Kj-Fx Forex Trading Technique 1

Welcome and thank you for visiting this thread. This is the first chance that we will interact over here.

The technique presented over here is the modification of the original one available on the internet (do not know the source). So, there is no claim made that this technique is the original one. But it is modified to produce results that are acceptable to me. I am here to share my technique which I use in a consistent way to produce the results.

As a result, my technique may work or may not work for you. If you think that it will work for you then stay along and we will continue to see several examples (some producing profits and some producing loss !). If you think that it will not work for you then please move on and do not waste your time. It is your call.

Let us be respectful to each other during this journey ! Feel free to ask the question related to the presented technique or the examples presented. I will try to answer as per my knowledge.

The pair that we will use is EUR/USD only. The time frame will be 1 hour. The new day will start at 5.00p.m. New York Time. I know you have some immediate questions like, why E/U only? Why 1 hour? Why 5.00p.m.? etc. But hold on to those questions. I will discuss these Whys in the later posts.

We will put 34EMA and 13EMA applied to close on the chart. We will also put Parabolic SAR with default settings (0.02, 0.2). The trading platform that I am using is MT4. Wait, do not run away ! THIS IS NOT TYPICAL MA CROSSOVER sytem. We will use this two ma in a different way. Meanwhile, see the following attached image EURUSD-1HR-Fig-1.png to get the idea about the drawings.

We have not discussed any setup, entry, exit rules yet. So stay tune for the interesting materials to come !

How many years do you use this indi based strategy ? Yes years ....

I ask, bcz it is easy to plan and project these usual "indo based" systems every day at least a hundred. And yes - going through this forum as well you may find them ... thousends ! People like me surfing here in forum for years now saw these systems coming and absconding ....

I wont say, that these system do not work, not at all. They work - perhaps - at least in the hands of their developers, but I never saw great advantages comparing them.

So - what are the extraordinary features of yours generating the necessity to have one common indi based system more here in the FF ?

shew me

Subscribed - interested to learn, how this MA system differs from others of that kind.

Thank you all those who asked for the information (Post#2,3,4). I am using this technique for the last one year in Stock Trading. I have been using this technique in Forex since last 3 months. But, whether I am using for 3 months or 3 years will not matter to you if it does not work for you. Moreover, this is just information sharing. NO CLAIM IS MADE THAT THIS IS THE HOLY GRAIL TECHINQUE AND WILL WORK FOR EVERYBODY. So, check out yourself if it will work for you or not by how I am using this technique for Forex.

So, let us continue.

We will use the 34EMA and 13EMA as a trend direction indicator, dynamic support and dynamic resistance and PSAR as initial stop loss. Now, we will see the buy setup and entry though example. See the following Figure-2:

Figure -2

Check the candle marked as #1. That candle is closed above both EMAs, the close is in the top 25% to 30% of the candle range, and open is above the both EMAs. Both EMAs are pointing upwards, 13EMA above 34EMA with distance between them. So, in this scenario, I will place a buy-stop order at high of candle #1 + 1 pip +spread. The stop will be placed at the value of PSAR. The buy order was triggered at candle # 2. I use various profit targets methods. Let me discuss only one over here. My first profit target will be the range of the candle#1. Yes, there is higher risk than the reward in this example. But there is also higher probability that the target will be reached. Because if you observe the two candles prior to candle#1, they are small range with small body followed by higher range candle#1. This situation is the indication (NOT GUARANTEE) that market will move higher. And you can check it out that target was indeed achieved. For you reference, the candle#1 is 8.00p.m. dt. 06-Jan-2016 (New York Time) candle and target is achieved at 4.00a.m. dt. 07-Jan-2016(NY Time) candle.

I will discuss the candle#3 and candle#4 in next post.

In Post#5, we have seen one of the ways to enter the market by using 34EMA and 13EMA as trend confirming indicators. Now we will see how to use these two EMAs as dynamic support and enter the trade. Let me reproduce the Figure 2 again and will discuss the process.

Figure - 2 is reproduced here for easy reference.

