James Stanley's "Fingertrap" Scalping Strategy (also good for longer term trading)
I posted this elsewhere a while back, but I thought I'd put it in /forex and not on the blog, because it's my absolute favourite tool in all of Forexland. James Stanley is a (very good) trader and educator at DailyFX (Twitter: @JStanleyFX). He's also very friendly and helpful on Twitter if you have serious questions. Here's the link to the original article but what I'm going to do is explain it in a little more detail, show you how James uses it, and then explain how I use it for finding entries on longer term trades and breakouts. There's also this helpful video you can watch: http://www.youtube.com/watch?v=RrxOiAhIlaQ Right, so before I explain what it is, here's a checklist for WHEN the Fingertrap strategy is effective:
Is the market trending TODAY? (short term trend, not choppy action)
Is it nowhere near a place it could? stop (important fib, trendline, the basic stuff)
Is it the morning of the NY session? (it works best during this time)
Is it a fairly active pair with a tight spread? (if you're going to be scalping)
If the answer to all those questions is yes, you're ready to go: 1: switch to an hourly or 2hr chart, so you can see what movement on the day is like. You should be able to spot a strong directional bias if there is one, and you may have already done analysis to find important support and resistance. 2: Add two indicators: an 8 period EMA (Exponential Moving Average) and a 34 period EMA. I don't know why those numbers, and different combinations might work better on different pairs (EUJPY tends to throw a lot of false signals with this, as does gold, so it's worth experimenting). We use EMAs and not SMAs because they respond more quickly. Here I'm looking at EUJPY on 2hr chart, on 26 April 2013): http://i.imgur.com/9wqd36U.png 3: Is price clearly above or below BOTH moving averages (eg. it's a downtrend and price is below both, or an uptrend and it's above) AND has the 8 EMA crossed over the 34 EMA (crossed to the downside if you're looking at a downtrend). These two factors are a strong confirmation of a trend, if you need one. 4: Once you have confirmed that a trend is in place, switch to your preferred scalping timeframe. I usually use 5m or 1m charts. You'll now see that the 8EMA (which is the only one we're looking at from now on) hugs the price quite closely. 5: If we're in a downtrend, what we are looking for is for price to ideally break through some kind of support, and then to rebound to the 8EMA. It can push through it, even close a whole candle above it, but should eventually move back down below it. This is your signal to enter short. As you can see from the chart below (same time, 5m chart), it's essential that you determine that there is a trend first and not just some jumping around. http://i.imgur.com/pvjgeKg.png 6: The idea is to use relatively small trade sizes, and scale in and out of the trade rapidly. When price extends quite a bit away from the 8EMA, that's the time to take partial profits, wait for a rebound to the 8EMA, and then enter again. 7: The game ends when the 8EMA crosses the 34EMA again, and price is on the other side of both of them The idea is that, even with strong moves, there are quick pullbacks. This strategy helps to give you an edge in determining where those pullbacks are likely to stop. It's not perfect, but no strategy is. The point is that it gives you a higher probability of entering at a good time (buying relatively low, or selling relatively high), and it also means you can have a lower risk entry (being closer to the last swing high). Now, I don't get to do a lot of scalping because I have a day job, but I do use this for breakouts, and just any regular old entry as a matter of habit (unless I'm doing a fairly long term trade and 10 pips either way doesn't matter that much to me). What I will do is wait for a breakout or a strong move in the direction I want. Then I put my Fingertrap template on, and wait for price to "reload" to the moving average before getting in, placing my stop above a nearby swing high. My stop will always be placed while thinking about how long I plan to hold the trade. If I'm looking for a move in GBP/USD from 1.56 down to 1.50, I'm not going to place my stop above the nearby swing high on the 5m chart - I'm going to place it around 1.5650. So you have to use your discretion obviously. For example, I will be watching EUUSD very closely for a break of 1.3000 or 1.2950, and then employ it from there. For scalping, the nearby swing high is definitely a good place to put it - if the trade goes that badly away from you, you definitely want to be out. Give it a try, and let me know if you find it to be helpful! Let me know if you have any questions.
Ultra-Short Term Forex Trading Strategy GBP/USD Open Market Strategy Hamilton Forex System 1m trend strategy . You can help thousands improve their trading! Who's online. There are currently 21 users online. Home #3 Range-bound trading (34 EMA + 5 EMA) Submitted by Edward Revy on December 17, 2009 - 17:56. Many systems start with words: "I’ve been observing charts for a while, and suddenly ... Join me won't you, as I attempt to demonstrate and refine a very simple trading strategy that honestly speaking, I wish I had found before I ever started trading. Now most people find themselves on a path looking for the so called "Holy Grail" trading system. Some say it doesn't exists. Some spend their whole life looking for it... I say I think I have found it! 5/10/34 EMA Forex Trading Strategy. There are no middle grounds in the market in terms of profitability, it is either you “win” or you “lose,” more so, your trading strategy will eventually determine your ultimate stand. The free profitable 5/10/34 EMA forex trading strategy is composed of an advanced EMA arrows indicator and green/red colored histogram trading oscillator. Learn below ... 34 EMA Based Exit. For this strategy, we will not be using any preset stop loss. Instead, because our strategy is based on a dynamic support in the form of the 21 & 34 EMA, we will also be using these dynamic supports as our basis to close the trade. If price does cross the 34 EMA, then this signifies that price may reverse. Price closing below the 34 EMA will be our trigger to close the trade ... No matter what Forex swing trading strategy you are using, I will always hit home the importance of risk management. If you loose all your chips, you go home. Requirements For The 34 EMA Trend Line Strategy. You will need to plot a 34 exponential moving average on your chart. That is simple to do and if you are having any issue, consult the ... The good thing is that the strategy only involves standard indicators that can be found in any trading platform. As for the strategy rules, they are easy to understand even for a rookie trader. How to use the EMA strategy. You need to go long if EMA (12, Close) crosses all three EMA(34) lines upwards. Wait till a new candle opens and then enter ... The trendline trading with 34 ema forex trading strategy is a trading strategy that combines the breakout of a trendline with 34 EMA to look for trade setups.. Currency Pairs: Any. Timeframes: 5 minutes and Above. Forex Indicators: only 34 ema or you can any of the following and substitute for 34 ema: 7 ema, 14 ema, 21 ema or 50 ema or even 10 ema. 34 EMA and Price Action Crossover Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye. Based on this information, traders can assume further price movement and adjust this system accordingly. The 34 EMA With Trendline Breakout Forex Trading Strategy combines exponential moving average indicator with price action trading.. In a good trending market, this forex trading strategy is a very reliable trading strategy that can pull in a lot of pips quite easily into your forex trading account.. To prove it, just go and do a bit of back test on past price data and you will see what I’m ... Using the 34 EMA as part of a breakout trading strategy can point you in the direction of the trend of the market. Combined with trend lines, it can also allow you to enter trades counter trend for quick scalping opportunities.. Any time you a trading counter to the 34 EMA, you are going against the longer term trend direction so you want to make sure you tightly manage your trade so you don ...
34 EMA and Price Action Crossover Forex Trading Strategy - How To Trade Using Forex Strategies
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