Simple Stochastic Day Trade Forex Trading Strategy | Forex

So you wanna trade Forex? - tips and tricks inside

Let me just sum some stuff up for you newbies out there. Ive been trading for years, last couple of years more seriously and i turned my strategies into algorithms and i am currently up to 18 algorithms thats trading for me 24/7. Ive learned alot, listened to hundreds of podcasts and read tons of books + research papers and heres some tips and tricks for any newbie out there.

  1. Strategy - How to... When people say "you need a trading strategy!!" Its because trading is very hard and emotional. You need to stick to your rules at all times. Dont panic and move your stop loss or target unless your rules tell you to. Now how do you make these rules? Well this is the part that takes alot of time. If your rules are very simple (for example: "Buy if Last candles low was the lowest low of the past 10 candles." Lets make this a rule. You can backtest it manually by looking at a chart and going back in time and check every candle. or you can code it using super simple software like prorealtime, MT4 ++ Alot of software is basicly "click and drag" and press a button and it gives you backtest from 10-20-30 years ago in 5 seconds. This is the absolute easiest way to backtest rules and systems. If your trading "pure price action" with your drawn lines and shit, the only way to truly backtest that kind of trading is going in a random forex pair to a random point in time, could be 1 year ago, 1 month ago, 5 years ago.. and then you just trade! Move chart 1 candle at a time, draw your lines and do some "actual trading" and look at your results after moving forward in the chart. If you do not test your strategy your just going in blind, which could be disaster.. Maybe someone told u "this is the correct way to trade" or "this strategy is 90% sure to win every trade!!!" If you think you can do trading without a strategy, then your most likely going to look back at an empty account and wonder why you moved that stop loss or why you didnt take profit etc.. and then your gonna give up. People on youtube, forums, interwebz are not going to give you/sell you a working strategy thats gonna make you rich. If they had a working strategy, they would not give it away/sell it to you.
  2. Money management - How to.... Gonna keep this one short. Risk a small % of your capital on each trade. Dont risk 10%, dont risk 20%. You are going to see loosing trades, your probably gonna see 5-10 loss in a row!! If your trading a 1000$ account and your risking 100$ on each trade (10%) and you loose 5 in a row, your down -50% and probably you cant even trade cus of margin req. Game over.. Now how does one get super rich, super fast, from risking 1-3% of your account on each trade?? Well heres the shocking message: YOU CANT GET RICH FAST FROM TRADING UNLESS YOUR WILLING TO GO ALL IN! You can of course go all in on each trade and if you get em all right, you might get 1000%, then you go all in 1 more time and loose it all... The whole point of trading is NOT going bust. Not loosing everything, cus if you loose it all its game over and no more trading for you.
  3. Find your own trading style.... Everyone is different. You can have an average holding period of 1 month or you could be looking at a 1 min chart and average holding time = 10 minutes. For some, less volatility helps them sleep at night. For others, more volatility gives them a rush and some people crave this. There is no "correct" timeframes, or holding periods, or how much to profit or how much to loose. We are all individuals with different taste in risk. Some dont like risk, others wanna go all in to get rich over night. The smart approach is somewhere in the middle. If you dont risk anything, your not gonna get anything. If you risk everything, your most likely going to loose everything. When people are talking about trading style, this is kinda what that means.
  4. There are mainly 2 ways to trade: Divergence and Convergence. Or in other words: Mean reversion or trend following. Lets talk about them both: Trend following is trying to find a trend and stay with the trend until its over. Mean reversion is the belief that price is too far away from the average XX of price, and sooner or later, price will have to return to its average/mean (hence the name: MEAN reversion). Trend following systems usually see a lower winrate (30-40% winrate with no money management is not uncommon to see when backtesting trend following systems.. You can add good money management to get the winrate % higher. Why is the % winrate so low? Well a market, whatever that market is, tend to get real choppy and nasty right after a huge trend. So your gonna see alot of choppy fake signals that might kill 5-6 trades in a row, until the next huge trend starts which is going to cover all the losses from the small losses before the trend took off. Then you gotta hold that trade until trade is done. How do you define "when trend starts and stops"? Well thats back to point 1, find a strategy. Try defining rules for an entry and exit and see how it goes when you backtest it. For mean reversion the win % is usually high, like 70-90% winrate, but the average winning trade is alot smaller than the average loosing trade. this happens because you are basicly trying to catch a falling knife, or catch a booming rocket. Usually when trading mean reversion, waiting for price to actually reverse can very often leave you with being "too late", so you kinda have to find "the bottom" or "the top" before it actually has bottomed/ topped out and reversed. How can you do this you ask? Well your never going to hit every top or every bottom, but you can find ways to find "the bottom-ish" or "the top-ish", thens ell as soon as price reverts back to the mean. Sometimes your gonna wish you held on to the trade for longer, but again, back to point 1: Backtest your rules and figure that shit out.