Now, look at candle#3. You will notice that 34EMA has acted over there as the dynamic support. The candle prior to candle#3 could not close below the 34EMA and candle#3 opened just above the 34EMA and also closed above 34EMA, 13EMA, and in the top 30% of candle range. This indicates that the buying pressure is still on. So, I may put the buy-stop order at the high of candle#3+1pip+spread, stop loss at the low of candle#3-5pips, and profit at the buy entry + range of candle #3. I have ignored the PSAR value at this time because 34EMA has nicely supported the price after a retrace. Does this guarantee that the trend will go up ? The answer is NO. But the probability is high for the trend to continue higher. How could I conclude that ? We will find the answer in the upcoming post.

For your reference, candle#3 is 3.00a.m. dt.07-Jan-2016 (NY Time) candle and target was achieved at 4.00a.m. dt.07-Jan-2016 (NY Time) candle. I had not taken that trade because of it was too early for me to wake up.

Before, I proceed to questions posed in my earlier posts, let me just show you an example of the sell trade. See the following figure:

Figure - 3

The candle#1 was formed on 11-Jan-2016 2.00p.m. (NY Time). At that time, 34EMA and 13EMA were pointing down, 13EMA below 34EMA, close of the candle is in the 30% range from the bottom and below both EMAs, 34EMA has acted as dynamic resistance, PSAR is above the candle. I should have placed a sell-stop order at low of candle#1-1pip, stop loss at PSAR value-spread, and take profit at the entry-range of candle#1 - spread. Now, you can check your chart and see how the trade is progressing. When you examine your chart, you will notice that price went near to stop loss around 3.00a.m. dt. 12-Jan-2016 (NY Time) but did not hit the stop loss. At the time of writing this post, 8.00a.m. dt. 12-Jan-2016 (NY Time) candle has completed. Still, the first target is not achieved. This tells me to keep the patience. Will the target be achieved ? I do not know at the time of writing this post. The time will answer this question. So, let us see what happens ! PLEASE REMEMBER THAT THIS IS NOT A TRADE RECOMMENDATION OR ANY TYPE OF ADVICE TO ENTER THE TRADE USING YOUR MONEY. I AM JUST SHOWING HOW THIS TECHINIQUE HAS PRODUCED THIS OPPORTUNITY WHICH MAY PRODUCE PROFIT OR LOSS. USE YOUR OWN JUDGEMENT.

UPDATE on Post # 7:

The profit target was achieved at 10.00a.m. 12-Jan-2016 (NY Time) candle.

Also, there was a typo in Post#7 : stop loss will at PSAR value + spread instead of PSAR value - spread.

Hi, I don't understand your trade because in #post 6 you wrote that signal candle has to close (and open as well) under both of the EMAs. But today candle only close below. Doesn't open under both of the EMAs. What is the right rule? Thanks ;-)

Thank you for visiting this thread and posting the question.

The post#6 says "candle#3 opened just above the 34EMA and also closed above 34EMA, 13EMA, and in the top 30% of candle range. This indicates that the buying pressure is still on." Here, the close must be above the 34EMA and 13EMA. The open is just above the 13EMA. This situation is possible when the 34EMA is acting as the dynamic support .

The example given in post#7 describes the situation when the 34EMA is acting as the dynamic resistance. So, the open is just below the 34EMA, but the close has to be below both 34EMA and 13EMA; and that is the case in this example.

I hope that your question got the answer. Let me know if still there is any confusion in my writing.

Nice technique, but you did not mansion whay 5 pm NY time and why EU only. We can trade any pair and any time.

You have the answer in the post #1 :

Thank you, mpradeep (Post#11) and FerruFx (Post#12) for visiting this thread and posting over here.


Today, let us discuss one of the WHYs. That is, WHY EUR/USD only ?

