Trading Strategy Explained ~ forex trading on news
Let me use this opportunity to explain and make some clarifications in respect of following aspects of my trading strategy.
a) Candle trades
b) Monthly chart
c) Weekly chart
d) Daily Chart
e) 4-Hour chart
Candle trades: For the candle trades I use weekly and monthly candles and I have a micro account with Alpari which I use for these trades, because I am still experimenting. However, whenever a unique opportunity present and it aligns with my trade set in the charts, I replicate such trades on my main account. For the candle trades, I dont use RSI. I simply follow the candle, if the candle is bearish, I will go short and if the candle is bullish, I will go long. If you want to try this, open a separate micro account or even try it on a demo account over a period of time to properly understand it.
Long Term trades:For long term trade, I follow the daily, weekly and monthly charts using RSI as a guide. The signals on these period are usually few, but of the best quality.
Monthly RSI gave a buy signal in March 2009 and over the next 4 months, price rose by about 3000 pips. The next signal was given in June 2010 and yield about 1800 pip. Using the monthly RSI, there is no signal to sell yet.
Weekly RSI gave six signals on the chart 3 buy and 3 sell as shown on the chart.
Daily RSI gave three signals so far, 1 buy and 2 sell as shown on the chart.
I attach herewith a daily, weekly and monthly charts for GBPUSD to illustrate the points. The place where the signals are given highlighted in blue boxes.
How do you interprete all these based on where we are today for your long term trade?
Monthly: The buy signal was given in June, if you miss it wait for another signal. Most importantly, dont trade in the middle of channel. You can get your trades on other timeframe.
Weekly: The weekly gave a buy in May and sell signal in August indicated by the spots highlighted. Price is currently on 50 points. Wait for another signal if you want to trade weekly long term.
Daily: The daily gave the sell signal in between August 2-4 and has currently cross the 50 point mark down. The next signal you should watch out for is buy. If you miss the signal in August, wait for the next one.
For a trader who missed all these signal for medium term, trade, what does he do?
If you miss all this signals, the next option is to trade intra-day using H4. The horizontal line on the RSI is your guide.
For a trader who misses all of these signals, what does he do?
The best option is to stay out on the sideline and wait for the next signal, because that is the only way to be a successful trader.
I took time to clearly enumerate the steps to show that is important for a trader to be methodical in his approach. If a set-up is not right, ignore such trades. To give you more trading opportunities, you can monitor between 2-4 majors and only trade the one that presents the best opportunity at any point in time.
Happy trading!
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