Read these 4 points and try to follow them and you are at least 4 steps closer to being a profitable trader. Some might disagree with me on some points but i think for the majority, people are going to agree that these 4 points are pretty much universal. Most traders have done or are doing these things every day, in every trade.
Here is some GREAT material to read: Kevin Davey has won trading championship multiple times and he has written multiple great books, from beginner to advanced level. Recommend these books 100%, for example: Building winning algorithmic trading systems" will give you alot to work with when it comes to all 4 of the above points. Market wizards, Reminiscences of a stock operator are 2 books that are a great read but wont give you much "trading knowledge" that you can directly use for your trading. Books on "The turtles" are great reading. Then you have podcasts and youtube. I would stay away from youtube as much as possible when it comes to "Heres how to use the rsi!!!" or "this strategy will make you rich!!". Most youtube videoes are made by people who wanna sell you a course or a book. Most of this is just pure bullshit. Youtube can very harmfull and i would honestly advice about going there for "strategy adivce" and such. Podcasts tho are amazing, i highly recommend: Better systems trader, Chat with traders, Top traders unplugged, We study billionairs, to name a few :)
Also, on a less funny note.. Please realize that you are, and i am, real fucking stupid and lazy compared to the actual pro's out there. This is why you should not go "all in" on some blind stupid strategy youve heard about. This is why this is indeed VERY FUCKING HARD and most, if not everyone has busted an account or two before realizing just this. Your dumb.. your not going to be super rich within 1 year.. You can not start with 500$ account and make millions! (some might have been able to do this, but know that for every winner, theres 999 loosers behind him that failed... Might work fine first 5 trades, then 1 fuckup tho and ur gone..
And lastly: Try using a backtesting software. Its often FREE!!! (on a demo account) and often so simple a baby could use it. If your trading lines and such there exists web broweser "games" and softwares that lets you go "1 and 1 candle ahead" in random forex pairs and that lets you trade as if its "real" as it goes.
A big backtesting trap however is backtesting "losely" by just drawing lines and looking at chart going "oh i would have taken this trade FOR SURE!! I would have made so much money!!" however this is not actually backtesting, its cherry picking and its biased beyond the grave, and its going to hurt you. Try going 1 candle at a time doing "real and live" trades and see how it goes.

Bonus point!!
many people misunderstands what indicators like the RSI is telling you. Indeed something is "overbought" or "oversold" but only compared to the last average of xx amounts of bars/candles.
It doesn't tell you that RIGHT NOW is a great time to sell or buy. It only tells you that the math formula that is RSI, gives you a number between 1-100, and when its above 70 its telling you that momentum is up compared to the last average 14 candles. This is not a complete buy/sell signal. Its more like a filter if anything. This is true for MOST indicators. They INDICATE stuff. Dont use them as pure buy/sell signals.. At least backtest that shit first! Your probably gonna be shocked at the shitty results if you "buy wehn rsi is undeer 30 and sell when RSI is above 70".

