M5-Two-Way-Confirmation-Strategy

see #18

Exit at the Pivotal Point could be one favored option.

Exit @ 36.96

Profit: + 26 pips

See #16


Exit @ 0.8970

Profit: +17 pips

AUDCHF, M5, 2011 June 06

Long @ 0.8979

May 25, 2011
Forex Day Trading Using Price Action And Pivot Points

Today I want to talk about how you can day trade the forex markets using nothing more than price action and pivot points. I sometimes visit a few trading forums and often come across some really complicated trading systems that use many different indicators. However the fact is that you can do just as well stripping away all of these indicators and just following price action, using pivot points for additional guidance.
So you basically want to set up a basic 5 minute candlestick chart and add pivot points to this chart.
Then if you simply study these charts really closely on a daily basis for the major currency pairs, you should start to see the same sort of patterns reoccurring, and you will soon have enough confidence to start opening and closing positions.
I actually placed a few trades today on the GBP/USD pair earlier today, which will hopefully show you my own thought processes when trading these shorter time frames. First of all let me show you the chart:

http://theforexarticles.com/wp-conte...5May2011_2.png

I should point out that I will only consider trading the 5 minute chart if the overnight trading range is small (in comparison to the average daily range) . Luckily this was the case today.
The overnight trading range between 12.00 and 08.00 (UK time) was approximately 40 points, compared to a daily average of around 120 points (according to the Average True Range indicator on the daily chart). This means that there was always likely to be a decent sized breakout either upwards or downwards at some point during the day, so there were plenty of points available.
You can see from the chart that there were 4 points of interest:
FALSE BREAKOUT - The price broke down through the pivot point and closed below the overnight trading range (as indicated by the blue lines) just before 8.00. So this was a high probability trade and a great opportunity to go short. However after opening a short position at 1.6139, it turned out to be a false breakout and I closed out for -14 points after the price closed back above the pivot point.
INITIAL UPWARD BREAKOUT - After looking as if it might have another crack at breaking downwards, the price then moved sharply higher and closed above the overnight trading range. At which point you basically have two options. You can either enter a long position and hope that the breakout continues, or you can wait for confirmation. I personally went long straight away at 1.6198 after the breakout candle closed.
CONFIRMATION BREAKOUT - There was then a short period of consolidation followed by a confirmation breakout. So if you hadn't already entered a long position on the initial breakout, you could have taken a long position with more confidence at this point.
CLOSE POSITION - The obvious exit point for this trade was always going to be the first line of resistance, ie R1, and you can see that the price just about touched this resistance level at around 1.6241 before falling back downwards again. So in the end I banked a profit of 43 points from this particular trade.
Of course if you subtract the spreads and the loss from the false breakout earlier, the total profit is only around 23 points. However it was still a profitable trading day overall, and hopefully you can see how easy it can be to bank a decent profit on days like today when the overnight trading range is relatively small.


http://theforexarticles.com/2011/05/...-pivot-points/

Price Action Trading - Waiting For Confirmation
By Nial Fuller http://img.ezinearticles.com/spriting/trans.gif

Many aspiring Forex traders jump into the market before their entry signal has fully completed or fail to even develop a defined trading plan. It is crucial to a trader's long-term success that they wait until all their pre-defined parameters are met before jumping into the market. In order to define a trading strategy you must define its entry and exit method. A highly effective and highly adaptable method is absolutely necessary to enable definition of entry and exit and allow for vivid confirmation of signals.
Once traders start jumping in and entering trades before the completion of their specific setup they are essentially negating their entire trading plan. The main point of developing a written out trading strategy is that it is done when you are in an objective state of mind set and are not reacting emotionally to the market. When a trader enters a trade that doesn't fully meet his or her pre-defined criteria they are acting on emotion, these types of behaviors are what get most traders started down the slippery slope of emotional trading.
Employing an easily definable and effective trading method such as price action analysis will allow you to stay calm and wait patiently as your price setup forms and then strike with cat-like precision when the setup is complete.
The problem with many methods that traders use to trade Forex is that they have large gray areas, or entry and exit parameters that may change depending on what time frame you are looking at. The beauty of price action setups is that they show you exactly what price is doing and give you a unique perspective to analyze the Forex market on any time frame while still remaining relevant. For example, if a price action trader sees a possible pin/reversal bar form on a daily chart the signal will be noticeable on all lower time frames as well. It may be in the form of a 2 or multiple bar reversal on the 4 hour or a head and shoulders on the 1 hour.
The great thing about price action setups is that they generally confirm themselves across all time frames and leave very little to the trader's discretion. Price action signals like any other are stronger on higher time frames and generally will be visually evident on lower time frames as well.
When you trade Forex using price action setups you can more readily attain the necessary objective mindset that is required to be consistently successful as a trader. Having a method that is easily definable and inherently reflects the very nature of the market is great tool for any trader. Waiting for a price action setup to confirm itself via subsequent price movement is the best way to be sure you are on the right side of the trade. Many traders rely on indicators which often cover up the underlying price movement and provide them with a false sense of clarity. Take the indicators off your charts and learn a few good price setups and you will see the Forex market from a whole new perspective. Patiently waiting for your pre-defined price action setup to confirm itself in the flow of price movement is paramount to any Forex trader's long - term financial success.

