1.Momentum Reversal Trading Strategy #1 The strategy seeks trading opportunities through the combination of fundamental and technical analysis. #2 It requires a trader to analyse the fundamental aspects of the traded currency to establish mid to long term trend rst. Then it uses the price momentum, support and a resistance zones to spot market reersals. #! The strategy allo"s to enter the market at lo" risk and proide a large prot potential through adanced money management. # $ll trades are planned in adance to gie a trader enough time to enter the market eery time. %ost trades are placed as pending limit orders often e&ecuted during 'ondon(s session. #) The strategy "orks "ell on all ma*or + -ollar crosses. It generates bet"een 1) signals per month. $ll trades are entered and held for anything up to seeral "eeks depending on the price action and the market fundamentals. #/ The strategy has been traded in lie markets for the last 1) months and its performance is clearly documented in the performance section The strategy strategy uses uses a fe" indicators indicators only0 only0 1. toc tochast hastic ic scillat scillator or mult multitim itime e frame3 frame3 2. u uppo pport rt and re resis sista tance nce !. 4ibo ibonac nacci ci ret retrac raceme ements nts $fter establishing your bias and long term trend through 5ommitments of Traders report, it(s time to s"itch to daily charts and look for a price reersal phase. To dene the price ree To reersal rsal you need need to analyse the price on daily charts charts rst and and ans"er ! simple questions0 1. 6as the the market market been been clearly clearly falling falling or rallying rallying recent recently7 ly7 2. Is the "eekly and daily stochastic sho"ing oerbought oerbought or oersold leels on daily charts7 !. Is the price price trading trading around around ma*or ma*or support support or resistan resistance ce zones7 zones7 Example 1: USDJPY Daily !"art
In the +-89: chart aboe you can see four e&les of the price being in a reersal phase. etup #1 on the chart ;eekly and daily stochastics are aboe <= zone and the market has been in a substantial substant ial rally prior to that. $ trader should be marking this zone as bearish and s"itching to intraday charts to seek a bearish reersal price pattern. Setup #$ on t"e !"art imilar to setup #1, price, after a fe" days of rally, it came back up to an oerbought stochastics zone aboe <=3 and is no" trading around a ma*or resistance zone. $ trader "ill be marking this area as bearish and s"itching to intraday charts to seek a bearish reersal price pattern. Setup #% on t"e !"art nce again, the momentum is no" oerbought and the price is forming a clear resistance. $ trader "ill be marking this area as bearish and s"itching to intraday charts to seek a bearish reersal pattern. Setup #& on t"e !"art The price declined and and reached reached a support at 11< area. area. The momentum momentum is no"
oersold. $ trader "ill be marking this area as bullish and s"itching to intraday charts to seek a bullish reersal price pattern. The aboe setups "ill "ill be attempted attempted only in the direction direction of the the trend trend established established by the trader during a fundamental analysis. The fundamentals "ere pointing to the do"nside in +-89: + -89:. The rst ! setups setup s "ould be considered con sidered and the th "ould be either ignored or entered as a counter trend position "ith a lo"er lot size.
'ore more in(ormation )*+), -ERE
$:T"e Moving average !rossover strategy. "at is it/ %oing aerage indicators are standard "ithin all trading platforms, the indicators can be set to the criteria that you prefer. 4or this simple day trading strategy "e need three moing aerage lines,
ne set at 2= periods,
the ne&t set at /= periods
and the last set at 1== periods.
The 2= period line is our fast moing aerage, aerage, the /= period is our slo" moing aerage and the 1== period line is the trend indicator. indicator. -o0 do + trade 0it" it/ This day trading strategy strategy generates a >+: >+: signal "hen the fast moing aerage or %$3 crosses up oer the slo"er moing aerage. $nd a ?'' signal is generated "hen the fast moing aerage crosses belo" the slo" %$. o you open a position "hen the %$ lines cross in a one direction and you close the position "hen they cross back the opposite "ay. 6o" do you kno" if the price is beginning to trend7 ;ell, If the price bars stay consistently aboe or belo" the 1== period line then you kno" a strong price trend is in force and the trade should be left to run.