Editedit: Huge post already, why not copy paste my comment with an example showing the difference in trend following vs mean reversion:
The thing about trend following is that we never know when a trade starts and when it ends. So what often happens is that you have to buy every breakout going up, but not every breakout is a new trend. Lets do an example. Check out the photo i included here: https://imageshost.eu/image/image.RcC

THE PHOTO IS JUST AN EXAMPLE THAT SHOWS WHY A TYPICAL TREND FOLLOWING STRATEGY HAVE A "LOW" WINRATE.
THE PHOTO IS NOT SHOWING AN EXAMPLE OF MY STRATEGIES OR TRADING.

  1. We identify the big orange trend up.
  2. We see the big break down (marked with the vertical red line) this is telling us we are not going higher just yet. Our upwards trend is broken. However we might continue going up in a new trend, but when will that trend come?
  3. We can draw the blue trend very earyly using highs and lows, lines up and down. Then we begin to look for breakouts of the upper blue line. So every time price breaks upper blue line we have to buy (cus how else are we going to "catch the next trend going up?)
As you can see we get 5 false breakouts before the real breakout happens!
Now if you could tell fake breakouts from real breakouts, your gonna be rich hehe. For everyone else: Take every signal you can get, put a "tight" stop loss so in case its a fake signal you only loose a little bit. Then when breakout happens as you can clearly see in chart, your going to make back all the small losses.
So in this example we fail 5 times, but get 1 HUGE new trend going further up. This 1 huge trade, unless we fuck it up and take profits too early or shit like that, is going to win back all those small losses + more.
This is why trend following has a low winrate. You get 5 small loss and 1 big win.

Now lets flip this! Imagine if your trading Mean reversion on all the same red arrows! So every time price hits the blue line, we go short back to the bottom (or middle) again! You would have won 5 trades with small profits, but on that last one you would get stopped out so hard. Meaning 5 small wins, 1 big loss (as some have pointed out in comments, if you where trading mean reverting you would wanna buy the lows as well as short the tops - photo was suppose to show why trend following strategies have a lower % winrate.)

Final edit: sorry this looks like a wall of text on ur phones.
submitted by RipRepRop to Forex [link] [comments]

[educational] Stretgies for day trading based on Technical Analysis

[educational] Stretgies for day trading based on Technical Analysis

1. Breakout

Breakout strategies center around when the price clears a specified level on your chart, with increased volume. The breakout trader enters into a long position after the asset or security breaks above resistance. Alternatively, you enter a short position once the stock breaks below support.
After an asset or security trades beyond the specified price barrier, volatility usually increases and prices will often trend in the direction of the breakout.
You need to find the right instrument to trade. When doing this bear in mind the asset’s support and resistance levels. The more frequently the price has hit these points, the more validated and important they become.

Entry Points

This part is nice and straightforward. Prices set to close and above resistance levels require a bearish position. Prices set to close and below a support level need a bullish position.

Plan your exits

Use the asset’s recent performance to establish a reasonable price target. Using chart patterns will make this process even more accurate. You can calculate the average recent price swings to create a target. If the average price swing has been 3 points over the last several price swings, this would be a sensible target. Once you’ve reached that goal you can exit the trade and enjoy the profit.
https://preview.redd.it/0oj4a1xlvdh31.png?width=773&format=png&auto=webp&s=8f2aa07b0c7caeeb00c4f997c12e814abbd380da

2. Scalping

One of the most popular strategies is scalping. It’s particularly popular in the forex market, and it looks to capitalise on minute price changes. The driving force is quantity. You will look to sell as soon as the trade becomes profitable. This is a fast-paced and exciting way to trade, but it can be risky. You need a high trading probability to even out the low risk vs reward ratio.
Be on the lookout for volatile instruments, attractive liquidity and be hot on timing. You can’t wait for the market, you need to close losing trades as soon as possible.
https://preview.redd.it/dzaf7t1nvdh31.png?width=653&format=png&auto=webp&s=f3d96d74311de806c3809698df2a964e3eb4db5e