Article Source: http://EzineArticles.com/3502404

How to Find Profitable Forex Systems
By Vernon L Lees

If you're an avid Forex trader, you would have heard of profitable Forex systems - a trading system based on specific instructions and perhaps a few indicators. These trading strategies are touted to help any trader who gets their hands on them to increase their Forex earnings. Although there are bogus trading systems that often wipe out the victim's capital in moments, profitable Forex systems do exist. So what are the tell-tale signs of these profitable trading systems?

Profitable Forex systems are simple and easy to follow
If you've visited Forex forums, you would have realized a very popular acronym that's used by seasoned traders: KISS. KISS stands for "Keep It Simple, Stupid!" and this cannot be truer when it comes to trading systems. Complicated Forex strategies tend to fail because there are simply too many parameters to take note of. As a result, very often these systems become too inflexible to deal with changes in market forces over time.
A tell-tale sign of profitable Forex systems, if we follow this rule, is the simplicity of their trading approach - they have no more than 2 indicators, and the instructions are easy to follow. Find systems like this, and hold on to them tight - they'll make you money.

Profitable Forex systems give precise instructions
These trading systems will state the action to be taken precisely. For example, they will specify the exact moment to enter a trade, and the exact situation to exit a trade. Ambiguous instructions based on subjectivity are signs that the Forex system is shoddily done - stay away from these trading systems!

Profitable Systems have proven track records
They have weathered the years, and emerged victorious. They have gone through thousands of trades, and still prove themselves profitable over time. They may even have experienced periods of downturn. These systems are however able to weather through the bearish and bullish cycles of a Forex market, making them highly profitable Forex systems.

Profitable Forex systems advocate good money management
Profitable Forex trading systems do not ask traders to risk too much of their capital in a single trade - usually, they instruct traders to risk only about 1-3% of their total capital on any one trading outcome. Such systems will allow traders to limit their losses. This is incase the markets suddenly start to move in an unfavorable. By limiting the amount placed on each trade, losses are limited when this situation inevitably arises. As such, traders using these Forex systems will be able to weather through the losing trades. Make no mistake, all systems will have losing trades and periods of loss, but only the good ones help traders make it through them.
Profitable Forex systems might be few and far between, but they do exist. Spend some time assessing the systems on offer to you before you jump in and start to trade with them. As long as they fulfill the criteria above, you'll realize that you have, in your hands, a powerful money-making system. Happy trading!

Article Source: http://EzineArticles.com/6324557

EURUSD, M5, 2011 June 06

ADX around 47, Stoch Divergence, DPV 1.4575 has reached.

Long @ 1.4568

Stop Loss: 1.4550

Target: 1.4605 if EMA55 will be broken at 1.4592

5 Minute Intraday Trading Strategy

This strategy is originally created by Philip Nell a veteran stock trader with more then 10 years experience. This has been tested for trading EUR/USD and GBP/USD. I like the way it define market motion. Though this is a great trading system, I personally don’t use this since I don’t like trading in 5 minute time frame.
It’s quite simple, what you need is 50 SMA, 21 EMA and 10 EMA attached on your 5M Chart. Open position when the angle of the 50 Simple moving average are greater than 20 degrees and the price retrace back into the zone of the 21 Exponential moving average and the 10 Exponential moving average. Set stoploss at 6 pips plus spread and profit taking at 8-10 pips. Move stoploss to breakeven as soon as 6 pips gain is obtained.

