A straightforward yet profitable plan and an idea could be the ultimate secret to consistent longterm sustainability for the reason that it allows traders to capitalize in their advantage without emotions daily in and day out. Now ‘s article is introducing you with an effective and strong trading swing plan onto the 4-hour graph. Therefore it’s critical to follow along carefully and be sure all the steps are known.
Note: that there is certainly one essential task we’d love to request that you accomplish return for access for the profitable strategy. All of us would like you to tweak and examine drive it along with your ideas. Like that we are able to perhaps develop a far better strategy using an increase of profits or not as volatility. Additionally, see How Currency Pairs Work in Forex.
If you’re interested in finding a technique that utilizes intra-day tactics rather, then be certain that you learn this article about how the most effective trading strategies .
Statistics of installation to get this easy yet rewarding approach:
The very first thing you wish to share is that the operation specifics of this plan. We will need to be certain you are carrying this installment seriously and therefore are enjoying the value offered within this report. So, let’s review the stats of this EURAUD backtest from the Full 2013:
1) Trail stop Parabolic: 13.8 units of hazard / 0.39 each trade.
2) Trail stop Tenkan: 43.9 components of hazard / 1.25 each trade.
3) The typical wages (half Parabolic and half by Tenkan) will be 28.86 units of hazard / 0.82 each trade.
4) That means when your trader is exceeding 1 percent each trade, then the profit is 28.86 percent.
5) 3-5 trades taken.
Iam certain that we have your attention today. We recommend paying close attention as the stats make better… The residual stats have been calculated on the basis of situation :
a) 17 wins and 18 losses for about 50 percent – 50 percent.
B) The average triumph was 3.2 and the average loss was -0.58.
C) The benefit variable so has been 3.2 / / 0.58 = 5.55 (! ) ) .
D) There were 10 trades outside from this 17 which made 1 unit of more or reward.
E) There were just 4 trades outside of 18 that shut for the complete loss.
When each unit of reduction has been paid by 5.5 units of benefit and approximately 50 percent of those trades are obtained, then the plan will pull in to profit.
The strategy will be able to catch long runs and enormous wins.
Does the operation show leading equilibrium, however there are additional benefits also:
1) Simplicity – straightforward principles which aren’t demanding to execute.
2) The plan can truly ride on momentum.
Enough was said on the operation information with the particular strategy, therefore now is the time to proceed and explain the rules and thoughts supporting this idea.
Here are the basic facts Linked to the plan:
Our goal was to develop a swing plan which could be traded by all types of traders from beginners to highly experienced kinds.
As always, our sole focus is really on technical investigation. The optional element is restricted to make sure that our rules are magnificent to several traders.
The principal strength of the plan would be to concentrate on symptoms that are trending. Hence, the plan is centered on trading with the tendency however it is going to only utilize onetime framework: the 4-hour graph.
Our resources and signs are straightforward:
A) Parabolic settings two green dots.
B) Parabolic settings 5 purple dots.
C) Ichimoku index: Tenkan-sen / / Tenkan= reddish lineup.
P ) Ichimoku index: Kijun-sen / / Kijun = gloomy lineup ‘.
As a roadmap and building block for constructing any strategy, we highly recommend reading Forex Chart Patterns and How to Find Opportunity in Forex.
This model is a checklist of the 5 steps prior to and during the entry.
T = Trend
O = Opportunity
F = Filters
T = Trigger
EM = Entry Method
All of these steps will be reviewed here one by one for this swing strategy. The 4-hour chart is used for all of the 5 steps, besides the filter chart which uses the daily time frame.
PART 1 DEFINING TREND
This strategy uses the Tenkan and the Kijun lines for trend definition purposes. The Tenkan and Kijun lines are part of the Ichimoku indicator, but the remaining 3 parts of the indicator were removed (please read more here about the Ichimoku indicator).
The strategy needs Tenkan and the Kijun to be aligned to one side:
a. When the Tenkan is above the Kijun – bullish bias.
b. When the Tenkan is below the Kijun – bearish bias.
c. When the Tenkan equals the Kijun -range.
This is a sweet, simple and effective way of measuring the trend. Trading must not be complicated or high level mathematical to be profitable.
PART 2 OPPORTUNITY
The opportunity is valid when the Tenkan has an angle:
a. An upward sloping angle means upward momentum.
b. A downward sloping angle means downward momentum.
c. A flat angle means no trend/range environment and no momentum.
The trend and opportunity have to be aligned to the same side before a trader can continue with the next step. This could be either:
A) Bullish trend and bullish opportunity.
B) OR bearish trend and bearish opportunity.
In the screenshot below is an example of when a currency has momentum to the upside, downside or no side (flat).
Again the opportunity is very intuitive and has an internal logic to it. Nothing fancy yet effective.
PART 3 FILTERS
The filter uses the daily chart to check if any trend and momentum face major obstacles such as daily tops and bottoms. If yes, and the price is too close (sufficient space towards S&R) then that pair and potential trade setup would be filtered out and ignored. When testing the strategy, no filters were used, which means that the statistics are showing the “gross” performance. The results can potentially be improved with filters.
The filter steps keep our focus on valid setups and make sure our mind is not overtrading. Filters are very important for making your trading more profitable.
PART 4 TRIGGER
The trigger is the moment that the trader is waiting for: the price has confirmed its expected development and a trader is one step away from entering. The trade is not just a potential trade setup but it close to becoming an actual trade. This strategy uses the following triggers:
1) For a bullish trend and bullish opportunity: price needs to break through one of the two Parabolic levels to the upside (parabolic is above price).
2) For a bearish trend and bearish opportunity: price needs to break through one of the two Parabolic levels to the downside (parabolic is below the price).
Green dots mean parabolic with a value 2, whereas purple dots mean parabolic with a value of 5.
The trigger means full alert for the trader as the moment of entry spirals closer…
Click to learn more about momentum trading.
PART 5 ENTRY METHOD
The entry method is an immediate market order as soon as the candle closes. There is one important element that needs to be confirmed before an entry is taken: the close of the candle needs to be near (within 40%) the candle extreme (in the direction of the breakout), which means:
a) An upside breakout should be accompanied with a close near the high;
b) A downside breakout should be accompanied with a close near the low.
False breakouts often tend to have big-sized wicks upon a breakout. By waiting for the candle to close, the trader can avoid these potential false breakouts and stay in control of their trading plan.
The entry is the defining moment but it never hurts to be critical before opening the position.
The stop loss uses the tops and bottoms from the 4-hour chart. The tops and bottoms are candles which are the highest or lowest candles within a group of a minimum of 5 candles.
The take profit uses a trail stop loss. The main trail is an exit upon a crossover of the Tenkan and Kijun to the opposite side plus a candlestick close on the opposite side of the Tenkan line (for longs cross to the downside; for short cross to the upside). Another trail stop loss that could be used for discretionary purposes is the Parabolic value 2: as soon as the parabolic is placed on the opposite side of price then the trade is immediately closed. We also have training on Japanese Candlesticks and How to use them.
That concludes the rules and explanation of strategy 201. We hoped you enjoyed the ride!
But now… it’s YOUR turn!
We need your input on this strategy:
“What could be the largest advantage of this plan? ”
“What exactly is the weakest point? ”
“What exactly is the main advancement point”?
“Do you prefer this plan? “
We hope you find that this simple yet profitable strategy is a very profitable forex strategy. Let us know down below! Last but not least, make sure that the strategy rules match your own trading psychology to increase the chances that the rules are implemented effectively.
Thank you for taking the time to read our posts, and also for sharing this article with your acquaintances.
Please leave a comment below if you have any questions about this simple strategy!