3. Momentum

Popular amongst trading strategies for beginners, this strategy revolves around acting on news sources and identifying substantial trending moves with the support of high volume. There is always at least one stock that moves around 20-30% each day, so there’s ample opportunity. You simply hold onto your position until you see signs of reversal and then get out.
Alternatively, you can fade the price drop. This way round your price target is as soon as volume starts to diminish.
This strategy is simple and effective if used correctly. However, you must ensure you’re aware of upcoming news and earnings announcements. Just a few seconds on each trade will make all the difference to your end of day profits.
https://preview.redd.it/z4r2o6covdh31.png?width=600&format=png&auto=webp&s=b054c77c4bc5978821e879eff73d613d728cb0cf

4. Reversal

Although hotly debated and potentially dangerous when used by beginners, reverse trading is used all over the world. It’s also known as trend trading, pull back trending and a mean reversion strategy.
This strategy defies basic logic as you aim to trade against the trend. You need to be able to accurately identify possible pullbacks, plus predict their strength. To do this effectively you need in-depth market knowledge and experience.
The ‘daily pivot’ strategy is considered a unique case of reverse trading, as it centers on buying and selling the daily low and high pullbacks/reverse.
https://preview.redd.it/4ya3txcpvdh31.png?width=776&format=png&auto=webp&s=f40216413b1376b2d6d5a67e4d09057f55be6ba1

5. Using Pivot Points

A day trading pivot point strategy can be fantastic for identifying and acting on critical support and/or resistance levels. It is particularly useful in the forex market. In addition, it can be used by range-bound traders to identify points of entry, while trend and breakout traders can use pivot points to locate key levels that need to break for a move to count as a breakout.

Calculating Pivot Points

A pivot point is defined as a point of rotation. You use the prices of the previous day’s high and low, plus the closing price of a security to calculate the pivot point.
Note that if you calculate a pivot point using price information from a relatively short time frame, accuracy is often reduced.
So, how do you calculate a pivot point?
  • Central Pivot Point (P) = (High + Low + Close) / 3
You can then calculate support and resistance levels using the pivot point. To do that you will need to use the following formulas:
  • First Resistance (R1) = (2*P) – Low
  • First Support (S1) = (2*P) – High
The second level of support and resistance is then calculated as follows:
  • Second Resistance (R2) = P + (R1-S1)
  • Second Support (S2) = P – (R1- S1)

Application

When applied to the FX market, for example, you will find the trading range for the session often takes place between the pivot point and the first support and resistance levels. This is because a high number of traders play this range.
It’s also worth noting, this is one of the systems & methods that can be applied to indexes too. For example, it can help form an effective S&P day trading strategy

6. Moving Average Crossover

You will need three moving average lines:
  • One set at 20 periods – This is your fast moving average
  • One set at 60 periods – This is your slow moving average
  • One set at 100 periods – This is your trend indicator
This is one of the moving averages strategies that generates a buy signal when the fast moving average crosses up and over the slow moving average. A sell signal is generated simply when the fast moving average crosses below the slow moving average.
So, You’ll open a position when the moving average line crosses in one direction and you’ll close the position when it crosses back the opposite way.
How can you establish there’s definitely a trend? You know the trend is on if the price bar stays above or below the 100-period line.

the source : https://www.daytrading.com/strategies
submitted by JalelTounsi to ethfinance [link] [comments]

[educational] Technical analysis, patterns, and charts analysis for the day trader

[educational] Technical analysis, patterns, and charts analysis for the day trader
Chart patterns form a key part of day trading. Candlestick and other charts produce frequent signals that cut through price action “noise”.
The best patterns will be those that can form the backbone of a profitable day trading strategy, whether trading stocks, cryptocurrency of forex pairs.
Every day you have to choose between hundreds of trading opportunities. This is a result of a wide range of factors influencing the market. Day trading patterns enable you to decipher the multitude of options and motivations – from hope of gain and fear of loss, to short-covering, stop-loss triggers, hedging, tax consequences and plenty more.
Candlestick patterns help by painting a clear picture, and flagging up trading signals and signs of future price movements. Whilst it’s said you’ll need to use technical analysis to succeed day trading with candlestick and other patterns, it’s important to note utilizing them to your advantage is more of an art form than a rigid science.
You have to learn the power of chart patterns and the theory that governs them in order to identify the best patterns to supplement your trading style and strategies.