The settings aboe can be altered to shorter periods but it "ill generate more false signals and may be more of a hindrance than a help. The settings I suggested "ill generate signals that "ill allo" you to follo" a trend if one begins "ithout short price @uctuations iolating the signal.
n the chart aboe I hae circled in green four separate signals that this moing aerage crossoer system has generated on the ?+A+- daily chart oer the last si& months. n each of those occasions the system made /==, 2==, 2== and 1== points respectiely. I hae also sho"n in red "here this trading technique has generated false signals, these periods "here price is ranging rather than trending are "hen a signal "ill most likely turn out to be false.
The rst false signal in the aboe e&le broke een, the ne&t e&le lost !) points.
The aboe chart sho"s the rst positie signal in detail, the fast %$ crossed quickly do"n oer the slo" %$ and the trend %$, generating the signal. Botice ho" the price moed quickly a"ay from the trend %$ and stayed
belo" it signifying a strong trend.
The second false signal is sho"n aboe in detail, the signal "as generated "hen the fast %$ moed aboe the slo" %$, only to reerse quickly and signal to close the position. $lthough the system is not correct all the time, the aboe e&le "as correct /C12 or )=D of the time. >+T. ;e can immediately see "o0 mu!" more !ontrolled and de!isive trading e!omes "hen a trading technique is used. There are no "ild emotional rationalisation, eery trade is based on a calculated reason.
%.-ei2in34s"i Trading Strategy ;hat is it7 6eikin$shi chart looks like the candlestick chart but the method of calculation and plotting of the candles on the 6eikin$shi chart is diEerent from the candlestick chart. This is one of my faourite fore& strategies out there. In candlestick charts, each candlestick sho"s four diEerent numbers0 pen, 5lose, 6igh and 'o" price. 6eikin$shi candles are diEerent and each candle is calculated and plotted using some information from the preious candle0 1. 5lose price0 6eikin$shi candle is the aerage of open, close, high and lo" price. 2. pen price0 6eikin$shi candle is the aerage of the open and close of the preious candle. !. 6igh price0 the high price in a 6eikin$shi candle is chosen from one of the high, open and close price of "hich has the highest alue. . 'o" price0 the high price in a 6eikin$shi candle is chosen from one of the high, open and close price of "hich has the lo"est alue. 6eikin$shi candles are related to each other because the close and open price of each candle should be calculated using the preious candle close and open price and also the high and lo" price of each candle is aEected by the preious candle. 6eikin$shi chart is slo"er than a candlestick chart and its signals are delayed like "hen "e use moing aerages on our chart and trade according to them3. This could be an adantage in many cases of olatile price action. This fore& day trading strategy is ery popular among traders for that particular reason. It(s also ery easy to recognise as trader needs to "ait for the daily candle to close. nce ne" candle is populated, the preious one doesn(t repaint. :ou can access 6eikin$shi indicator on eery charting tool these days. 'ets see ho" a 6eikin$shi chart looks like0
-o0 do + trade 0it" it/ n the chart aboeF bullish candles are marked in green and bearish candles are marked in red. The ery simple strategy using 6eikin$shi proen to be ery po"erful in back test and lie trading. The strategy combines 6eikin$shi reersal pattern "ith one of the popular momentum indicators. %y faourite "ould be a simple tochastic scillator "ith settings 1,<,!3. The reersal pattern is alid if t"o of the candles bearish or bullish3 are fully completed on daily charts as per G>989: screenshot belo".
S-5RT SETUP nce the price prints t"o red consecutie candles after a series of green candles, the uptrend is e&hausted and the reersal is likely. 6AT positions should be considered. *567 SETUP If the price prints t"o consecutie green candles, after a series of red candles, the do"ntrend is e&hausted and the reersal is likely. 'BG positions should be considered. '+*TERS The ra" candle formation is not enough to make this day trading strategy aluable. Trader needs other lters to "eed out false signals and improe the performance. M5ME6TUM '+*TER 8Sto!"asti! 5s!illator 1&99%; ;e recommend to use a simple tochastic scillator "ith settings 1,<,!.
+ strongly advise you read Sto!"asti! 5s!illator guide
4 Trader 0ould no0: ?nter long trade after t"o consecutie A?- candles are completed and the tochastic is aboe <= mark ?nter short trade after t"o consecutie GA??B candles are completed and the tochastic is belo" != mark.
