Ok since a lot of people disagree with me on the 5 pip strategie let's put my theory to the test. This way you can see for yourself whether i am gambling or scalping or trade according to a precise workable plan.
1. We only trade when there is a trend.
2. Also we dont wanna enter on the beginning of the trend. We wanna wait
till the trend is underway before we get in. That way we will be in profits
right away. And within seconds you will close your trade with 5 pips
profit.
3. We need the following Indicators:
You can use this little trend catcher on any time frame from 3 minutes to daily charts. I will play it on the 5 minute and 15 minute time frames.
We need the ADX indicator and set to 7.
Draw two horizontal lines on the ADX. Set the parameters to 25 and 35 respectively. As we know the theory behind ADX is that the trend is strong once the ADX break above 35 level (some say 25, others 40, others 30). But since i am conservative trader only looking for A-grade trades i will use 35 level. Sometimes even 40 level. And ADX under 25 is ranging market, one in which you DO NOT wanna trade. We also know that the ADX doesn't show trend direction but trend strength. And i only wanna trade the strong trends. Afterall i only wanna make 5 pips not 100. So i dont care if i join later than most other traders. If you wanna get the direction the look at the DMI lines.
If you like me and only trade "A-grade" trades then you wait for the ADX to pull under the 25 level. ADX under 25 level tells me the market is not trending and in ranging mode. So at this point i am not interested in trading. As soon as the ADX breaks thru 25 and starts moving up towards the 35 level you begin to show interest cause you might have a A-grade trade coming up. Once ADX breaks above 35 horisontal line you want confirmation that a trend has indeed started. The confirmation comes when the candlestick in which the ADX broke thru the 35 level CLOSES and the ADX is still ABOVE the 35 level. I then enter a trade on the opening of the next candlestick.
If you want further visual confirmation that the trend has started then add two moving averages to your chart.
Simple Moving Average set to 4 and applied to close
Simple Moving Average set to 11 and applied to close
We all know the theory behind moving averages. Wait for 4SMA to cross up over the 11SMA then we are in uptrend. And when the 4SMA crosses under the 11SMA then we have a downtrend.
Ok so now you have a ADX that crossed above the 35 level. And you have two simple moving averages that have crossed. If 4 crossed above the 11 then we are looking to buy. If 4 crossed down thru 11 then we are looking to sell. You can even use the +DMI and -DMI on your ADX. We all know that once the +DMI crossed up over the -DMI then we are looking to buy and when the -DMI crossed up over the +DMI we are looking to sell. But to make sure you are trading a strong trend wait for the DMI to also cross above the 35 level. If it is the +DMI that crosses above the 35 level then we have a strong uptrend. If it is the -DMI that crosses above the 35 level then we have a strong downtrend.
4. I will aim for 5 pip profit
5. I will use a 20 pip stop loss
Trade signal:
1. First the sma has to cross.
2. Then wait for ADX to rise above the 35 level
3. Then enter the trade
Attached Thumbnailshttp://www.forexfactory.com/attachme...1&d=1192869744
1. We only trade when there is a trend.
2. Also we dont wanna enter on the beginning of the trend. We wanna wait
till the trend is underway before we get in. That way we will be in profits
right away. And within seconds you will close your trade with 5 pips
profit.
3. We need the following Indicators:
You can use this little trend catcher on any time frame from 3 minutes to daily charts. I will play it on the 5 minute and 15 minute time frames.
We need the ADX indicator and set to 7.
Draw two horizontal lines on the ADX. Set the parameters to 25 and 35 respectively. As we know the theory behind ADX is that the trend is strong once the ADX break above 35 level (some say 25, others 40, others 30). But since i am conservative trader only looking for A-grade trades i will use 35 level. Sometimes even 40 level. And ADX under 25 is ranging market, one in which you DO NOT wanna trade. We also know that the ADX doesn't show trend direction but trend strength. And i only wanna trade the strong trends. Afterall i only wanna make 5 pips not 100. So i dont care if i join later than most other traders. If you wanna get the direction the look at the DMI lines.
If you like me and only trade "A-grade" trades then you wait for the ADX to pull under the 25 level. ADX under 25 level tells me the market is not trending and in ranging mode. So at this point i am not interested in trading. As soon as the ADX breaks thru 25 and starts moving up towards the 35 level you begin to show interest cause you might have a A-grade trade coming up. Once ADX breaks above 35 horisontal line you want confirmation that a trend has indeed started. The confirmation comes when the candlestick in which the ADX broke thru the 35 level CLOSES and the ADX is still ABOVE the 35 level. I then enter a trade on the opening of the next candlestick.
If you want further visual confirmation that the trend has started then add two moving averages to your chart.
Simple Moving Average set to 4 and applied to close
Simple Moving Average set to 11 and applied to close
We all know the theory behind moving averages. Wait for 4SMA to cross up over the 11SMA then we are in uptrend. And when the 4SMA crosses under the 11SMA then we have a downtrend.
Ok so now you have a ADX that crossed above the 35 level. And you have two simple moving averages that have crossed. If 4 crossed above the 11 then we are looking to buy. If 4 crossed down thru 11 then we are looking to sell. You can even use the +DMI and -DMI on your ADX. We all know that once the +DMI crossed up over the -DMI then we are looking to buy and when the -DMI crossed up over the +DMI we are looking to sell. But to make sure you are trading a strong trend wait for the DMI to also cross above the 35 level. If it is the +DMI that crosses above the 35 level then we have a strong uptrend. If it is the -DMI that crosses above the 35 level then we have a strong downtrend.
4. I will aim for 5 pip profit
5. I will use a 20 pip stop loss
Trade signal:
1. First the sma has to cross.
2. Then wait for ADX to rise above the 35 level
3. Then enter the trade
Attached Thumbnailshttp://www.forexfactory.com/attachme...1&d=1192869744