Use In Day Trading

Used correctly trading patterns can add a powerful tool to your arsenal. This is because history has a habit of repeating itself and the financial markets are no exception. This repetition can help you identify opportunities and anticipate potential pitfalls.
RSI, volume, plus support and resistance levels all aide your technical analysis when you’re trading. But crypto chart patterns play a crucial role in identifying breakouts and trend reversals. Mastering the art of reading these patterns will help you make smarter trades and bolster your profits, as highlighted in the highly regarded, ‘stock patterns for day trading’, by Barry Rudd.

Breakouts & Reversals

In the patterns and charts below you’ll see two recurring themes, breakouts and reversals.
  • Breakout – A breakout is simply when the price clears a specified critical level on your chart. This level could by any number of things, from a Fibonacci level, to support, resistance or trend lines.
  • Reversal – A reversal is simply a change in direction of a price trend. That change could be either positive or negative against the prevailing trend. You may also hear it called a ‘rally’, ‘correction’, or ‘trend reversal’.

Candlestick Charts

Candlestick charts are a technical tool at your disposal. They consolidate data within given time frames into single bars. Not only are the patterns relatively straightforward to interpret, but trading with candle patterns can help you attain that competitive edge over the rest of the market.
They first originated in the 18th century where they were used by Japanese rice traders. Since Steve Nison introduced them to the West with his 1991 book ‘Japanese Candlestick Charting Techniques’, their popularity has surged.
Below is a break down of three of the most popular candlestick patterns used for day trading.

Shooting Star Candlestick

This is often one of the first you see when you open a chart with candlestick patterns. This bearish reversal candlestick suggests a peak. It is precisely the opposite of a hammer candle. It won’t form until at least three subsequent green candles have materialized. This will indicate an increase in price and demand. Usually, buyers lose their cool and clamber for the price to increasing highs before they realize they’ve overpaid.
The upper shadow is usually twice the size of the body. This tells you the last frantic buyers have entered trading just as those that have turned a profit have off-loaded their positions. Short-sellers then usually force the price down to the close of the candle either near or below the open. This traps the late arrivals who pushed the price high. Panic often kicks in at this point as those late arrivals swiftly exit their positions.

https://preview.redd.it/gf5dwjhbrdh31.png?width=300&format=png&auto=webp&s=437ff856bfd6ebc95da34528462ba224d964f01f

Doji Candlestick

One of the most popular candlestick patterns for trading forex is the doji candlestick (doji signifies indecision). This reversal pattern is either bearish or bullish depending on the previous candles. It will have nearly, or the same open and closing price with long shadows. It may look like a cross, but it can have an extremely small body. You will often get an indicator as to which way the reversal will head from the previous candles.
If you see previous candles are bullish, you can anticipate the next one near the underneath of the body low will trigger a short/sell signal when the doji lows break. You’ll then see trail stops above the doji highs.
Alternatively, if the previous candles are bearish then the doji will probably form a bullish reversal. Above the candlestick high, long triggers usually form with a trail stop directly under the doji low.
These candlestick patterns could be used for intraday trading with forex, stocks, cryptocurrencies and any number of other assets. But using candlestick patterns for trading interpretations requires experience, so practice on a demo account before you put real money on the line.

https://preview.redd.it/4yo650lcrdh31.png?width=300&format=png&auto=webp&s=b2aa3cdeef23e44e1e3e3047bbe2604fce0a4768

