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COMPLEX STRATEGIES Forex Forex complex t rading st rategies rategies are those that include more than three technical indicators for generating signals and have a number of important rules to use as a complex technique in trading.
Attention all users: trading strategies are posted for their educational purpose only. Trading rules may be subject to interpretation. Risk levels may be increased dramatically under extreme market conditions. Use and/or modify the ideas to create your trading style/system, but only at your own risk. We strongly recommend testing strategies on demo accounts before investing money. Again those strategies will will be free and will have illustrations, examples, analysis and recommended trading set-ups. This should be a good strategic base for every trader to explore something new and improve own trading systems and techniques. The fact is, complex strategies sometimes get unnecessary complex. But even then it will not stop most of the traders from testing and applying them in Forex trading. Here we have a new level of strategy making: you can either simplify the system you like, adopt its rules completely and trade happily or just make some useful notes notes for yourself and move on. Stay tuned! Truly yours, Edward Revy and my best Forex strategies Team
Complex Forex Strategies: • • • • • • • • • • • • • • • •
Complex trading system #1 ("Multi-conditional") Complex trading system #2 (“2-Cross”) Complex trading system #3 (MACD Divergence) Complex trading system #4 (Trend trading with EMAs) Complex trading system #5 (Fibonacci trading) Complex trading system #6 (Munzer Forex System) Complex trading system #7 (Mohammed Munzer Forex system) Complex trading system #8 (CCI Divergence Breakout) Complex trading system #9 (H4 Bollinger Band Breakouts) Complex trading system #9-a (H4 Bollinger Band Deviation) Complex trading system #10 (Egudu simple 4 tools trading) Complex trading system #11 (Trading MACD consolidation) Complex trading system #12 (Fibonacci + trend li ne confluence) Complex trading system #13 (The Shark Attack System) Complex trading system #14 (Pivots, SAR + EMAs) Complex trading system #15 (Rainbow Madness)
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Complex trading system #1 ("Multi-conditional")
Currency: ANY Time frame: 1 hour + 30 min + 5 min. Indicators: 14 EMA, 21 EMA, 50 EMA, Bollinger Band (20, 2). Entry rules: Enter on 5 minutes chart. On 5 minutes chart, for uptrend: if 14 EMA is above 21 EMA, then if both 14 EMA and 21 EMA are above 50 EMA, then if 50 EMA is within the Bollinger Bands borders, then... go and check 30 min chart: if price bar is a up-close bar and sitting on 14 EMA or 21 EMA and same again: if 14 EMA is above 21 EMA, then if both 14 EMA and 21 EMA are above 50 EMA, then if 50 EMA is within the Bollinger Bands borders, then... go Long... OR go and check if 1 hour chart meet same conditions as for 30 min chart and then go Long. If at least one condition is violated – stay away. The reverse is for the downtrend: Enter on 5 minutes chart. On 5 minutes chart, for downtrend: if 14 EMA is below 21 EMA, then if both 14 EMA and 21 EMA are below 50 EMA, then if 50 EMA is within the Bollinger Bands borders, then... go and check 30 min chart: if price bar is a down-close bar and touching 14 EMA or 21 EMA and same again: if 14 EMA is below 21 EMA, then if both 14 EMA and 21 EMA are below 50 EMA, then if 50 EMA is within the Bollinger Bands borders, then... go Short... or go and check same rules for 1 hour chart and only then enter Short on 5 minutes chart. Exit rules: exit when any of the conditions is violated or when the profit is high enough to close the trade.