ST5P 5RDER '+*TER To further improe the performance of this a"esome day trading strategy,other lers might be used. I "ould recommend to place stop orders once the setup is in place. In the long setup sho"ed in the chart belo", the trader "ould place a long stop order fe" pips aboe the high o the second 6einkin$shi reersal candle. The same "ould apply to short setups, trader "ould place a sell stop order fe" pips belo" the lo" of the second reersal candle.
4!!elerator 5s!illator
4or 'ong trades0 If t"o consecutie GA??B candles are printed, "ait for the $5 to print the green bar aboe the = line on the daily charts 4or hort tradesF If t"o consecutie A?- candles are printed, "ait for the $5 to print the red bar aboe the = line on the daily charts
RU*ES The reersal pattern is alid if t"o of the candles bearish or bullish3 are fully completed on daily charts as per G>989: screenshot belo". -on(t enter the market straight after a olatile price s"ing to one direction. It important to consider fundamental ne"s in the market. I "ould adise to aoid days like0 1. >ank 6oliday 2. B49 !. 4%5
. 5entral >ankers speeches. Money management: 1. %oe position to break een after )= pips in prot. 2. %oe stop loss at the ma*or local lo"s and highs or if the opposite signal is generated. 'et your "inners run. !. top loss 1== pips @at or use local technical leels to set stop losses. . Every trader is advised to implement t"eir o0n money management rules. Strategy examples and s!reens"ots trategy doesn(t generate much setups, but "hen it does, they are usually important market tops or bottoms. ee some sample trade setups before and after. To get t"e ready MT& templates (or t"e setups elo0 please )*+), -ERE T5 D56*54D :ou can then unzip it and place them in your %T and hae the belo" charts ready
Date: $$ May $=1% Trade: *ong Pri!e in: 1.$>$$ Pri!e out: 1.%$1?
Result: @%==
Date: $1 June $=1% Trade: S"ort Pri!e in: 1.%$1?
Pri!e out: 1.%=A Result: @1%=
Date: %1 5!toer $=1% Trade: S"ort Pri!e in: 1.%BAB Pri!e out: 1.%?=?
Result: @1=
&. T"e s0ing (orex day trading strategy. "at is it/
"ing day trading strategy is all about igilanceH The trader needs to be on guard to notice a correction in a trend and then be ready to catch the s"ing( out of the correction and back into the trend. C4nd 0"ats a !orre!tion/ + "ear you as2. imple. 5orrections inole oerlap of price bars or candles, lots and lots of oerlapH $ trending price makes progress quickly, corrections don(t. 'ets look at some charts for an e&le.
Take the aboe chart, ?+A+- at 2= minute candles, "ithin the green circle "e hae 2/ candles "here the price stayed "ithin a 1== point range. -o0 do + trade 0it" it/ $s I hae marked "ith the blue lines the price een contracted to a daily moe of only 2= pointsH $ s"ing trader "ould be on 6IG6 $'?AT hereH 5ontracting price, lots and
lots of oerlap. This presented a ery high probability that the price "as going to continue in the trend that had started the preious "eek. The trade "ould inole selling "hen the rst candle moed belo" the contracting range of the preious fe" candles, $ stop could be placed at the most recent minor s"ing high. range $rro"s 3 $nother e&le of a s"ing trade is sho"n in the chart belo".
$gain "e are "orking on the ?+A+- 2= minute chart. In green "e can see a correction to the do"nside, notice the slo"ing do"nside momentum7 6oti!e all t"e overlapping pri!e !andles/
The entry point in this trade "ould be a little harder to e&ecute, although the principle is the same. ;e "ant to "ait for the price to sho" a sign of reersal, at the end of the correction, t"o separate candles moed aboe the upper blue line. T"is s"o0ed t"at t"e pri!e 0as no0 gearing up (or reversal. $ trader "ould buy the open of the follo"ing candle and place a stop at the lo"est point of the correction. The risk here "as about != points, the gain "as about /== if you managed to ride it all the "ay upH "ing trading is a little more nuanced than the crossoer technique, but still has plenty to oEer in terms of money management and trade entry signals.
