your stop loss up to entry. Then your remaining lots at the 2nd support.

Examples:

The top red bars show a short. The bottom indicator pink bars show short entries which do not take into account pivot points. The last trade on the right in which I am still in is turning out quite profitable, I just don’t enter with as many lots as if it did line up with the pivot points. You can see with the restriction of the bands on the right that something big was going to happen, the system tells you when it is time. I set up alarms on the indicator to alert me when to enter a trade. With different pairs I have different voices, so On EUR/JPY I hear “enter long EUROYEN” when the signal is given and “exit EUROYEN”. Pretty cool but enables me not to be glued to the screens, which can be hard to get away from…


Another short term trade short which resulted in a profit of 146 pips

-GCTrader1 from www.forexfactory-

Daily 95 Pips Forex Strategy

The basis of this system is very simple and has proven to be profitable, though I am adjusting the money management/profit targets.

Overview

This is a pure "set and forget" system where trades are placed at the same time everyday. The option is also there for those inclined to monitor their positions to adjust stop levels as profit targets are reached. Please note that there is currently an Expert Advisor being created that will automate the trading of this strategy, thus keeping to the set and forget objective. Please click on the paperclip at the top right hand side of the screen to find the current versions.

By setting multiple profit targets we are exercising money management, while aiming for 95 pips profit from a 50 pips move in price. We will simply be placing orders 5 pips above the previous days HIGH and 5 pips below the previous days LOW.(Actually, it's more like the previous 17 hrs at 5 pm EST.). Use a 30 pips stop loss for all orders. Orders are placed on Monday, Tuesday, Wednesday, Thursday and Friday.

Execution

1.) At 5pm EST open the 1hr chart (2hrs b4 start of the Asian session) of USDJPY. For those whose brokers spreads are still wide at 5pm EST on Sunday (which is 7am my time on a Monday here in Brisbane), in order to avoid the wide spreads you may need to wait until they reduce to normal before placing the orders for the day. I typically have to wait until around 8pm EST.

2.) Use the high and low of the previous 17hrs. For Mondays orders go back as far as 00:00 EST on Friday for high and low.

3.) Open a total of 6 PENDING orders (for each pair) including 3 BUY STOPS and 3 SELL STOPS that expire within 24hrs (I use 18hrs) as follows:

Buy/Long Orders:
1 - Entry = HIGH+5pips, Take Profit=15pips, S/L=30pips
2 - Entry = HIGH+5pips, Take Profit=30pips, S/L=30pips
3 - Entry = HIGH+5pips, Take Profit=50pips, S/L=30pips

Sell/Short Orders:
1 - Entry = LOW-5pips, Take Profit=15pips, S/L=30pips
2 - Entry = LOW-5pips, Take Profit=30pips, S/L=30pips
3 - Entry = LOW-5pips, Take Profit=50pips, S/L=30pips

That's it!

Once you have placed your orders you are free to go and do something else with your day as this strategy does not require you to be monitoring the trades. Though, as already mentioned, to maximise results you may choose to adjust stop levels when profit targets are reached.

There can be 4 possible outcomes after either the long or short trades are triggered:
1.) All 3 profit targets are reached for a total of +95pips.
2.) The first 2 profit targets are reached (+45pips) and the remaining lot is stopped out (-30pips) leaving a total of +15pips.
3.) The first profit target is reached (+15pips) and the two remaining lots are stopped out for a total of -45pips.
4.) All 3 lots are stopped out for a total of -90pips.
Additional to this is the variable outcomes of when both the long and short trades are triggered.
Also note that for those so inclined to monitor the trades, stop levels may be adjusted on remaining lot/s to protect already achieved profits. Trailing stops may also be used at your discretion.

Please note that as a general rule of thumb you should not risk any more than 3% of your trading account on any one trade. Therefore, with the DAILY95PIPS strategy the order size will need to be divided between the long and short orders. The total potential loss on the long orders (90pips) will therefore add up to 3% of your trading account. Alternatively, you could risk 3% of your trading capital on EACH order, totalling 9% of your trading capital being risked for the long trades. The same applies to the short orders.

By: mikelath
www.forexfactory.com

Fibonacci Forex Trading Signal

The fact that Fibonacci numbers have found their way to Forex trading is hard to deny. Moreover, trading currencies with Fibonacci tool for many traders have become the bread and butter of their whole trading career. So, shall we look at the one of such good Forex trading systems today?