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Complex trading system #2 (“2-Cross” (“2-Cross” )
Currency: GBP/USD (preferred) or any other. Time frame: 3 hours (preferred) or 4 hours. Indicators: SMA 200, SMA 100 – these are two influential SMAs; you will find price “obeying” their boundaries. SMA 15 EMA 5 MACD (12, 26, 9) Trading Rules: Since we are dealing with “unpredictable until settled” indicators (EMA, SMA, MACD) we will always be using signals AFTER the current signaling candle is closed. 1. Never open a trade if price is less than 25 pips away from 100 SMA or 200 SMA. 2. Do enter the market when price has crossed either 100 SMA (expect large move) or 200 SMA (expect very large move) and only after the current candle has closed on the opposite side of the SMA. SMAs this big do not get crossed very often. 3. Set stop loss initially at 50 pips. Look for nearest support/resistance level and adjust it accordingly – it could grow up to 70-90 pips but it should not be less than 40 pips. Anyway this measure is taken only to save us from a sudden “exploding market”, in all other cases it will not be hit as our system will take you out from the trade earlier. 4. Enter in the direction of 5 EMA once two conditions are met: 1) 5 EMA crosses 15 SMA “permanently” – which means the current candle is closed and lines are “locked” and will not move while we make a decision to open a trade. 2) MACD lines are crossed, and the current candle is closed. 70
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The 2 crosses do not have h ave to happen simultaneously. MACD lines can cross earlier than EMA and SMA or shortly after, but there should be no more than 5 candles in between 2 crosses. If “2-cross” condition is not met – n o entry. Exit rules: exit with the same rules as for entry: when two crosses are in place. If we have only one o ne cross – we are still in trade. Profit target: a) can be set to a desired amount of pips and followed with trailing stop further once the target is reached. b) or use 50 pips profit target – do start chasing the price with trailing stop after gaining 50 pips. c) or you may not use trailing stop and set no profit targets, then exit according to Exit rules – on the next “2-cross”.
Let’s walk through the numbers: #1 – EMA 5 crosses 15 SMA, MACD lines also crossed, price is not close to SMA 100 – we place Long order. #2 – again we have 2 crosses: moving averages cross and MACD – we exit Long and immediately place Short order. # 3 – 2 crosses are in place, by the time our current signaling candle is closed we are already far enough from 100 SMA, so we close Short and open Long position. Yes, till this point we were trading in sideways moving market – so no profits here, may be some small 71
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negative results. Solution – trading only during active hours, for GBP/USD it is London and New York sessions. #4 – As we were Long – this point is our exit (“2-cross” condition is met again) and immediately place Sell order. #5 – moving averages on the chart have crossed, however MACD – does not, we stay in trade. We watch price passing 100 SMA and closing below it – it is a good sell signal, but we are already trading it. #6 – first appears MACD crossover, followed by moving averages crossover – at this point we close our Short position. Do we open Long position immediately? No, because we are very close to 100 SMA. We need to wait until candle passes and closes above 100 SMA to open a Long trade. Once it happens we are in trading Long. #7 – MACD lines has attempted to cross, but nothing to worry as there is no second cross from moving averages. #8 – same as #7. #9 – time to finally close Long position and go Short. Complex t rading s yst em #3 (MACD (MACD Divergence)
Currency: EUR/USD (preferred) or any other. Time frame: 30 min. Indicators: MACD (5, 26, 1) – draw 0 line, Full Stochastic (14, 3, 3), EMA 3, SMA 13 Trading rules: watch for divergence between the price on the chart and MACD or between price on the chart and Stochastic. Once divergence spotted, wait for EMA 3 and SMA 13 to cross and enter the trade in the direction of EMA 3. Set stop loss at 26 pips. Take half of the profit at 20 pips; let the rest to run further with trailing stop in place.
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Divergence on Stochastic can be found the same way as on MACD. The reason for using both MACD and Stochastic is that one of the indicators can show divergence while the other will not at given period of time. Complex tradin g sys tem #4 (Trend (Trend trading with EMAs)
Time frame: 1 day, 1 hour or 30 min. Currency pair: any. Indicators: 80 EMA; 21 EMA; 13 EMA; 5 EMA; 3 EMA; RSI (21) Trading Trading rules:
80 EMA suggests major trend direction. When market trades above 80 EMA – uptrend, opposite for downtrend. 21 EMA and 13 EMA give a current trend direction. While 13 EMA stays above 21 EMA – uptrend, opposite for downtrend. RSI (21) above 50 mark suggests an uptrend, below – downtrend. Entries are made on a cross of 3 and 5 EMA in the direction of a trend: Buy when 3 EMA crosses 5 EMA upward in an uptrend market AND both 3 and 5 EMA cross a channel of 13 and 21 EMA AND RSI is above 50, and price is above 80 EMA. Entry with Sell order when 3 EMA crosses 5 EMA downward in a downtrend market AND both 3 and 5 EMA cross the 13 and 21 EMA AND RSI is below 50, and price is below 80 EMA.
