The breakdown of all the strategies have been tagged as TF1, TF2 and TF3. These trading plans come from years of research elements, that have beeen grouped together to make clear and objective systems.
What you will not, find in this section is the ‘Holy Grail’. All my systems will have losses. Jake Bernstein says it clearly…’the best systems will lose as many as 7 times in a row”.
TF1
SNAP SHOT
Strategy Name: TF1
Market: Currency Major and minor
Trading Personality: Day trader
Timeframe for scans: Daily, 1 hour, 30 min, 5 min and trade on 1 min
Chart setup: Ichimoku Cloud and RSI
Chart settings Standard: Straight out the box.
Money management: 1% or less at any one time
As a visual person, I like to quickly scan my charts and filter out potential trade opportunities. I get in on support/resistance.
Market: Major and minor The system will allow you to trade most Major and Minor currency pairs, however, I like to narrow my field of vision to below:
| MAJOR |
| EURUSD |
| USDJPY |
| GBPUSD |
| USDCAD |
| USDCHF |
| AUDUSD |
| NZDUSD |
| MINOR |
| EURGBP |
| EURCHF |
| EURJPY |
| EURAUD |
| EURNZD |
| EURJPY |
| GBPJPY |
| CHFJPY |
| CADJPY |
| AUDJPY |
| NZDJPY |
| GBPCHF |
| GBPAUD |
| GBPCAD |
Trading Personality: Day trader.
I use the 1 min chart to get in and out. This may flag up a few alarm bells for most. I think my system reduces all the noise and choppiness.
The system has 2 methods:
Method 1 1 or 2 hours
Method 2 10 to 30 min
I interchange between these methods, depending on how much time I have to be near my screen.
Timeframe for scans: Daily, 1 hour, 30 min, 5 min and trade on 1 min
I use 5 min as my go to chart when finding trade direction, followed by 1min, 15min and 30min. 1 hour and daily are not critical, however, if the direction is down and I want to trade up. I keep a keen eye on this. Furthermore, this strategy can be traded anytime of the day.
Chart setup: Ichimoku Cloud and RSI
Before I go into the indicators, a vital component is the candlestick. Steve Nison, brought the indicator to the Western world. I use Japanese candle sticks for support and resistance.
Ichimoku cloud
The Ichimoku Kinko Hyo system is a very elaborate but simple system devised by a Japanese journalist named Goichi Hosoda in the late 1930s and released to the general public in the late 1960s after 30 years. Ichimoku Kinko Hyo translates as “one glance equilibrium chart”.
The original system consists of five lines named Tenkan-Sen, Kijun-Sen, Senkou Span A, Senkou Span B and the Chikou Span. What we call the Ichimoku cloud is the area between the Senkou Span A and Senkou Span B, it is usually coloured.
The Ichimoku system is a moving average based trade identification system. It is quite elaborate and novice traders might find it difficult to read.
Tenkan-sen (Conversion Line):(9-period high + 9-period low)/2)) On a daily chart, this line is the mid point of the 9-day high-low range, which is almost two weeks.
Kijun-sen (Base Line):(26-period high + 26-period low)/2)) On a daily chart, this line is the mid point of the 26-day high-low range, which is almost one month.
Senkou Span A (Leading Span A): (Conversion Line + Base Line)/2)) This is the midpoint between the Conversion Line and the Base Line. The Leading Span A forms one of the two Cloud boundaries. It is referred to as “Leading” because it is plotted 26 periods in the future and forms the faster Cloud boundary.
Senkou Span B (Leading Span B): (52-period high + 52-period low)/2)) On the daily chart, this line is the mid point of the 52-day high-low range, which is a little less than 3 months. The default calculation setting is 52 periods, but can be adjusted. This value is plotted 26 periods in the future and forms the slower Cloud boundary.
RSI
The RSI is the Relative Strength Index. It was created by Welles Wilder in 1978. It is an oscillator type indicator that moves up and down on a scale from 0 to 100 and identifies the speed and change of price movements.
The formula to calculate the RSI is the following: RSI=100 – [100 / (1 + RS)] where RS is the Relative Strength = average gain / average loss
In the standard setting of the RSI, the average gains (loss) are calculated by adding all the gains (losses) for the past 14 periods.
It is commonly accepted that the RSI has the following index thresholds:
A reading of 30 or under is considered “oversold” and identifies potential price increase.
A reading of 70 or higher is “overbought” and identifies a potential price decrease
I like to adjust 30 to 40 and 70 to 60. This is something I picked up on forexfactory.com forum going back 5 years [01.10.2016]. I am not sure what the reasoning was, but it works for me.
Chart settings Standard: Straight out the box.
My system is simple, I have designed it this way. If I have to move brokers, I can find my indicator setup easily.
Stop and money management
The stop is based directly above or below support or resistance points, at +/-10 pips. The trade is never near a round number, and never exceeds our 1% risk profile.
How to speculate using the TF1 strategy.