Trading setup and tools we need:
Time frame: 3 hour (or 4 hour).
Currency pairs: any.
Indicators:
Fibonacci tool - our main tool
EMA 100 – green (visual guidance)
SMA 150 – red (visual guidance)
RSI (14) on a daily chart

We will be working with next Fibonacci retracement levels: 0.382, 0.618, 0.250 and 0.750.
Default stop loss – roughly 100 pips and then adjusted according to the most recent swing high/low.
Profit target – no target is set as we will let the profits run.
Trading Rules:
Find the closest to the current price wave with a distance from High to Low over 100 pips.
Apply Fibonacci on it no matter if the wave is going up or down, only size matters.
Some terms we are going to use here:
The corridor between 0.382 Fibonacci retracement level and 0.618 retracement on the chart – will be called a “must channel”.
Fibonacci retracement levels will be numbered always from bottom to top, no matter whether it is an up or a down wave. E.g. at the bottom we will always have 0.250, then next 0.382, 0.618 and finally on top – 0.750 Fibonacci retracement level.
Entry rules:
Always enter only according with both:
1. EMA and SMA trend suggestion (e.g. green on top – uptrend, red on top - downtrend)
2. RSI suggestion (e.g. reading below 50 – only sell orders, above – only buy orders).

Now, after applying Fibonacci on a wave bigger than 100 pips we wait for the price to go inside a “must channel” area (at least to make 1 pip into the channel). Only then next rules will be valid:
- If a full candle (including shadows) is closed below 0.250 Fibonacci retracement, we go short. If we are currently long – it is time to close long position – it is an exit rule as well.
- If a full candle (including shadows) is closed above 0.750 Fibonacci retracement, we go long. If till this time we had short positions open – we close them – and again it is an exit rule as well.

Important: once another wave greater than 100 pips occur, set a new Fibonacci on the new wave. Retracement levels will change and so we will now follow new retracements.
(Optional: for visual aid traders may mark old Fibonacci wave to see the general pattern of consecutive waves on the chart).

click image to enlarge

That’s it. Stay in trade, resetting Fibonacci with each new wave and moving a stop loss according to the last swings high or low (in simple words, a stop loss will be always just below the Fibonacci 0% line) until it is time to close the position according to our rules.

This strategy prevents a lot of “bad” entries, eliminates early exits and allows staying in trade for a long period of time helping to take everything a current move can offer.
Traders may close all good winning positions on Friday evening if they prefer not to hold them over a weekend.

By: Edward Revy
www.forex-strategies-revealed.com

IB Forex Trading - 40 to 100 Pips per Day

This forex system is very simple and requires only one indicator. The system works in anytime frame and with any pair. The Indicator you need is Slow Stochastic setting 8.3.3 some platforms will only allow 8.3 that’s ok.

Next the key part of the system in all trades is the INSIDE BAR or IB. An IB is simply when the current bar is less than or equal to the bar to the left of it. The inside bar can also be the same size as the previous bar.

klik to enlarge the picture

THE INSIDE BAR is a standard technical analysis pattern; however most people over look it. You can also use an outside bar or OB.

HOW TO TRADE THE IB
First look for an IB to form then check if it’s a valid IB with the stochastic indicator set up.

STOCASTIC INDICATOR SET UP
When stochastic are below or around the 20 and oversold and starting to hook round look for an IB to go long, When stochastic are up to 80 and above and starting to hook round in overbought look for an IB to go short you will find them the best in trending markets also range bound markets but if the price action is choppy stay out.

The Stochastic don't have to be exactly 80-20 but it is stronger signal if they are. Sometimes as an example they may at 35 as long as they start to turn and hook up and an IB forms it’s a possible valid trade.

ENTRY
To enter a trade wait for the next bar after the IB to go up 1-2 pips higher than the IB for a buy signal or 1-2 pips lower for a sell signal. Also the shadow of the IB must be inside the prior bar as well in the overall size otherwise it’s not a valid signal.

If after the IB formed you get another bar the same size as the IB and it doesn’t go 1-2 pips either way then you may look at up to 3 more bars after the IB bar to confirm a signal and enter a trade. If you don’t get a signal stand a side and wait for a new IB to form.


STOPS & EXITS
For stops and exits you can trail a stop at the bottom of the prior bar to the IB by 1-2 pips if you’re more Aggressive 2 bars below the prior bar to the IB.

Exit when stochastic cross in the opposite direction but becarefull when going long as when stochastic hits 80 it can hang around a while first before carrying on up or just staying flat in a strong up trend so wait for a hook down and heading under the 80 level or a reversal candle to exit. Also to exit look for the big numbers if you were trading GBP/USD. Try not to enter trades around the big numbers wait for price to go through and retrace to the support or resistance then look for an IB to form and take the trade.

I look at a 1 hour chart first and see what the over all trend for the day is going to be then trade off a 15 min chart for the day.

One of the benefits of this System is it can get you into trades early before the crowd. Once you have demo the system how would you like to trade live


James
Master Contributor and Member of BabyPips.com Forum

25 and 50 EMA Forex System

This is a basic 25 and 50 EMA forex system setup;
4 Hour Chart
EMA 25 (Green)
EMA 50 (Blue)
Relative Strenght Index -RSI (14)
Stochastic (5,3,3)
Average True Range (100)



FOREX ENTRY CRITERIA

Take LONG position when
1. A candlestick open/close above the 50 EMA line
2. RSI is at or above 50 center line



Take SHORT position when
1. A candlestick open/close below the 50 EMA
2. RSI is at or below 50 center line



STOP LOSSES AND MANAGEMENT

Stop losses in this forex system are relatively easy to set. From the point of entry add 1 x’s or 2 x’s the current ATR value.