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Note that additional entries are possible when 3 and 5 EMA cross back and then shortly after make a signaling cross again. Note, that when we get the signal to enter we always wait for the current price bar to close and only then (if conditions nave not changed) - open a position.
Exit rules: when 13 EMA crosses 21 EMA back. Keep an eye on 80 EMA, also watch RSI 21 to cross 50 point mark again - both will suggest immediate exits.
P.S. For more conservative trading take positions that do not contradict with 80 EMA's trend suggestion. Complex trading system #5 (Fibonacci trading)
When a trader chooses to use small time frames (like 10 min, 15 min, 30 min even 1 hour) risks to be wrong are always higher than with larger time frames. Therefore, it is very important to have a really good Forex trading system that can advise on entries with high chances to win and what's more important it should be able to tell exactly where to exit without need to constantly monitor the price. Note also, the more traders look at charts, the more they tend to have controversial feelings about the success of a current open trade... With all this long introduction, it is only left to mention that this strategy will require from traders basic knowledge of use of Fibonacci tool. What is Fibonacci tool and how to use it? Simply Google "forex fibonacci" phrase and you'll find a lot of information about it. 74
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...This is probably the only reason we classified this trading system as Complex one, not every trader is comfortable with using Fibonacci studies in Forex. Trading Trading setup: Time frame: any over 5 min and less than 3 hour. Currency pairs: any. Indicators: 5 WMA Rules:
Look at the price waves. Find the most recent swing high and the most recent swing low = so called Fibonacci A swing and B swing. Pull Fibonacci from A to B. To know which direction to pull (up or down) simply look at a t the trend; if it is unclear, find appropriate AB swings and set Fibonacci in both directions. Once set, wait and watch the retracement from AB swing to unfold. During the retracement there are three conditions to be met in order to consider trading: 1. The price must touch 5 WMA. 2. The price must at least touch 0.382 Fibonacci retracement level. 3. The 0.618 Fibonacci retracement level must not fail. Here it means the price should not close below (uptrend) / above (downtrend) 0.618 retracement line. It can touch or poke it, but the level must withstand the "attack". When all three criteria are met, enter once the candle is clearly closed above 5 WMA for Long entry, below - for Short. Stop order is placed always 4-5 pips above (downtrend) / below (uptrend) the 0.618 Fibonacci retracement level. Profit target is set to 1.618 Fibonacci expansion level derived from point A.
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Complex tr ading sy stem #6 (Munzer (Munzer Forex Forex System)
Mine is on 1 hour chart: Two EMA of settings 5 and 15 - close Two EMA of settings 144 and 169 - close- vegas 1 hour tunnel asctrend2 for determining stop MACD settings 12,26,9 RSI settings 21 Trend trigger mod Entry long: EMA 5 and 15 crossover upward crossover of MACD lines upward RSI(21) > 50 and TrendTriggerMod upward Short entry: EMA 5 and 15 crossover downward crossover of MACD lines downward RSI(21) < 50 and TrendTriggerMod downward Hint1: do not make the trade if trendtriggermod do not agree the others Hint2: beware of the 2 EMA's 144 and 169 They work well as Support and Resistance
Exit: Use new crossover of MACD lines Stop loss depends on asctrend2 or use ATR(14)*2" Munzer, our greatest appreciations for contributing this Forex system!
Complex tr ading sy stem #7 (Mohammed (Mohammed Munzer Forex Forex sys tem)
timeframe: daily EMA(34); SMA(150); Double CCI (CCI=50 and CCI=14); Full stochastics (5,3,3) - When price is between EMA(34) and SMA(150) Do not trade - Trade long when EMA(34) is over SMA(150) and a daily candle crosses EMA(34) and closes over it by putting an entry order 10 pips above the candle's high taking into consideration that stochastics lines are up and not in the overbought zone - trade short when EMA(34) is below SMA(150) and a daily candle crosses EMA(34) and closes below it by putting entry order 10 pips below the candle's low taking into consideration that stochastics lines are down and not in oversold zone 77
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- Exit depends on stochastics lines crosses Stop loss= 75% Daily ATR - You can repeat entrys after retracements towards EMA(34) or towards "NO TRADE ZONE" depending on double CCI patterns trend continuation and trend line break only if stochastics and entry conditions returns valid -closing above EMA(34) for long or below it for short and with entry orders 10 pips above for long and below for short. Complex tr ading s yst em #8 (CCI (CCI Divergence Breakout)
Timeframe : 15mins and above Indicator : CCI (Commodity Channel Index) Description : This strategy uses hidden divergence and price action to take a breakout trade. Divergence is the one key indication in the market that can be useful and is not lagging. It is a sign of a market reversal coming up in the near future. Understanding and making use of divergence will help a technical trader greatly when analyzing the market.
