QUANTUM ASIAN METHOD
(QAM) by Masterrmind*
DUE TO POPULAR DEMAND AND SEVERAL REQUESTS BY INTERESTED TRADERS I WILL BE OUTLINING HOW I TRADE QAM
The original QUANTUM LONDON TRADING (QLT) thread by mer071898 can be found here:
http://www.forexfactory.com/showthread.php?t=551382 (original idea was based on the Frankfurt/London trading times).
Note: Trading the Q Method in the FF and London sessions is certainly possible (I know because I traded it for several months as have others) but it requires a rather big bank roll ie a larger trading account balance. Not all traders have the luxury of a larger account typically over $10 000 is required to trade during this trading window. Therefore to help traders who either have or only wish to trade the Q Method with a much smaller account balance I decided to investigate ways to make this possible. By selecting whats known as a 'turtle pair' ie a currency pair that typically has a very small ADR and frequently trades within a relatively smaller pip range I found that it was possible to start trading with a much smaller account balance and the likelihood of a large DD was less likely to occur (note however that a larger DD can and will occur even in a turtle pair so a trader must always be prepared and this is where risk management enters the equation). This thread will be a continuation of that journey and hopefully outline many of the traps that are ever present, provide additional trading knowledge and ultimately grow a smaller (eg $1000) account into a larger account by having a reasonable net weekly %gain and a respectable DD without risking the whole account in the process.
The following important points need to be made regarding the QAM Trading Strategy:
1. QAM is not my main trading strategy but simply an additional strategy that is allocated a small% of my trading account;
2. QAM should always be viewed as a trading strategy that is relatively risky because it thrives on producing a drawdown;
3. QAM can be applied to several currency pairs, commodities and indices;
4. QAM can be traded on multiple time frames;
5. QAM can be traded in a host of different trading windows; and
6. There is no limit to the number of ways that QAM can be traded, adapted or expanded upon.
7**. Importantly my approach to much of the QAM strategy is of a discretionary nature meaning that the traders decisions go well beyond opening a long trade when a blue box appears and short a trade when a red box appears!
** Sometimes this is the case but my idea with QAM is to close off mini cycles of trades at opportune times as a means of limiting large DD as much as possible.
The main points I look at when trading QAM can be briefly outlined as follows (they will be thoroughly expanded upon throughout the course of the thread):
1. Taking advantage of the typical Asian Session trading patterns that exist which implies known retracements in price;
2. Likely occurrence of pullbacks of price to the Daily Open zone;
3. Mini pullbacks of price to known areas of support and resistance for potentially closing out cycles of trades;
4. An awareness of a given pairs' ADR, ATR and other important factors;
5. The spread of the traded pair (broker spread and broker choice needs to be considered as high spread influences the efficient closing of cycles ie with respect to the ask and the bid for a short entry versus a long entry);
6. The volatility and likely trading ranges within a given trading window;
7. Setting realistic global SL for each trade or a cycle of trades such that maximum risk is never exceeded;
8. Have a realistic trading plan over weekly, monthly and yearly periods;
9. Develop a reasonable net weekly %gain at a certain DD in demo initially and then fine tune it later for a live trading account;
10. Learn to observe how price typically moves across the chart noting areas of S+R;
11. Awareness of strong trend development and how to actively manage a cycle of trades to minimize loss as much as possible
12. Awareness of news and its typical impact on a given currency pair (often this is highly variable but not always); and
13. Many other trading factors if and as required.
The QAM system can literally be traded using the Quantum Indicator on a 'naked' chart provided the trader has a very strong affinity to price action, zones of support and resistance, psychological levels (the round numbers 000 and the 50's), daily open price, knows the ADR, ATR, spread, average trading window pip range over several months, the trading window start and end times and a general familiarity with how the pair typically moves throughout the course of the week!
QAM.tpl 823 KB | 2,500 downloads
It should look similar to the chart below if you've done everything correctly:
Note: the template (tpl) is suitable for the MT4 trading platform only at this stage and is used here simply because it is the most popular platform among forum traders (other platforms can, do and will perform better and/or worse than MT4!)