Trade management is extremely important with this forex system. The initial profit taking target is between 50 and 100 pips. Regardless of what position you have open. Recommended is to close 50% of your profits at your first target and immediately move your SL to B/E.

This can sometimes lead to your position being closed out when the price retraces, leaving you out of trade and possibly missing a greater profit, but it is the safer way to trade.

Another risk management option is minimizing your SL by 50% once you hit your initial target of 50 – 100 pips.

The remainder of the position is left to trail for profits. It is closed out either at historical S/R or at the cross/touching off Stochastic on the 4 Hour Chart. We do not trade on any time frame smaller than the 4 Hour Chart.

I recommend you move your SL from B/E to newly created S/R every time the price moves in your direction so you can better trail it. Of course you may also use an automated trailing order.

The important thing is to take profit at 50-100 pips after your entry on the candlestick open. Fake outs do occur, but when we take profit at 50 – 100 and move to B/E we are safe even at full price reverse.

This is an H4 System, trades will occur very often, You can expect 100 to +1000 pips.

Recommended to trade GBP JPY or EURJPY due to their volatility and NZDUSD because it trends steadily.


EXIT OPTIMIZATION

In many instances you will be forced to sacrifice more pips for the safer approach to forex trading. I’ve implemented the use of the Stochastic indicator when trading 25-50 EMA System so you can pinpoint an area on the chart which will leave you exiting your remaining position at a level you normally wount be able to capitalize on due to risk management.

Every time the Stochastic indicator begins touching or crossing you should consider exiting as the price may be pulling back. Naturally with this also occurs the occasion in which the price pulls back but does not close under the 50 EMA, leaving you out of a trade and probably having you wish you never exited in the first place. To capitalize on the bounce an minimize loosing to many pips we take advantage of the 25 EMA.

When price corrects, it will normally test the 50 EMA, if it does not break you will be looking to reenter, however an immediate reentry or an entry off a close/open after the bounce from 50 may often be false. In order to reduce this, we wait for price to close above 25 EMA before attempting another Long in the same direction of our previous trade. I recommend having a crossing or a touching of the Stochastic Indicator complement the open/close above 25 EMA when considering a reentry. Yes.. pips will be missed, but it is the least dangerous approach to the problem.

On the next picture you will see (in order of appearance) an entry, a first exit optimization area, a trade reentry based on 25 EMA and another Ex. Op. area.





The idea here is to move you SL to a LOW every time the price breaks a High (BULLISH) and vice versa: move your SL to a HIGH every the price breaks a low (BEARISH). Use Exit Optimizing when necessary.


Regards,
E. Lang
www.forexfactory.com

4 Hour Simple System

This is a simple one that I have found from forexfactory forum, it seem good system to try

Setting :

Simple Moving Average (SMA) 100
Damiani Volatmeter 10,60,1.4 (download Damiani volatmeter here)
MACD - 15,26,9
4 hour chart
Pairs EURCHF (it has a medium level volatility and it does not get trapped between news, though it reacts mildly but it could be worth checking the other pairs)


System Rules

Long:
Take a long trade when price closes above 100 SMA and MACD histogram goes above 0 line.

Short:
Take a short trade when price closes below the 100 SMA and MACD goes below 0 line.

Re-entry:
When the price, once has given a long or short signal, retraces back to the 100 SMA, re-enter the direction you went the first time. It is recommended to do it the first 2 times the price hits the 100 SMA and keep a watch thereafter.

Retrace entry:
When a bar is over 100 pips, wait for a retracement to occur towards the 100 SMA line and then enter. This will save you from unnecessary draw down.

Exit rule

Scaling:
Take 3 positions per trade. Set first TP to 40, 2nd TP to 70 and let the third position run with Stoploss at breakeven.

Stop loss:
1. Previous high/ low or what you call as support and resistance.
2. AutoPivot Indicator. Use only the weekly option in it and place stop accordingly.

Filter

This is a trend following system, and has it's bad days. To avoid getting trapped in a range, use the Volatmeter indicator. It is, so far the best indicator to helps detect a ranging a trending market. In volatmeter indicator watch when the white line crosses above the green, It mean the market beginning a range or already entered into it. When the green line crosses above the white line, market getting into a trend, this is what we looking for to take short position or long position.

As an example; once trade hits the first target, moved the second position to breakeven and leave the third as it is. When the 2nd position is hit, move the 3rd to breakeven, giving the trade enough room to breathe. Then look for the price to come back, to add to the position, if it is open. At times, when price comes back to the 100 SMA, get stopped out at breakeven, it has given 100 pips on 2 positions.

Another example

The blue box is the main entry and the yellow, you can see, is the re-entry.

By Marketsnipers from www.forexfactory.com