Below are some pictures for your reference:

http://www.forextac.com/wp-content/u...6/intraday.JPGhttp://www.forextac.com/wp-content/u.../intraday2.JPG
http://www.forextac.com/wp-content/u.../intraday3.JPG
http://www.forextac.com/wp-content/u.../intraday4.JPG

http://www.forextac.com/5-minute-int...-strategy.html

how long have you trading this and how many pips have you made. results please.

See #27


Exit @ 1.4605

Profit: + 37 pips

This is one concept among many trading systems which I trade since 5 years. When I trade this system it could collect between 200-500 pips a week, dependent at the market environment and of how many currency pair you will be willing to adapt to, as you may know.

Most of the time I trade it at EURUSD and make some pips here and some pips there, which could be entirely satisfactory for me. I make the money about the lot size parameter and the probability event of profit taking (risk reward ratio) also, as you may know.

"Results please". What kind of communication is that, please? Aren't you able to talk more respectful at this board here? Who do you think you are?

Behaviour Inertia Model

EURUSD, M5, 2011 June 07

Trading the pivotals?

DR1 1.3639 has been hit.

Stochs and ADX are at its top level.

Short @ 1.3639

Targert: DPV 1.4598 / mS1 1.4568

Waiting for Confirmation!

Excellent trading forexcube. Thanks for the info on the ADX never really looked at it before but looks interesting. Do you use a stop loss or do you hedge?

Hi ohammond

When higher time frames (H1, H4, Daily) seems looking to go eventually down I like to hedge the order for several hours, may be days. Otherwise I try to set a volatility stop loss or with regard to the estimated "risk reward ratio".

I prefere to enter the M5 trades in conjunction with the main trend, so if M30, H1 or H4 are signalizing more a downward movement I like to trade the market price at M5 also down (may be contrary with some M1 ups in the meantime by higher market volatilities).

Best regards
FXcube

Money Management
Volatility Stop Loss

One of the common ways to set an initial stop loss is to use a volatility method. The volatility method I consider uses a concept (also a technical indicator) called Average True Range (ATR). If you are not familiar with it, it would be best to read up on ATR, then come back here.

Using a volatility method, you are prepared after entry, for the price to fall a distance which is based on the volatility of that one stock (or how far it normally moves on a day to day basis).
Taking material from the ATR article - to use ATR for exits, you would normally use a multiple of the ATR to ensure a sufficient gap between your exit and the stock's normal price movement. Therefore, using the ATR without any modification (the ATR value itself, eg. 5 cents) would have your stop loss too close to the price and would not allow the stock you are trading sufficient room to move and behave naturally.

Depending on your trading style, you would normally consider using something in the order of 2 - 3.5 multiplied by the ATR as a suitable initial stop loss. If you used what is referred to as a ‘2.5 ATR stop’, then your initial stop loss will be 2.5 multiplied by the ATR below your entry price.

As an example, we purchase XYZ Corporation at $2.20, and we use a 3ATR initial stop loss. The ATR is 5.4 cents.
We work out what the ATR multiplied by 3 is and then subtract that from the entry price.

Using the example detailed above, the exit price is calculated as follows:
Initial stop loss
= $2.20 - 3 x ATR
= $2.20 - 3 x $0.054
= $2.20 - $0.162 (round down to $0.16)
= $2.04

NB: Yes you could have rounded the $0.162 up to $0.17 however it is not worth discussing. Let me assure you that the 1 cent up for grabs won't really matter in the long run.

So in the above example, our initial stop loss for our trade with an entry price of $2.20 would be $2.04.
Remember, the advantage of this method is that it considers the volatility of the stock you are purchasing and tailors the initial stop loss accordingly.

Of course, you can use any range of numbers, eg. 1.5ATR through to 4 - 5ATR. The items to consider are the same as using different percentages.