Note : On my CCI, I always connect my peaks (tops) never the bottoms (dips). It is critical that you watch the video tutorial below with this strategy to understand it fully. Long Breakout - Price must be trending downwards - CCI must go towards the upward direction and bounce - After a bounce on the CCI, connect your high peaks on your price 78
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- Aggressive : At a clear close above the trend line enter long - Conservative : After the trend line is broken, wait for a pullback to the trend line to enter Short Breakout - Price must be trending upwards - CCI must go towards the downward direction and bounce - After a bounce on the CCI, connect your dips on your price - Aggressive : At a clear close below the trend line enter short - Conservative : After the trend line is broken, wait for a pullback to the trend line to enter Stops - If your trend line is not that steep, you can keep your stops at the high/low of the breakout candle. - If your trend line is steep, keep your stop at the swing high/low - If your trend line is medium steep, keep your stop at the low of couple candles away Exits - 1:1 Risk to reward. If your stop is -12 pips your limit should be +12 pips. - Open 2 lots. If your stop is at -10 pips, once your trades goes in your favor and you're at +10 pips, close 1 lot and let the other one run. Exit at Support and Resistance levels. - Exit at the nearest 50 or 00 level. These are psychological levels. (make sure your exit is at least the same number of pips as your stop, otherwise dont enter the trade) - Trailing Stop. Once in a trade, at the close of each candle, place your stop 1 pip below the low (if in a buy trade). Vise versa for sell trade.
Short Example :
Long Example :
Complex trading system #9 (H4 Bollinger Band Breakouts)
Open the 4 hour chart and choose whatever currency you want. 79
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Insert the Bollinger Band (20) indicator and be sure that its center line is appearing. Identify 2 valid lower points OR 2 valid higher points in the Bollinger Band and drop a line from the first to the second line; it will be our break line. Now when a candle closes above the break line issued from the higher points and in case the center line of the Bollinger band in the 1 hour chart crosses the break line then we have a LONG Trade. If the candle in the 4 hours chart closes under the break line issued from the 2 lows points and in same time the center line of the Bollinger band crosses the break line in the 1 hour chart, then we are in a SHORT trade. If the candle in the 4 hours chart closes under the break line issued from the 2 lows points and in same time the center line of the Bollinger band crosses the break line in the 1 hour chart, then we are in a SHORT trade. I will give an example: Open the 4 hours chart, open NZD/USD currency and locate the date 2008/1/16 2:00 AM EST
You can see the breakLine I dropped; it is a 2 lows points Bollinger Band which I mention it above Now wait till a 4 hours candle break the BreakLine, you can see the candle (A) first breaked the Breakline, but is it a valid Sell Entry ? we must confirm it. So we open the 1 hour chart and locate the same Point (A) in the 1 hour chart.