I have been trading the stocks and their derivatives. There are more than 4000 stock tickers available in US Stock markets to trade at any given trading day. Out of these 4000 symbols, one can easily get around 10 to 20 tickers (stock symbols) which will satisfy your criteria for trade setup in theory. Should I trade all these 10 or 20 symbols since they are presenting the setup assuming that I have enough capital ? My coach did not allow me to trade all, not even half, not even 5, not even 1 during my training period. I respected his order. It happened for quite a few times. There will be very nice theoretical setups but he will not allow me to place any trade. One day, I asked him why is he not allowing me to place the trade? What is wrong? He told me that you would have answer by next week. Then there was a big week-end and my coach invited us for a fishing trip in a sea with the professional fishermen. Though the trip was not about any stock trading discussion; it was just a fun trip for us, my coach asked us to observe that how these professional fishermen are working, acting, deciding for throwing the nets etc. Then we observed - they were not throwing their nets in any random way even though there were many fish available; they were following certain patterns (knowingly or unknowingly) in deciding when to throw, how to throw, and how to maximize the catch with consistent focused optimal efforts. These professional fishermen had mastered the area of fishing, were consistent, and focused in their job. These observations taught us very important lesson for the trading. The lessons learned -"Know your subject, follow and master it, stay focused, stay consistent."
So, I got answer to my question of why ? I need to understand the stock symbol, follow it, understand how it reacts during certain period of time, observe its any behavioral pattern, etc. I need to study that stock chart in such a way that the chart will speak to me , will guide me, and tell me that this is the time to trade based on your setup conditions. My coach has also taught me that use your indicators as your guiding sticks and not as a crunch to lean on. Your indicators should not make decision or force you to trade. It does not mean that indicators are bad objects. It is the matter of preference. Your chart with the indicators will guide you when you should trade if you have followed and understood the behavior of the stock symbol.

I am still developing this skill. It is a continuous learning process.

I know that this is not a stock trading thread. But it is a FOREX trading technique thread. I believe that the story described over here is relevant to answer the question why EUR/USD only. Because of the way I am trained by my coach, I have decided to understand one pair at a time. At present, my choice is EUR/USD.

Should you follow the path I am taking ? I cannot decide for you. You are the best judge for yourself.

Will this trading technique work for other pairs ? - I do not have answer for that question yet. Because, I have not studied any other pair yet. I invite you to explore yourself and find the answer.

Thank you for giving your time in reading this post !

Nice post

Thank you, FerruFx (Post#14) for your kind words.

Today, we will see two examples where 34EMA has acted as a dynamic resistance in one case and combination of 34EMA and 13EMA has worked as trend confirming guide in another case. See the following figure:

Figure - 4

The candle#1 is 5.00p.m. dt. Jan-12-2016 (NY Time) candle. In this case, if we observe carefully, then we can see that 34EMA has acted as a dynamic resistance. The candle is closed below the 34EMA and 13EMA. The open is just below the 34EMA. I would have placed the sell order at the low of candle#1-spread-1pip, stop-loss at high of candle#1+spread+1pip, and profit target at sell order price-range of candle#1-spread. The target was achieved at 8.00p.m. dt. Jan-12-2016 (NY Time) candle. I did not take this trade as I was away from my computer.

Now see, candle#2. It is 3.00p.m. dt. Jan-13-2016 (NY Time) candle. I am not writing the entire description of what should be the order. But, the important point over here is that the before hitting the profit target, it went in the another direction. So, for this type of trade, the patience is must. Otherwise, the trader will get out of the trade and then will see the trade going in the anticipated direction and hitting the profit target. This type of incidences will force the trader to lose the discipline and make mistake. I had taken this trade.

The main objective of these two examples is to show (1) if you miss the trade, do not feel guilty and do not blame yourself. There is always the next trade; and (2) the importance of discipline and consistency.

Thank you for reading this post.

If candle 1 would have opened below the 13MA (and no clear dynamic support) where would you put the SL? - The PSAR is still on the other side.
Also, how do you handle large spread candles like 50....100 pip?
Thanks

Thank you, Go5 for your post.

I would skip the trade if the candle#1 would have opened below 13EMA and PSAR still below the candle#1 and there is not dynamic support presented.

I would also avoid the setup where the candle is unusually large compare to other candles.

Let us see if we can come across such situation in real examples going forward and then I can explain in a better way.

Hi Kj-fx,

do you trade candle like this actual one on EURGBP? It's not finished yet but if it's: PSAR changed direction, it opened and probably will close above both of EMAs but candle face is not nice.

Thank you, dafa, for your post#18. I am studying EUR/USD only. So, I am not sure, whether this technique will work for EUR/GBP or not. But, one thing is sure. I will take trade only when the candle is closed.

Kj, I am impressed by your discipline. Sticking with your rules is important for successful trading.

KP