Hammer Candlestick

This is a bullish reversal candlestick. You can use this candlestick to establish capitulation bottoms. These are then normally followed by a price bump, allowing you to enter a long position.
The hammer candlestick forms at the end of a downtrend and suggests a near-term price bottom. The lower shadow is made by a new low in the downtrend pattern that then closes back near the open. The tail (lower shadow), must be a minimum of twice the size of the actual body.
The tails are those that stopped out as shorts started to cover their positions and those looking for a bargain decided to feast. Volume can also help hammer home the candle. To be certain it is a hammer candle, check where the next candle closes. It must close above the hammer candle low.
Trading with Japanese candlestick patterns has become increasingly popular in recent decades, as a result of the easy to glean and detailed information they provide. This makes them ideal for charts for beginners to get familiar with.

https://preview.redd.it/7snzz8qdrdh31.png?width=300&format=png&auto=webp&s=f83ff82f0980dd30c33bc6886ae7e7ed3a98b72f

More Popular Day Trading Patterns

Using Price Action

Many strategies using simple price action patterns are mistakenly thought to be too basic to yield significant profits. Yet price action strategies are often straightforward to employ and effective, making them ideal for both beginners and experienced traders.
Put simply, price action is how the price is likely to respond at certain levels of resistance or support. Using price action patterns from pdfs and charts will help you identify both swings and trendlines.
Whether you’re day trading stocks or forex or crypto with price patterns, these easy to follow strategies can be applied across the board.

Zone Strategy

So, how do you start day trading with short-term price patterns? you will likely employ a ‘zone strategy’. One obvious bonus to this system is it creates straightforward charts, free from complex indicators and distractions.

https://preview.redd.it/7e5x37zerdh31.png?width=300&format=png&auto=webp&s=2098a4c9df4a4556c3024cec1c176ce50c9806c0

Dead Zone

This empty zone tells you that the price action isn’t headed anywhere. There is no clear up or down trend, the market is at a standoff. If you want big profits, avoid the dead zone completely. No indicator will help you makes thousands of pips here.

The Red Zone

This is where things start to get a little interesting. Once you’re in the red zone the end goal is in sight, and that one hundred pip winner within reach. For example, if the price hits the red zone and continues to the upside, you might want to make a buy trade. It could be giving you higher highs and an indication that it will become an uptrend.
This will be likely when the sellers take hold. If the price hits the red zone and continues to the downside, a sell trade may be on the cards. You’d have new lower lows and a suggestion that it will become a downtrend.

The End Zone

This is where the magic happens. With this strategy, you want to consistently get from the red zone to the end zone. Draw rectangles on your charts like the ones found in the example. Then only trade the zones. If you draw the red zones anywhere from 10-20 pips wide, you’ll have room for the price action to do its usual retracement before heading to the downside or upside.

Outside Bar At Resistance Or Support

You’ll see a bullish outside bar if today’s low exceeded yesterdays, but the stock still rallies and closes above yesterday’s high. If the complete opposite price action took place, you’d have yourself the perfect bearish example.
Unfortunately, it isn’t as straightforward as identifying an outside candlestick and then just placing a trade. It’s prudent to find an outside day after a major break of a trend.

https://preview.redd.it/egb0lp6grdh31.png?width=300&format=png&auto=webp&s=b0170eceea5006464e5832bc3a9083c72ee677ad

Spring At Support

The spring is when the stock tests the low of a range, but then swiftly comes back into trading zone and sets off a new trend. One common mistake traders make is waiting for the last swing low to be reached. However, as you’ve probably realized already, trading setups don’t usually meet your precise requirements so don’t stress about a few pennies.

https://preview.redd.it/q82lap2hrdh31.png?width=300&format=png&auto=webp&s=9e40f0bc25c2df06a1d93edb68b293c858a32592

Little To No Price Retracement

Put simply, less retracement is proof the primary trend is robust and probably going to continue. Forget about coughing up on the numerous Fibonacci retracement levels. The main thing to remember is that you want the retracement to be less than 38.2%. This means even when today’s asset tests the previous swing, you’ll have a greater chance that the breakout will either hold or continue towards the direction of the primary trend.