?.)andlesti!2 patterns. MUST RE4D: )andlesti!2 patterns $1 easy patterns 8 and 0"at t"ey mean ;
Fullis" engul
"at is it/ ?ngulng patterns happen "hen the real body of a price candle coers or engulfs the real body of one or more of the preceding candles. The more candles that the engulng candle coers the more po"erful the follo"ing moe "ill likely be. There are t"o types. >ullish and bearish. The bullish engulng pattern signals a bullish rise ahead and the opposite is true for the bearish engulng candle. In the aboe chart I hae circled the bullish engulng candles "hich led to price rises immediately after. -o0 do + trade it/ ;ell, the bullish engulng pattern is a precursor to a large up"ard moe. o, "hen you see an the engulng candle taking shape you should "ait for the follo"ing candle and then open your position. :our stop should be placed at the lo" of the engulng candle.
Fearis" engul
"at is it/ The bearish engulng pattern signals a bearish price decline ahead. In the aboe chart I hae circled the bearish engulng candles "hich led to price declines immediately after. $gain, the more candles that the engulng candle coers the more po"erful the follo"ing moe "ill likely be. -o0 do + trade it/ It is the same principle as the bullish pattern, *ust the @ip side of the coinH
The bearish engulng pattern is also a precursor to a large decline. o, "hen you see an the engulng candle taking shape you should "ait for the follo"ing candle and then open your position. :our stop should be placed at the high of the engulng candle.
*ong s"ado0 pattern.
"at is it/ The long shado" refers to the length of the line from the closing price on a candle to the high or lo" price of that particular candle. The shado"( should be at least t"ice the length of the real body of the
candle. These shado"s tend to occur at turning points. $nd they tend to lead to large price moesH -o0 do + trade it/ $s "ith the rest of the candle stick patterns, "e "ait for the long shado" candle to close and "e place our trade at the open of the ne&t candle. :our stop should again be placed at the e&treme high or lo" of the shado" candle and trailed to follo" the trend.
-ammer patterns.
"at is it/ $ candle forms a hammer( "hen the real body of the candle sits at one end of the candle leaing a head and handleH $gain these candles tend to form at price reersals giing a strong signal for traders. -o0 do + trade it/ Its the same trickH ;e "ait for the long hammer candle to close and "e place our trade at the open of the ne&t candle. :our stop should again be placed at the e&treme high or lo" of the hammer candle. and again trailed to follo" the trend.
B.Support and Resistan!e Role Reversal Day Trading Strategy "at is it/ To start I needs to assume that you kno" "hat is the support and Aesistance in 4ore& trading. If not see fe" simple denitions and e&les belo". upport and Aesistance are psychological leels "hich price has diJculties to break. %any reersals of trend "ill occur on these leels.
"en a !ertain level is diG!ult (or pri!e to !ross up0ards it is !alled Resistan!e. "en a !ertain level is diG!ult (or pri!e to !ross do0n0ards it is !alled Support.
The harder for price to cross a certain leel, the stronger it is and the protability of our trades "ill increase. The most basic form of upport and Aesistance is horizontal. %any traders "atch those leels on eery day basis and many orders are often accumulated around support or resistance areas. It important to mention, support and resistance is BT an e&act price but rather a KB?. %any noice traders treat the support and resistance as an e&act price, "hich they are not. Trader must think of support and resistance as a KB? or $A?$.
These leels are probably the most important concepts in technical analysis. They are a core of most professional day trading strategies out there. -o0 do + trade 0it" it/ 'et me introduce you to the LAole AeersalM. 'et(s see ho" can you use it in your eery day(s trading. Aole Aeersal is a simple and po"erful idea of support becoming a resistance in the do"ntrend3 and the resistance becoming a support in the uptrend3. 'et see ho" this plays out in the uptrend. nce the price is making higher highs and higher lo"s "e call it uptrend. Technical trader must assume the price is going to go up foreer and only long trades should be considered. nce the uptrend is dened, the lo"est strategy to trade is N buy on pullbacks. $s per denition of an uptrend, the price punching through the resistance and pullback before it makes another higher high. LAole reersalM concept comes handy for bulls in this scenario.
