Though technically this is my third year, I do learn from at least 10 forex old-timers who has experience trading the market for at least over 10 years each... so if say I get to grip 30% from each of these traders experience, it means 3 years times by 10 traders (3 x 10 traders) equals to 30 years plus 2 years of my own experience will bring to a total sum of 32 years of trading experience. Is that a fair judgment? Or is it just something for me to boost my own confidence in becoming more profitable this year? Well... you tell me ;)
Anyway, back to the main topic... I guess I would like to share one of my simplest strategy that I myself do not recall from whom did I learn... but most importantly - was working well for me in year 2009.
So, this strategy is pretty simple. All it requires is for you to use the Daily and Weekly candlesticks, with 10 or 15 EMA, and I prefer 15 (Exponential Moving Average - Close) as main reference. No need RSI, Stochastic, CCI, DDX whatsoever...
All you have to do is by the time New York close at 5PM EST daily, watch the previous day range (say 150 pips for GU) and see where the price close at 5PM. If the price close above the 15 EMA, chances are good for buying especially if it is still early days (Mon - Wed) of the week, and vice versa.
But, you must analyze the line direction as well as there are instances when the trend is either strongly bullish or bearish, or close to the 15EMA line, it could potentially be either a strong support or resistance to the price movement. The easiest and safest way is for sure to stick with the main trend since breakout or reversals hardly happened in a strongly trended market. You can verify this by changing the time frame to Weekly instead of Daily.
Secondly, to be much safer in using this strategy, wait for London Session to begin, especially after all the UK and Eurozone economic news have been released before making a decision whether a trade can be taken or otherwise. Of course you can apply this right after 5PM EST after New York close if you see a strong setup, you just have to decide.
I believe this is called a position strategy and normally we could hold the trade until at least the end of London Session before closing it with at least 50 pips as Profit Limit target. I normally set 100 with 70% hit when I employ this method, but of course depending on market's condition and pairs that you are trading.
You can set your Stop Loss at 25 pips (max) below or above the previous day high or low. Position size should be base on 3% calculation from your account balance divide by your stops distance. Smaller distance will allow you to take bigger lots... (ie 3% from 10000 = 300 dollars divide by 100 pips SL = 30k minilot position). Email me if you're not clear on this...
Two important things to note though:
1. The only day that you cannot apply this is when the market is showing a Doji signs with balance in power between the Bulls and the Bears, playing along the 15EMA lines, with high volatility and volumes... so better stay out or just scalp using 15 minutes timeframe.
2. Study the daily range the pair has reached for the day (say already +55 pips above opening price). Chances you can go along with the market for at least the next 50 pips, but of course time your entry base on smaller time frame, at least with either 1 hour or 15 minutes candlesticks... Do not jump blindly.
OK guys, my only reminder is you must bear in mind that NO strategy is perfect for sure... but I do recommend you to consider this one... most of the time, a simple approach is all you need to become profitable with your trading. And I believe this one will work just fine for me in 2010 too...
Wishing you guys Happy New Year and safe trade...
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