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We look at Point (A) in H1 and we locate its center Line (The Center Line of The Bollinger Band), as you remark that the center line didn't cross the Break Line as the candle A did; so it is not a valid sell entry, and as you can see the price go up again. So we wait another opportunity. We reopen the H4 (4 hours chart) and wait till point (B) is formed, we see the H4 candle crossed the BreakLine, is it a valid sell entry ? we open the H1 chart and locate the Candle (B) , we look at the center line we see the center line crossed the breakLine so we do a short because we confirm the sell entry. Complex tr ading sy stem #9-a #9-a (H4 (H4 Boll inger Band Deviation )
In this strategy I will add some advanced techniques to the last strategy "Bollinger Bands deviation strategy Part I". I". So first of all I will open the EUR/USD chart, then I will open the 4 hours time frame and I will add the Bollinger Band (20) and Zig Zag indicators. As we saw in the previous video, the entry point was the closing candle which corresponds to the bollinger bands deviation angle, this angle was defined by dropping a line from the lower ZigZag for short trades and from the upper Zig Zag for long trades. Today I will make this strategy more accurate, I will not wait the H4 to finish the candle to enter into a long trade, what I will do is the following: I will spot a deviation in the bollinger band of the H4 chart and open the corresponding 1 hour chart, as soon as I see a bollinger band deviation I will enter a trade when the 1 hour candle is finished, by this way I entered a trade much sooner then the H4 chart which gave me more pips in advance. Concerning the exit point. The exit point is defined by the H4 chart, we simply wait the H4 breakLine to be intersected with the H4 bollinger Band to exit the trade which gives us a maximum number of pips. So we used the H4 chart and the H1 chart in combination to harvest the maximum profit. You can view the video of this strategy at: http://www.rpchost.com/Forex-Videos.aspx?head=Rpchos http://www.rpchost.c om/Forex-Videos.aspx?head=Rpchost.com%20-%20Bollinge... t.com%20-%20Bollinge... Complex trading system #10 (Egudu simple 4 tools trading) 81
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any currency; 1hr, 7EMA(blue); 21EMA(red); ADX(14); MACD(12,26,9)
enter long once the 7EMA crosses 21EMA up a nd the ADX has passed it's 25 or 20mark and the MACD is trending up. The other way round is for short position. Note, only enter a position once the ADX has passed it's 25mark. Exit: exit any position once the 7EMA crosses the 21EMA. Also, the MACD should be looked at before entering a trade, when it's consolidating, you should stay away from the trade. Complex trading system #11 (Trading MACD consolidation)
Time frame: 1hr currency: any indicator: MACD(12,26,9)
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Entry: place a buy stop and a sell stop 5pips during the MACD consolidation with a stop loss of 10pips from entry and a profit target of 30-50pips. Please note that, the MACD must be very close, in fact it should almost become a straight line only then should you enter the positions. l hope to give a p icture shot of it soon, but u can check the chart of GBP on the 7th, 10th, 14th of Dec 2007 on the hourly chart. Complex trading system #12 (Fibonacci + trend line confluence)
Here is a low risk high reward strategy. It works best on 4H and and Daily chart for all currency pairs. Buy or sell at the confluence of trend line support/resistance and 61.8% or 78.6% fib retracement of the latest swing.
Entry should be strictly in the direction of the long term trend. Place Place your s top 20 pip below or above the next fib level.
Trade with three lots. Profit target for the first lot should be twice the risk. When first target is achieved, move the stop to break even and book profit on the second lot at next horizontal supp/res area. Let run the third lot profit till the breach of trend line or with the help of your favourite indicator to confirm the trend reversal. Complex tr ading s ystem #13 (The (The Shark Shark Att ack System)
Discovered long before there were stock markets, the Fibonacci method has proved to be useful for traders. 83
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One of the key goals of stock market traders is to find a way out of the maze of the stock market. Toward this goal, traders have resorted to using astrology, rocket science, fundamental analysis, technical analysis, and more to achieve this goal. The Fibonacci method is one such attempt to unravel the mysteries of the stock market, in this case by relating the market's movements to the Fibonacci series. Fibonacci series were discovered long before there were stock markets, but they relate amazingly well to the stock markets and other natural phenomena. Leonardo of Pisa, a 13th-century Italian mathematician better known by his nickname, Fibonacci, is credited with the creation of the Fibonacci series. The series has its first two numbers as zero and 1. You arrive at the remaining