Bill
- | Joined Feb 2011 | Status: Member | 125 Posts
Are you finding validity in the belief of many traders that the Asian market sets the trading parameters? I haven't really taken the time to study that, but I have seen it stated by several traders I admire.
I've been thinking about it, and the closest I can come to a logical answer is this:
I'm primarily trading EURUSD and GBPUSD, which are traded fairly lightly during the Asian session, and then burst into life when Frankfurt and London open.
If you look at GBPUSD in the 4 hour period before Frankfurt opens, there often isn't a lot going on. The price tends to bounce around rather lazily in a 10-30 pip range. I suspect this is simply because there just isn't the volume/large orders which drive the price during the European/NY trading sessions.
I'm led to believe that there are a large number of limit orders placed on either side of this range. If you watch the PA at 7-9am GMT, this does seem to fit.
The key thing I note is this.....the majority of the time, when Frankfurt/London opens, there is a huge increase in volume. The big players bursting into action in Europe suddenly give the price direction.
It's the words that I have underlined that are important to me. I know that the price is likely to make a significant move, I know when it's going to happen. What I don't know is what direction it is going to be in....
But that doesn't matter to me at all, that's where the asian session range box and the 3/8 EMAs come in.
I imagine a median running through the box on my screen. If the price begins to move from that line towards an edge of the box, I watch it. I don't care which way it's moving, the big players have control, it's up to them. Quite often, right after open, the PA will skip to the outer limits of the Asian range box and then skip to the other limit etc etc, just like it had been doing during the Asian session but now with more volatility. You could trade that range, but it's the BOs that i'm interested in.
So my set up and trigger has developed as follows:
1. Check the news (I don't want to be getting into a trade before big news, and even if it's hours away it can cause the PA to range, so it's no good).
2. Check the range box size from the last 4hours (if it's abnormally large for that pair, I'll avoid).
3. Check nearby SR (on all TFs). Am I trading into a record low, big round number, weekly resistance etc etc? If so I either avoid the trade or use a smaller TP. I also use SR to set TP levels.
4. Watch the PA on M30/M5 from 7am GMT. I just sit and observe the candles forming and things taking shape (this is where my strategy breaches one of your rules, I find that watching the candles form helps me spot good BO potential. As soon as PA breaches the outer limits of either side of the Asian range, I turn the candles off (back to your rules!).
5. Now we approach the first proper set up, I'm watching ONLY the EMAs at this point, it's helps me stick to rules and not be distracted....I need the 3/8 EMAs to have moved outside of the range box on the M30, a cross inside the box just before moving out is an A+ trade. Because of the light trading prior to 7am, there is almost always an M30 3/8 EMA cross in the vicinity which gives us our directional bias. Most of the time i will wait until that M30 period has closed for confirmation, but not always.
6. Now for the trigger, I drop down to M5 and look at the 3/8 EMAs. Are they compliant? (e.g. pointing in the right direction, the more parallel the better). If they are compliant then it's time to get in.
7. I place my trade. My stop loss is generally just under the last significant SR point on the M5. This is normally around 15 pips on GBPUSD or EURUSD. For TP, I'm aiming for nearby SR, but ideally looking for around 20-25 pips.
That's it.
If I can, I will watch the trade and manage manually, but it seems to be working well just setting and forgetting.
The thing is, even if it's a false BO, I tend to still catch 20 pips on GBPUSD and EURUSD.
I set my risk at around 1.5% of account balance.
- Joined Dec 2009 | Status: Member | 6,603 Posts
Yes, but I'm not sure my logic is correct! It's based purely on my observations so far
I've been thinking about it, and the closest I can come to a logical answer is this:
I'm primarily trading EURUSD and GBPUSD, which are traded fairly lightly during the Asian session, and then burst into life when Frankfurt and London open.
If you look at GBPUSD in the 4 hour period before Frankfurt opens, there often isn't a lot going on. The price tends to bounce around rather lazily in a 10-30 pip range. I suspect this is simply because there...
Looking at just trading BOs from Asian session and with crosses for entry is very profitable from what I am seeing.
- Joined Sep 2006 | Status: Member | 9,927 Posts
I've not abandoned this thread, I'm still trading the EMA cross overs and it's still being really profitable for me. The problem is that it's a pain for me to get charts posted (i'm trading from my iphone after I've checked set ups in the house before work).
I could post retrospectively when I get home from work, which would also show my exit points and how the PA developed over the course of the day, but I'm not sure how much use that would be?
I'm watching GBPUSD, EURUSD, AUDUSD and USDCAD from 7am GMT, looking for a cross on the M30 which...
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