https://preview.redd.it/ey997b2irdh31.png?width=300&format=png&auto=webp&s=c938aac51e3b3bbf1f45a11c46f4ae3dfd1b6dd4
Trading with price patterns to hand enables you to try any of these strategies. Find the one that fits in with your individual trading style. Remember, you’ll often find the best trading chart patterns aren’t overly complex, instead they paint a clear picture using minimal indicators, reducing the likelihood of mistakes and distraction.

Consider Time Frames

When you start trading with your short term price patterns pdf to hand, it’s essential you also consider time frames in your calculations. In your market, you’ll find a number of time frames simultaneously co-existing. This means you can find conflicting trends within the particular asset your trading. Your stock could be in a primary downtrend whilst also being in an intermediate short-term uptrend.
Many traders make the mistake of focusing on a specific time frame and ignoring the underlying influential primary trend. Usually, the longer the time frame the more reliable the signals. When you reduce your time frames you’ll be distracted by false moves and noise.
Many traders download examples of short-term price patterns but overlook the underlying primary trend, do not make this mistake. You should trade-off 15-minute charts, but utilize 60-minute charts to define the primary trend and 5-minute charts to establish the short-term trend.

Wrapping Up

Our understanding of chart patterns has come along way since the initial 1932 work of Richard Schabacker in ‘Technical Analysis and Stock Market Profits’. Schabacker asserted then, ‘any general stock chart is a combination of countless different patterns and its accurate analysis depends upon constant study, long experience and knowledge of all the fine points, both technical and fundamental…’ So whilst there is an abundance of patterns out there, remember accurate analysis and sustained practice is required to fully reap their benefits.

The source : https://www.daytrading.com/patterns
submitted by JalelTounsi to ethfinance [link] [comments]

How I use Volatility to my advantage (UK US open, late US etc)

[Only applies to M30 and lower]
What is volatility?
Volatility is the degree of variation in price of a given asset on a defined timeframe. When price moves quickly, market volatility increases. When price consolidates, market volatility decreases (simple definition). It is like the speedometer in our cars.
I usually add an Average True Range (ATR) on my charts to gauge approximately market volatility or market nervousness. However, it is not necessary, when you look at a chart you are able to tell if price is spiking, trending or consolidating.
Volatility is part of any strategy. It gives an expectancy toward future price action. In general, when market volatility is low, we expect significant support and resistance levels to hold price in a range. And when market volatility is high, we expect price to break these levels.
Volatility patterns
Fortunately, in the Forex market, daily volatility is predictable. We tend to see volatility peaks around major markets openings, which are the New York Stock Exchange (NYSE), the London Stock Exchange (LSE) and the Japanese Exchange. At the late hours of these markets, volatility tends to decrease.
These fundamental patterns are the most exploitable patterns in the Forex market. Yes, at least more exploitable than deceitful technical signals you are looking for. And they happen almost every day. However, there are exceptions. For example, we do not expect volatility peak to happen when countries of these big markets are on bank holiday.
EURUSD hourly volatility
The chart above shows the 4-weeks hourly volatility for the EUUSD pair. It is the average in pip of the difference between the highest and the lowest price of each hour of the day, over four weeks. Each bar represents the average in hourly range over four weeks.
There are two major peaks corresponding to the LSE and the NYSE openings.
Since the EUUSD is the most traded pair, we consider its volatility as "market volatility". In fact, the hourly volatility chart of the other pairs gives approximately the same pattern.
USDCAD hourly volatility
These charts were taken in May 2016. Take a look at Mataf.net’s volatility tool and type four (for four weeks) in the entry box. You will see approximately this same pattern in hourly volatility, with the two major peaks (UK and US opens) and decreasing volatility starting from the mid-US session. (Currently the pattern is disturbed by the brexit monster volatility, it will become clear again within few weeks)
We also have decreased volatility during the Asian session when there is no major news release coming from the Reserve Bank of Australia (RBA) or the Bank Of Japan (BOJ).
Asian sessions
These charts tell us market volatility is predictable. This leads us to define two principles:
First Principle: Around major markets openings (active time), market volatility tends to surge. We expect to see range breakouts, spikes or rallies. It is the best time to trade breakouts i.e., buying new highs and selling new lows.
Second Principle: During the late hours of major markets sessions and when major markets are closed (quiet time), market volatility tends to decrease considerably. We expect to see trading range or congestion in price action. It is the best time to range-trade i.e., buying the lows and selling the highs.
principles
Any trading strategy or system has to adapt to these variations in volatility to perform over time. If you are struggling with a particular strategy, maybe you are ignoring these changes in volatility.
How volatility patterns can help in improving your trading?
One cannot apply a strategy any time and expect to be profitable. When we simulate an automated and intraday trading system over three months without time filtering, we will notice the system is only profitable at certain hours of the day. This simply reflects intraday volatility variations.
You have to determine if your trading strategy is a trend following method or a range trading one.
If your strategy is a trend following approach, you will want to only trade around major markets openings to maximize profits. Otherwise, you will tend to give back profits as price slows down in the mid-session and market volatility decrease.
If your strategy is a range trading or reversal approach, you will want to only trade during quiet market time and avoid trading around market openings or around news releases.
Less trades maximize profits. Most of my trading sessions last less than one hour.
I made a portable document of this.
submitted by alm_hd to Forex [link] [comments]