If you use a 1.5ATR initial stop loss, you are obviously not allowing your stock to fall as far before you consider it a loser and exit the trade at a loss. This can be a disadvantage as you are potentially not allowing your stock the freedom to move above normally and perhaps continue its medium term trend.

On the other side, if you use a 4ATR initial stop loss, you are providing the stock ample opportunity to move in your anticipated direction before you consider it a loser and exit the trade at a loss.
Let's consider the 4ATR initial stop loss for a moment then - you might be reading this and think "but if I give back all that movement before I exit, I am going to lose more money!"

Fair comment - however it depends.
If you commit an equal amount of money to each trade, then yes, you are correct. Having your initial stop loss further away will result in a greater loss.

However, using a better position sizing model, ensures that regardless of how far your initial stop loss is away, you only lose the same amount of money. This is what money management is all about.
This method can be quite effective and you will naturally discover what multiple of the ATR is best for you. This is all there has to be with calculating an initial stop loss, if that is it, then it makes you wonder why more people don't use it and cut their losses. Let me reiterate - one of the most important things you can do trading is to cut your losses.

"Learn to take losses. The most important thing in making money is not letting your losses get out of hand."
Marty Schwartz

http://www.trading-plan.com/money_st...olatility.html

Average True Range
Money Management

The concept of ‘average true range’, commonly referred to as ATR, is a measure of a security’s volatility, and has a number of uses for money management.
The true range of a security for any given day is the greatest of the following three distances:

http://www.trading-plan.com/images/atr_1.gif

The distance from yesterday’s close to today’s high

http://www.trading-plan.com/images/atr_2.gif

The distance from yesterday’s close to today’s low

http://www.trading-plan.com/images/atr_3.gif

The distance from today’s high to today’s low

The average true range is a moving average of the true ranges. In order to use ATR effectively, you need to ensure that a sufficient sample is taken. For example, obtaining a two day ATR or ATR (2) is not sufficient to provide you with a reasonable indication of that security’s normal daily movement. Whereas using at least 10 days in the average calculation, or an ATR (10) would provide you an indication of that security’s daily movement over the last 10 trading days (2 weeks).

The ATR is usually expressed as ATR (X) where X is the number of days used in the calculation of the moving average. The number of periods you select to obtain the average would depend on your application.
One application of ATR is that they can be used quite effectively for setting exits, or stops. Using ATR for exits allows you to tailor your stop to the security you are trading. For example, if you used a standard 10% stop, this would be a tighter stop (i.e. closer) for some securities than for others.

If a security moves 5% a day on average, then a 10% stop would be tighter than for a security that only moves 1 ½% a day on average. Using ATR can alleviate this situation.
To use ATR for exits, you would normally use a multiple of the ATR to ensure a sufficient gap between your exit and the security's normal price movement. Therefore, using the ATR without any modification would have your stop too close to the price and would not allow the security you are trading sufficient room to move and behave naturally.
Depending on your trading style, you would normally consider using something in the order of 2 - 3.5 multiplied by the ATR as a suitable trailing exit. If you used a ‘2.5 ATR stop’, then your trailing stop will always be 2.5 times the ATR below the highest price the security has reached since you entered the trade.

Another application of ATR is to loosely categorise securities as blue chips, mid-capitalisation (mid-caps) or speculative companies. This concept is called Volatility Percentage. The calculation that is used is to take the ATR over the last 20 days and divide that by the closing price of the share and then multiply by 100 to determine a volatility percentage. The result will be an indication of what percentage the share moves on average on a daily basis.

As a guide, you will discover that most mid-cap and blue chip companies have a volatility percentage of under 4% and anything above 5% is normally speculative. A value of under 1.5% indicates that it may be a property trust or a security that offers little potential for short to medium term gains.

http://www.trading-plan.com/money_av...rue_range.html

EURCAD, M5, 2011 June 07
EURCAD, Daily, 2011 June 07

Sell @ 1.4302

Global View: Daily seems to be at a top level for going down with a shooting star yesterday, if it won't be broken down from this candle today.

M5 is ranging, so may be try to trade the range and wait for a bigger breakout.

Average Directional Index (ADX)

How to interpret ADX.
How to trade with ADX.

Link:
http://forex-indicators.net/adx

Downloads:
ADX.mq4
Advanced ADX.mq4