5n!e t"e resistan!e is ro2en to t"e upside9 it e!omes a ne0 support level. Aesistance changes its role to support, hence the name LAole AeersalM. $fter making a ne" higher high, the price in uptrend must correct. It is likely to correct to the ne" support leel. This can present an e&cellent buying opportunity for bulls. ;e don(t kno" "here e&actly price "ill resume an uptrend. Aisk management must be applied. Trader must remember to treat support and resistance leels as KB? rather than e&act price. The same principle applies to do"ntrends. If the market is in do"ntrend, the price "ill punch through supports making ne" lo"er lo"s. The broken support becomes ne" resistance and oEers opportunity for short positions.
ometimes the price "ill pull back a bit further than *ust the former support or resistance. It might retrace to"ard other important technical leels. I like to combine pure price action "ith other ma*or, "idely used leading indicators. %y faourite "ould be0 9iot 9oints and 4ibonacci retracements. $fter many years of using these tools, I can say "ith condence, they are pretty accurate. The popularity of these tools makes them so responsie. You !ould also estalis" (e0 levels o( entries (or example: If you are looking to buy the market after the price made fresh high, you "ould be "aiting for the price to retrace to"ards role reersal, 4ibonacci 'eel or moing aerage. $s you are pretty condent, the price is moing higher, you don(t kno" ho" far the price "ill pullback.
If it(s an aggressie day, the price can only come back to 2=%$ and shoot for ne" high again. $nother day, the price can dip as far as !OD 4ib retracement. :ou can diide you position into ! equal parts and set limit orders based on the logic aboe0 1C! at 2=%$, 1C! at role reersal, 1C! at )=D 4ib retracement. This "ay you lo"er the risk and increase the odds of getting lled. If you like this strategy and "ant to learn more about it, I adise you *oin ;ayne %c-onell 4ore& Today trategy ession ideos. ;ayne is most denitely the master of role reersal trading. I adise you "atch all his ideos. There is something to learn for you in each one of them.
. T"e Follinger and sHueeIe strategy.
>ollinger bands are a measurement of the olatility of price aboe and belo" the simple moing aerage. 8ohn >ollinger noted that periods of lo" olatility are follo"ed by periods of high olatility, so "hen "e notice the >ollinger bands squeeze( in to"ards each other, "e can infer that a signicant price moement may be on the cards soon. o, the >ollinger band squeeze trading strategy aims to take adantage of price moements after periods of lo" olatility.
+ urge you to read: Follinger ands 8 t"e )5MP*ETE "o03to guide ; -o0 does it 0or2/ The aboe chart is the ?+A+- 2= minute chart. The >ollinger band indicator should be set to 2= periods and 2 standard deiations and the >ollinger band "idth indicator should be s"itched on. ;hen trading using this strategy, "e are looking for contraction in the bands along "ith periods "hen the >ollinger band "idth is approaching =.=1== or about 1== points. -o0 do + trade it/ ;hen all the conditions are in place, it signies a signicant price moe is ahead as indicated "ithin the green circles aboe. $ FUY signal is generated "hen a full candle completes aboe the simple moing aerage line. $nd. $ SE** signal is generated "hen a full candle completes belo" the simple moing aerage line. tops should be placed at the high or lo" of the preceding candle, or, to allo" for a ma&imum loss of !D of your trading capital, "hicheer is the smaller.
A. T"e 6arro0 Range Strategy. "at is it/ The narro" range strategy is a ery short term trading strategy. The strategy is similar to the >ollinger band strategy in that it aims to prot from a change in olatility from lo" to high. It is based on identifying the candle of the narro"est range of the past or < days.
$ suitable candle "ould consist of a 5hubby( look "ith an opening and closing prices close to the days high and lo" as sho"n in the chart belo". Puite often you "ill nd t"o or more narro" candles together this only seres to contract the olatility and "ill often lead to an een larger breakout of the range to come.
-5 do + trade it/ nce a narro" candle is identied "e can be reasonably sure that a olatility spike "ill be close at hand.
$ >+: signal is generated "hen the price moes aboe the high of the narro" candle. $ ?'' signal is generated "hen the price moes belo" the lo" of the narro" range candle.
:our stop is placed at the lo" or high of the Barro" candle and trailed to suit.
>. T"e $ period RS+ strategy.
T"is strategy is pretty simple really.
$ >+: signal is generated "hen the 2 period AI moes aboe Q=. $nd a ?'' signal is generated "hen the 2 period AI moes belo" 1=.
In general this is a ery aggressie short term strategy as you can see by the amount of signals that are generated in the chart sho"n.