Cynthia's Breakout Simple System 2nd Intro to Cynthia's Basic Breakout Simple System Introduction to Cynthia's Breakout Trend Trading Simple System Cynthia's Simple Neon Breakout Intro 1 Breakout Trend Trading Simple System  Forex Trading

Simple Stochastic Day Trade Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template. The essence of this forex system is to transform the accumulated history data and trading signals. Simple Stochastic Day Trade Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price The best time to trade is day sessions, as trading flat is often at night. 2. Rainbow – universal indicator for any timeframe. The Rainbow indicator is a good example of how one basic tool helps to develop a comprehensive graphic analysis of the Forex market. It is also convenient from a visual point of view. The optimum times to day trade breakouts is during the first 30 minutes and the last 30 minutes of the day. If you don’t like overly complicated charts and you want to keep things simple, you will love the breakout price action trading. On a daily basis Al applies his deep skills in systems integration and design strategy to develop Cynthia’s Breakout Simple System The Breakout Simple System is a very simple manual system for the MT4 trading platform that uses indicators based on color and a special volatility window that gives you buy and sell triggers based on the force of the price action. Because it’s trend-following and based on volatility, it is evergreen and will always work. The Awesome Breakout Forex Day Trading Strategy is a breakout strategy that capitalizes on momentum breakouts out of the high and low price established during the quiet Australian trading session. Woodie CCI Trend Forex Day Trading Strategy is a trend following day trading strategy that provides trade signals based on short-term trends on

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Cynthia's Breakout Simple System

Cynthia's Easy Forex Breakout Simple System is a trade-by-color system, with supporting color-coded indicators. Trades are indicated by volatility-based indicators that are color-coded, to make ... Breakout Simple System Trade Forex Successfully Get more info: http://www.day-trade-forex.com/bossfyt.html NEW IN 2016! THE UPDATED XTRA ADVANCED IS AVAILA... This simple yet powerful forex breakout trend trading system is a trade-by-color system, with supporting color-coded indicators and a special volatility window that helps you stay out of flat markets. You can use the Breakout Simple System for scalping, news trading, day trading, or swing trading. You only need to catch one of these trades each day to earn a nice living! Intro to Cynthia's Basic Breakout Simple System Get more info here: http://www.day-trade-forex-online.info/recommends/BreakoutSimpleSystemMoreInfo NEW IN 201...