Method 1
A. Make sure the charts line up
B. Go to 1 min chart
C. Look for resistance or support point using candelsticks.
D. Make sure RSI penetrates through 60 or 40 line.
E. Place trade using stop at support and resistance point +/-10pips.
F. Close trade when RSI goes through 60 or 40 line. [If you are short then RSI will need to go down through 60 and recycle and come back up through 60] [Long will be RSI goes up 40 and recycles down through 40]
G. Candle stick charts go through both Sen lines
Method 2
A. Make sure the charts line up
B. Go to 1 min chart
C. Look for resistance or support point using candlesticks.
D. Make sure RSI penetrates through 60 or 40 line.
E. Place trade using stop about support and resistance point +/-10pips.
F. Close trade when RSI goes through 60 or 40 line. [If you are short then RSI will need to go down through 60 and close through 40] [Long will be RSI goes up 40 and it pushes through 60]
G. Bearish or Bullish Candle goes through one of the Sen lines
TF2
SNAP SHOT
Strategy Name: TF2
Market: [Currency] Major and minor
Trading Personality: Day trader
Timeframe for scans: Daily, 1 hour, 30 min and trade on 5 min
Chart setup: 50 EMA and MACD
Chart settings Standard: Straight out the box.
Money management: 1% or less at any one time
Look for any significant support/resistance, you will not be getting into a trade if there are any barriers to entry.
Market: Major and minor The system will allow you to trade most Major and Minor currency pairs, however, I like to narrow my field of vision to below:
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
Trading Personality: Day trader.
The system can be used any time of the day. Avoid any significant market news.
Timeframe for scans: Daily, 1 hour, 30 min, 5 min and trade on 1 min
The go to chart is 5 min, however, you will need charts to line up with 60min and 30min.
Chart setup: 50EMA and MACD
Before I go into the indicators, a vital component is the candlestick. Steve Nison, brought the indicator to the Western world. I use Japanese candle sticks for support and resistance. I have included some information below:
Candlestick chart contains open, high, low and close values for each time period you want to display. The hollow or filled portion of the candlestick is called “the body” (also referred to as “the real body”). The long thin lines above and below the body represent the high/low range and are called “shadows” (also referred to as “wicks” and “tails”). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.
50 EMA
An exponential moving average (EMA) is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. It’s also known as the exponentially weighted moving average. This type of moving average reacts faster to recent price changes than a simple moving average.
The default value of EMA varies on different charting software. You will need to adjust EMA to 50.
MACD
DEFINITION of ‘Moving Average Convergence Divergence – MACD’ A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA.
Chart settings Standard: Straight out the box.
My system is simple, I have designed it this way. If I have to move brokers, I can find my indicator setup easily.
Stop and money management
Stop is never near a round number, and does not exceeds our 1% risk profile.
How to speculate using the TF2 strategy.
- Make sure price is below/above 50 EMA on 5 min chart
B. Note any divergence in MACD
C. Make sure price is below/above 50 EMA on 60 min chart
D. Make sure price is below/above 50 EMA on 30 min chart
E. Take trade and close when price hits significant support/resistance.
TF3
SNAP SHOT
Strategy Name: TF3
Market: [Stock and Shares]
Trading Personality: Swing Trade
Timeframe for scans: 30, 60 min and 4 hour
Chart setup: Bollinger Band %B
Chart settings Standard: Straight out the box.
Money management: 1% or less at any one time
Market: Trade major and minor stocks and shares with sufficient volume [3 million].
Trading Personality: Swing trade typically from 2 days to about two weeks.
Timeframe for scans: 30, 60 min and 4 hour
A. Look at direction of market 4hr and 60min.
B. 30 min will be used to zone in on correct entry level.
Chart setup:
Candlestick charts
In order to create a candlestick chart, you must have a data set that contains open, high, low and close values for each time period you want to display. The hollow or filled portion of the candlestick is called “the body” (also referred to as “the real body”). The long thin lines above and below the body represent the high/low range and are called “shadows” (also referred to as “wicks” and “tails”). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.
Bollinger Band %B
Default setting for Bollinger %b and Band Width is a 20-Day simple moving average with bands drawn at 2 standard deviations.
The formula for Bollinger %b is (Closing Price – Lower Band) / (Upper Band – Lower Band).
The formula for Bollinger Band Width is (Upper Band – Lower Band) / Simple Moving Average for the same period.
%B near or above 100 can suggest an overbought market. Conversely, near or below 0 can be oversold. However, extreme readings are not necessarily indicative of turning points. In a rising trend, prices will tend to hug the upper band so %B can remain at very high levels, including above 100, without pointing to a reversal.
Momentum [12] and moving average [12]
Momentum measures the rate of the rise or fall in stock prices. From the standpoint of trending, momentum is a very useful indicator of strength or weakness in the issue’s price. History has shown us that momentum is far more useful during rising markets than during falling markets; the fact that markets rise more often than they fall is the reason for this.
Moving average [12]
The simplest form of a moving average, appropriately known as a Simple Moving Average (SMA), is calculated by taking the arithmetic mean of a given set of values.
Chart settings Standard: Straight out the box.
The price line uses standard candlesticks and Bollinger Band %B are on standard settings.
Momentum is usually 10 by default. I have adjusted this to 12. The moving average is added to the momentum indicator.
Stop and money management
The system uses Support and Resistance to protect you from major losses. If market reverses, you will get out +/- 10 pips from entry point.
How to speculate using the TF3 strategy.
- Check Bollinger to see if overbought or oversold on 4hr and 60min chart
B. Momentum needs to cross SMA on 4hr and 60min
C. Zone into 30min chart. You will have to wait Bollinger and Momentum to cycle to buy/selling point. Add to watchlist if the setup on 30min is not there yet.
D. Take trade on 30 min, when Bollinger B is overbought/oversold and SMA goes through the Momentum indicator.
E. Close when price hits significant support/resistance using candlestick charts.