The included indicators are as follows with all due acknowledgement to the original coders :
QAM.zip 160 KB | 3,662 downloads
Do not post charts to this thread containing 'lagging' indicators please which include some of the following:
.............. among many others.
Note: If you are unsure about whether or not a certain indicator can be posted to this thread please ask before you post it as this shows common courtesy.
[The CCI indicator (is a possible exception to the above rule) has shown to be useful when closing cycles of trades but certainly needs to be modified and in any case is not really needed].
Initially only 2 currency pairs EURCHF and EURGBP will be traded due to their common 'turtle' like behavior.
EURCHF WILL BE THE ONLY PAIR traded at the start.
EURGBP will be traded at a much later stage.
In the future other currency pairs will also be traded including some commodities and indices.
M1 time frame will be used initially but other TFs will be added later.
Asian Session initially over a 6 hour trading period
Start Time = Tokyo Open
End Time = Frankfurt Open
The trading start time may be altered at a later time to 1 hour pre Tokyo Open however the trading end time will not be altered and it is preferred that trading cycles/trades are completed before Frankfurt Opens.
CYCLES OF TRADES
Minimum 1 cycle to a maximum of 3 cycles
Initially the cycles are limited to a maximum of 2 cycles of trades per trading day unless the 2nd cycle of trades completes well inside the assigned trading window time slot (ie several hours before FF Open). Completion of cycles of trades may take place manually before the opposite signal arrives, at the opposite signal or by EA management at closure.
NUMBER OF TRADES PER CYCLE
To be determined based on account trading size, lot size per trade, global stop loss location and overall risk parameters.
I suggest that trade explorers be used by the serious traders as a means of confirming trades entered and closed including the collection of valuable trading analytical data which will highlight important parameters such as net% gain, drawdown and a host of other factors.
Demo TE - Although it is voluntary for a trader to provide a TE I will be providing one and hope that others might also participate especially during the 1st phase which will be demo only! This is where you can look at any bad trades etc and discuss it in the thread so that improvements in your trading results can be made.
Live TE will be used on one of my trading accounts and other traders are also welcome to participate on a voluntary basis.
I prefer to guide the trader more so than doing everything for them so please do your homework and attempt in the first instance to work out an issue by yourself! If you are still really lost then please post a question or PM me.
I will upload a basic template and some informative indicators but I expect the trader to be forward thinking enough to search for other useful informative tools freely available throughout the Forexfactory forum and beyond.
1. Open an M1 chart of EURCHF and attach the given template (including all the indicators)
2. Determine the ADR of EURCHF pair over the last month (initially just use 20 days but this might be modified later) which you will find at the top of your chart centred and in blue text courtesy of the ADR indicator.
3. Determine the ADR for the given currency pair of the trading window.
(An excel spreadsheet will be useful in recording these ranges on a continuous basis at the end of each trading day).
4. Go back through your chart of the EURCHF pair and become familiar with its typical daily movements from 1 session to the other and 1 hour to the next and make a mental note of any repeated patterns if any such patterns exist! This is to help you form an appreciation and an expectation of the typical movements of the pair.
5. Get ready to participate in the trading session when the market opens!
There is much to cover about many related topics that form part of trading this method but the basic concept is quite simple. The discretionary part of the traders thinking is far more important and knowing when to leave some cycles run while closing out others. At the end of the day you have done nothing wrong if you close out a cycle of trades prematurely since profit is profit but hopefully the more familiar you become with how price typically behaves on a given pair you will be able to extract more profit by closing out at better zones. Don't worry too much because no-one has the ability to close out perfect cycles of trades as it is impossible so what we wish to achieve here is taking a reasonable chunk of profit without bringing on unnecessary DD!
I hope the thread proves to be useful as well as entertaining so I hope you all enjoy the journey!
Master your Mind then Master your Trades