numbers by adding the previous two numbers. For example, 0+1=1 1+1=2 1+2=3 2+3=5 3+5=8 5+8=13 8+13=21 13+21=34 21+34=55 34+55=89 and so on. Thus, we arrive at a series of numbers: zero,1,1,2,3,5,8,13,21, 34, 55, 89. These numbers are related to each other by a ratio. Many phenomena in nature, science, and astrology can be explained by using this property of the Fibonacci numbers. Fibonacci numbers also have an interesting relationship with each other. Using the sums from the examples above, we get 21/34 = 0.618; 34/55 = 0.618; 55/89 = 0.618. Similarly, 34/21 = 1.618; 55/34 = 1.618, 89/55 = 1.618. This ratio is known as the golden ratio and an d forms the basis of the Fibonacci methods in technical analysis. The other two fractions, 0.382 and 0.5, most commonly used in technical analysis are calculated as follows: (1 - 0.618) = 0.382 and 0.5 is the mean of 0.382 and 0.618. FIBONACCI RETRACEMENTS
Fibonacci retracement tools are conveniently available in most software packages. To use it, we must: Identify a swing high and a swing low in the price action. Generally, use the 38.2%, 50%, and 61.8% values (Figures 1 and 2). If those values do not hold, 25% and 75% can also be used. Look for supporting evidence along with Fibonacci retracements, such as extreme values in short-term relative strength index (RSI) or stochastics, or confluence of Fibonacci levels across time frames. Focus on regions of support and resistance. In very strong bull and bear markets, look for prices that often do not retrace more than 25-38.2%. In moderately bullish and bearish markets, prices can retrace up to 50-61.8%. Finally, keep an eye out if prices start breaking the 61.8% to 75% retracement. If this happens, the main trend may be under threat.
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Figure 1: Fibonacci retracements in an uptrend
Figure 2: Fibonacci retracements in a downtrend
Figures 3 and 4 display examples of Fibonacci retracement levels in upswings an d downswings.
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Figure 3: Fibonacci retracement levels in an upswing
Figure 4: Fibonacci retracement levels in a downswing
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CONFLUENCE OF FIBONACCI LEVELS
With almost five Fibonacci levels to contend with, traders can often be confused. They are often left wondering which of the levels might most likely hold. In such cases, The confluence of two Fibonacci levels measured from two different swing lows to the same swing high in an upswing is considered the most significant support level. On the other hand, the confluence of two Fibonacci levels measured from two different swing highs to the same swing low is considered to be the most significant resistance level. When the stock gets close to a confluence level, traders should look for supporting evidence in order to act. Fibonacci levels like other indicators cannot b e acted on in isolation. The 60-minute chart of the Nasdaq composite in Figure 5 shows the confluence of levels at 2115, which acts as a strong support. Figure 5: Nasdaq composite 60-minute chart
SHARK ATTACK
Now, here's a strategy using the Fibonacci levels. The shark attack strategy details how retail traders are learning conventional, predictable theories in technical analysis and are not doing themselves any good. Haven't you seen it happen? Think of it. Whenever you position yourself for what you believe is a sure traditional setup, smart traders and institutions come in and move the market sharply in the opposite direction, coming in for the kill, much the way sharks do instinctively. In this, the shark attack is similar to the turtle soup strategy made popular by Larry Connors and Linda Bradford Raschke in their book, Street Smarts. That strategy is another example of how smart traders and institutions take advantage of retail traders using traditional setups who become trapped on the other side of the trade. 87
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If you become aware of how the shark attack strategy works, you can avoid the consequences. Here's how the shark attack strategy can be used with Fibonacci levels for both short trades and long trades: Conditions for the short trade (Figures 6 and 7) Assume the market is in an upswing and forms a swing swing high point 1, retracing normally to point 2. I wait for the market to test the previous top. Two possibilities arise: 1 The market forms a double top and comes down sharply. 2 The market breaks the previous top and continues to rally to point 3. Figure 6: Short trade shark attack
Figure 7: Short trade shark attack
The third possibility is the shark attack that is, the market breaks its previous top and rallies between 1.272 and 1.618 of the previous correction, which is point 3, and retail traders go long with it. After this, a sharp decline decline takes place, taking the market market down to at least 1.272 of the last rally. At that that point, pressured retail traders scamper away, and should prepare for shark attacks whenever traders act in a bullish or bearish consensus, expecting a breakdown or breakout.
