I'm always on the lookout for different methods of trading FX and have come up with something a little different. It is a work in progress as I haven't worked out the finer points. I am currently playing with this on the 4hr and 15 min time frames. I'll discuss the 15 min set up only so as not to confuse the issue as there are some subtle differences.
Okay I use the MT4 charts. 15 min chart on GBP, EUR and EUR/JPY. Ijust use these charts for the set up but actually trade off Oanda. I am a EUR fan, but the other two pairs are probably better for this method due to their volatility.
Now I am a big believer in setting a target of say just 20 pips a day in total, and that will do me. If this is successful, then you have 100 pips for the week or 400 pips for the month, which is nothing to gripe about. But like a lot of traders, I too chase the big winners and go for a lot more. Sometimes it works, sometimes it doesn't.
Now to the set up. I use candles and magnify the chart right out. I also add the daily pivots just to give me an idea of potential profit targets/turning points. Not an exact science but handy all the same.
I add one indicator and it is expanded to take up about half the screen. It is the Stochastics where I use the settings of 8,4,4 and select the 'Linear Weighted' for the MA Method. I then set the colours, for the Main, I use a bright colour that is going to stand out, and for the Signal, I use a very thing dotted line the same colour as the background. I then add a bucket load of horizontal lines in intervals of '5' from 0 to 100, making the 20, 50 and 80 horizontal lines a different colour to the others. So now you should have an indicator with one single line that cuts up and down through a lot of horizontal lines.
Now I normally start trading just before London opens and call it quits about 8hrs later. This is normally ample time to catch some winners. When I start trading I check to see which way the stoch is heading. It is either up or down. If it is heading down, then I just wait for it to turn up, then I get ready to go long. When it has been going down, it has been cutting down through the horizontal lines. Eventually it will turn between two lines, and either cut up through a line or continue down through the next line down.
What I am looking for is a confirmed cut up through the next line up. I will wait until the 15 min candle has closed to confirm the change in direction, and will enter on the open of the new candle. The same applies if I was looking for a change to the downside.
Just some things to consider. It is probably a safer trade if the trend has changed from down to up, then I would prefer the stoch line to cross below the 50 horizontal line as it would have been in oversold territory. The opposite applies for a change from up to down, looking to be in the overbought area.
Now I can either set a profit target on the trade or just follow along with the stoch as long as it contiues heading in the same direction. This where I sometimes use the pivot lines for an idea of resistance/support. Or I can close half my position when a certain level is made and then follow up the remaining half with a trailing stop. Various ways to deal with the trade once I am in. Stop is normally set either 30-40 pips away or near a recent high or low on the 15 min chart.
I'll see if I can work out how to attach a chart to give a visual on this, but it is pretty obvious once you have the right set up. That's the basics of it all, so I hope I haven't confused anyone too much. I welcome any comments or ideas. Cheers.
Okay I use the MT4 charts. 15 min chart on GBP, EUR and EUR/JPY. Ijust use these charts for the set up but actually trade off Oanda. I am a EUR fan, but the other two pairs are probably better for this method due to their volatility.
Now I am a big believer in setting a target of say just 20 pips a day in total, and that will do me. If this is successful, then you have 100 pips for the week or 400 pips for the month, which is nothing to gripe about. But like a lot of traders, I too chase the big winners and go for a lot more. Sometimes it works, sometimes it doesn't.
Now to the set up. I use candles and magnify the chart right out. I also add the daily pivots just to give me an idea of potential profit targets/turning points. Not an exact science but handy all the same.
I add one indicator and it is expanded to take up about half the screen. It is the Stochastics where I use the settings of 8,4,4 and select the 'Linear Weighted' for the MA Method. I then set the colours, for the Main, I use a bright colour that is going to stand out, and for the Signal, I use a very thing dotted line the same colour as the background. I then add a bucket load of horizontal lines in intervals of '5' from 0 to 100, making the 20, 50 and 80 horizontal lines a different colour to the others. So now you should have an indicator with one single line that cuts up and down through a lot of horizontal lines.
Now I normally start trading just before London opens and call it quits about 8hrs later. This is normally ample time to catch some winners. When I start trading I check to see which way the stoch is heading. It is either up or down. If it is heading down, then I just wait for it to turn up, then I get ready to go long. When it has been going down, it has been cutting down through the horizontal lines. Eventually it will turn between two lines, and either cut up through a line or continue down through the next line down.
What I am looking for is a confirmed cut up through the next line up. I will wait until the 15 min candle has closed to confirm the change in direction, and will enter on the open of the new candle. The same applies if I was looking for a change to the downside.
Just some things to consider. It is probably a safer trade if the trend has changed from down to up, then I would prefer the stoch line to cross below the 50 horizontal line as it would have been in oversold territory. The opposite applies for a change from up to down, looking to be in the overbought area.
Now I can either set a profit target on the trade or just follow along with the stoch as long as it contiues heading in the same direction. This where I sometimes use the pivot lines for an idea of resistance/support. Or I can close half my position when a certain level is made and then follow up the remaining half with a trailing stop. Various ways to deal with the trade once I am in. Stop is normally set either 30-40 pips away or near a recent high or low on the 15 min chart.
I'll see if I can work out how to attach a chart to give a visual on this, but it is pretty obvious once you have the right set up. That's the basics of it all, so I hope I haven't confused anyone too much. I welcome any comments or ideas. Cheers.
JAGfx
