Category: Trading Systems - Page 9

Trading strategy based on the Parabolic SAR and volume

The Parabolic system price/time is another idea that introduced the famous Welles Wilder in his book “New Concepts in Technical Trading Systems“. This system was developed as a high and reversal strategy, which means that a trader using this approach will always have either a buy position or a short position in the market. Here we must remember that when the Parabolic SAR generates a buy signal, for example, a series of bullish points appears below the current price action. As the market moves higher, the indicator points also rise, first slowly and then faster.

When the trend is stopped or begins to reverse, points and prices intersect, in which case a long position is closed and a new short position is open. For this system, we want to determine whether the addition of a volume requirement for Parabolic SAR entry signals can improve the performance of these signals. For example, the buy signal for this system is when a high in price reaches a point of Parabolic SAR above the market with a volume higher than the simple moving average of 5 periods (five bars) of volume. Both conditions must be met in the same bar.

Day Trading Techniques … What’s Best for You?

by rcanessa

When Forex traders talk about intraday trading, they are referring to buying and selling currencies (currency pairs) on the same day. Day traders often look small price movements and use large amounts of leveraged capital to make money with these little movements. In general, they look for markets with high liquidity – where large volumes of trades and sufficient market participants ensure that deals are closed instantly. Liquid markets (like the main currency pairs) also offer tight spreads – which means that the transactions are more profitable – and adjusted slippages, ensuring that trades are closed in the quoted price.

However, there are actually a number of daily trading strategies – including trading against the trend, daily pivots, momentum etc. Each of these similar approaches is used to identify an entry point, but the exit strategy is different in each case.

Skydive Trading System: A Lowry System Variation

by rcanessa

Introduction

The Skydive System is a trading system based in the strategy created by Scott Lowry (see the Lowry System), an American psychologist and trader that regularly speculate in the Futures market. Basically, this trading technique is based on the intersection of three exponential moving averages as shown in the image:

In the same way as happens with other similar trading strategies based on moving averages, in markets with low volatility and without a defined trend, the Skydive System often produce false signals. For that reason we can include a filter based in indicators like the MACD or the Williams %R.

This is a simple trading technique based in moving average crosses. It is based in the famous trading system developed by Scott Lowry, so is basically a trend follower strategy. For that reason is no recommended in markets that are moving in a range without a clear trend.

Lowry system – Trading system based on moving average crossovers

by rcanessa

What is the Lowry System? This is a trading technique developed by a trader named Scott Lowry and is based in moving averages crosses. Before starting the description of the strategy we will describe 3 basic concepts: Delphic Phenomenon (DF): This phenomenon occurs when the moving average of 18 periods and the moving average of 40 periods cross each other upwards (or … Read more

Vegas Tunnels Trading Strategy for 1 Hour Charts

by rcanessa

This is a trading system developed by Vegas to trade only in 1 hour price charts. Basically this trading technique is to open three equal positions (if the trading platform permits the trader can also open a position divided into three parts which can be closed independently). Another option is to divide the capital invested in the trade according to percentages, for example the first position corresponds to 50%, the second position to 25% and the third position to 25%. Each trader can decide how to work with each position.

It can be used in many markets, including Forex (any currency pair), precious metals (gold and silver), indices and other.

The methodology of this system is quite simple. Initially three exponential moving averages (EMA) are plotted on 1 hora chart:

Master Candles Trading Strategy

by rcanessa

What is a Master candle?

First at all we are going to describe what is a master candle. Basically these are candle with big bodies and wicks (the sticks over and under the bodie of the candle) marking a new high or a new low and whose extension or range covers out the following 4 or more candles. To better understand the concept of master candles we can observe the following image:

Forex Money Management Guide

by rcanessa

In this section, we will try to explain what is money management, what are the different techniques used when applying it, as well as other concepts related to this topic.

Introduction to Money Management

Money management is probably the most important aspect of managing a trading account. It is something so simple that can be learned in ten minutes and certainly is one of the most important causes of losses for most traders, usually in a reduced time.

As the name suggests, Monetary Management is nothing more than a set of techniques that help us to determine the size of our position to control potential losses that may arise when the market move against us.

Due to the high leverage offered in the Forex trading, many inexperienced traders assume a higher risk than any investor should take, resulting in hardly recoverable losses.

Scalping Guide for Traders

by rcanessa

What is scalping?

The scalping can be defined as a very effective (but also risky) trading technique which has become one of the most popular strategies in recent years. It is also known as “Quick Trading” and is one of the most effective trading strategies used in highly liquid financial markets such as Forex. Scalping is a series of short term operations (buy and sell fast trades) over the trading session, which can reach even the hundreds of daily trades with ease. In this case, it involves transactions that may take 1-2 minutes on average and sometimes even a few seconds.

The scalping is classified as an intraday trading technique, ie transactions whose duration is less than a day and can last from several seconds to several hours. Through the scalping, a human trader can make up to 20 or more buy or sell buy and sell trades in an hour to profit from micro-movements of the market. Automated trading systems based on computers are capable of a much larger number of scalping operations per day.

Common money management techniques for Forex

by rcanessa

In this article we will discuss some of the most popular techniques of money management applied in trading. Although the topic can get complicated and also there are many techniques, we will focus on the most important.

Fixed Capital Percent Technique

This technique determines that we should risk the same percentage amount over the size of our trading account in every operation we perform. It has several advantages, for example, when we win, we will gradually increase the size of our position, thus harnessing the power of compound interest, while when we lose, we will reduce the position size, protecting our account from further losses.

It is probably the most widespread money management technique among traders, because a priori, is the one that offers more advantages.

The Money Management – Basic Principles

by rcanessa

What is money management?

Many traders believe that the most important thing in trading is the knowledge of everything related to the market analysis or having a trading system with high reliability. It is true that these aspects are part of the success of a trader, but are only one part. However, one of the most important aspects of trading refers to the risk control and money management, because if we enter the market without a contingency plan for the worst case scenario, we are betting, not trading. We can spend much effort improving our trading system and gain knowledge about the market, but unless we develop a money management strategy we will not survive long in an environment as unpredictable as the market.

Money Management or Operational Risk Management is defined as the process of analyzing the trades according to risk and potential profits, determining how much risk, if any, is acceptable, and managing each position to control risk and maximize profit according to the equity in the trading account. Following the principles of preservation of capital, money management may consist of anything from a few simple rules to complex portfolio management theories. However, for most traders and investors, a common sense approach is more than enough to start earning money.

In this section I hope, for a moment, we will divert your attention from the search for the perfect system, so you can discover that you can turn a loser system into a winner just by changing the rules of money management.

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