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The short trade can be taken when the low of the previous bar is broken and the second higher high can be used as the stop-loss. The profits on the short side can be 1.272 times the difference of point 3 and point 2. Conditions for the long trade (Figures 8 and 9) The converse is true for the long trade. Assume the market is in a downswing and makes a swing low at point 1, and retraces upward to point 2. You should wait for the market to test the previous bottom. The market could either form a double bottom and rally sharply or break the previous bottom and continue to decline to point 3. Figure 8: Long trade shark attack
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Figure 9: Long trade shark attack
Once again, another possibility is the shark attack, which occurs when the market breaks its previous bottom and declines to about 1.272 and 1.618 of the previous correction (point 3), making retail traders go short with it. After this a sharp rally takes place, taking the market up to at least 1.272 1 .272 of the last correction, as once again, pressured retail traders scamper away and cover their short positions. The long trade can be taken when the high of the previous bar is broken and the second lower low can be used as the stop-loss. In both the long an d short trades, traders must tread with caution on the simple breakout/breakdown trades and should be ready for shark attacks whenever retail traders act in a bullish or bearish consensus expecting a breakdown or breakout. Complex tr ading s yst em #14 #14 (Pivots (Pivots , SAR + EMAs) EMAs)
price at a weekly pivot point on 4hrs and a parabolic Sar indicates to anticipated direction, this is the only two clue I like to watch here. he re.
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* Now, I will carry the microscope mi croscope down to hourly chart look 3 ema crossover, in this explanation I will use 7, 14, 21 parameters depending on where the price is going. Let's take downtrend in this case: OKAY ! LET GET STARTED
* price on a significant weekly point point on 4hrs and parabolic indicates down * 7 ema crosses 14 ema and extends through 21 ema, this will manifest after the last cross I mean 7 cross 21 ema, and RSI is below 50 level not oversold.
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* The last thing I will like to do here is to carry the microscope much down to 15 mint and the only thing I will do here is to look for my default RSI and I make sure is not oversold.
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Take Take profi t and stop p arameter arameter
Take profit - like some pips before the next significant weekly pivot point or stay in until hourly parabolic Sar indicates to opposite direction in this case until parabolic Sar indicates to an uptrend I have chart below that will explain more Stop parameter - some pips above that significant pivot that made you to go for the trade. Complex tr ading sy stem #15 (Rainbow (Rainbow Madness)
Timeframe : 30min Pairs : GBP/JPY, GBP/USD, EUR/USD (Recommended) RAINBOW MADNESS V1
Just take a look at these examples.
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All these trades were profitable. profitable. But you can not see 7. And 8. Trade profit area. I just can say it was hit. Just so you believe me there is another pic
If you would take some trades after trade 8. Your profit would still get g et hit as you can see last move down. If we take a look at these examples we can say that we go long if price is above RAINBOW and short if price is below RAINBOW. We can also say that we go long or short if rainbow colors are in right order. Take a look at pic again and you’ll understand. We want for price to find support somewhere in rainbow NOT somewhere on other side of rainbow. So first o f all what we need: need:
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Rainbow MMA06 Rainbow MMA07 Rainbow MMA08 For those who don't use MetaTrader: MMA06 MMA07 MMA08 68 EMA 50 EMA 35 EMA 65 EMA 47 EMA 33 EMA 62 EMA 44 EMA 31 EMA 59 EMA 41 EMA 29 EMA 56 EMA 39 EMA 27 EMA 53 EMA 37 EMA 25 EMA We have have to add 2 EMAs as well:
10 EMA close 12 EMA open Make your rainbows in different colors. In my chart – 06 is green, 07 is purple, 08 is blue. So stoploss and take profit. It’s easy to place stoploss. Real art is to place take profit right. I use FIB levels as TP. If you like you can add 50 EMA, 89 SMA, 150 SMA, 200 SMA, 365 EMA and use them as profit areas. Also you can use big bi g numbers. So: • FIB levels • MA’s • Big numbers • 10/12 EMA cross • Etc. I place my stoploss at previous high/low. If SL is very small and there is very high possibility it is going to get hit, place it at next high/low.
So SL and TP examples. WHITE – SL and BLUE - TP
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An d r ul es: Long: Rainbow 07 is above rainbow 06 and rainbow 08 is above rainbow 07 10 ema and 12 ema cross Short: Rainbow 08 is below rainbow 07 and rainbow 07 is below rainbow 06 10 ema and 12 ema cross 96
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Next Next is the improved version RAINBOW MADNESS V2
What we need for RAINBOW MADNESS v2: MACD Heiken Ashi Smoothed Many MA’s Trigger MA’s Stoch And a trend. SETTINGS:
MACD – 9:19:1 Heiken Ashi Smoothed – 2:17:3:2 MA’s – If you use MetaTrader than all you need is 06,07 and 08 set Rainbow’s. If you dont you have to put these on your chart: MMA06 MMA07 MMA08 68 EMA 50 EMA 35 EMA 65 EMA 47 EMA 33 EMA 62 EMA 44 EMA 31 EMA 59 EMA 41 EMA 29 EMA 56 EMA 39 EMA 27 EMA 53 EMA 37 EMA 25 EMA Every set of MA’s should be in different color. Just so it would be easier for you. 97
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Trigger EMA’s – 10 EMA (open) ; 6 EMA (close) You can use other set of trigger EMA’s if you want to. Like 5 EMA (open); 5 EMA (close) etc. But you should know that every MA’s set has problems. Find one that works for you or use 10/6 or 10/8 Stoch – If you want you can use usual stoch but it takes some room so I like to use stoch alert. Stoch 8.3.3 Overbought – 75 Oversold – 25 If you want to use usual stoch than put it on your chart with stoch alert just so you could understand why usual stoch gives many more signals. Why we need need all these indicato rs?
Cuz everyone of them improves other. Like trigger MA’s. They give many false signals but Stoch helps to escape them. And sometimes stoch gives false signals and MA’s help. Heiken Ashi candles work together with Rainbow. MACD: I have added 2 levels to MACD: 4.5; -4.5. The are between them is called Silent Zone. When MACD is somewhere in this channel we don’t take any trades. When MACD candle ends above/below this channel we can start to think – yes or no. Why do I need this stupid channel you ask? See example. Everything is showing that price is going down: RED Heiken Ashi, Rainbow, stoch, Trigger MA’s and MACD but MACD is still in the Silent Zone (We would enter trade on next ne xt candle after blue line if this would be right trade) So no trades while macd IS IN SILENT ZONE.
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Next Next 4 canles: (stoch )
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With this I mean that we enter trade only on next 4 candles after stoch makes a cross. If everything gives a signal later we don’t take the trade. One thing about stoch alert. Stoch makes cross AFTER arrow candle ends. That’s when we start to watch if we can take the trade. So anyway 4 candles. In this case we can enter trade only on o n sixth candle. Much too late. So anyway anyway rules f or entry:
LONG – MACD is above 0 and out of Silent Zone and previous candle is green. Stoch has made a cross. (Arrow on my chart. REMEMBER – stoch has made a cross after arrow candle. 100
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So first candle when we can enter trade is candle after arrow candle) Rainbow is in right order. If you don’t know what is right ri ght order see Rainbow Madness V1. Price bounces off somewhere in rainbow. Previous heiken ashi candle is blue. Trigger MA’s has made cross. REMEMBER REMEMBER - 4 candles! SHORT – MACD is below 0 and out of Silent Zone and previous candle is red. Stoch has made a cross. (Arrow on my chart. REMEMBER – stoch has made a cross after arrow candle. So first candle when we can enter trade is candle after arrow candle) Rainbow is in right order. If you don’t know what is right ri ght order see Rainbow Madness V1. Price bounces off somewhere in rainbow. Previous heiken ashi candle is red. Trigger MA’s has made cross. REMEMBER REMEMBER - 4 candles! I believe that examples will help you understand much better.
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An d n ow – Take Tak e Pro fi t and Stop St op Lo ss . That’s up to you. I’m just going to make a list and you can chose or if you want do it how you like it. SLprevious high/low 103
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round number areas strong s/r level Some indicator like bbands stop v1 TPFibo levels R:R 1:1 S/R levels Some indicator Price action Etc. Downloads:
RainbowMMA_06.mq4 RainbowMMA_07.mq4 RainbowMMA_08.mq4 rainbow_template.zip _Heiken_Ashi_Smoothed.mq4 _Stochastic_Cross_Alert.mq4 _Stochastic_Cross_Alert .mq4
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