Forex Trading Strategy

Posted on June 25th, 2008 by admin, under online forex trading.

Trade in the financial markets, as any serious business is built on the application of a set of Forex trading strategies. There are many strategies described in traders practice which become classical ones. However, each skilled trader has its own set of Forex trading strategies depending on the situation. A distinctive feature of an experienced trader is its own set of strategies and their regular use for achievement of success.

Forex trading strategy may depend on many factors. For example, the type of financial active, the size of a controlled deposit, time horizon, psychological aspects of the trader and his personal perception of risk. To be successful and receive regular profits from trade investor must create their own forex trading strategy, test it and, equally important, apply it regularly.

Forex trading strategy is a set of rules for the transactions. These rules are formulated by trader, regularly tested and applied. A set of Forex trading strategies will keep trader from excessive stress of uncertainty, of hasty decisions that might harm the deposit. Forex trading strategy should not only help the trader to go to the market at the right time and in the right place (this is called planning entry point), but also help him to close the position with maximal or planned profit.

Good forex trading strategy contains not only strict rules for trade. At the same time it must be flexible and adaptable to changing market conditions, which is a not fallen asleep scheme, but almost a living organism.

Overall, forex trading strategy should or may contain:
• a set of tools on which you will trade;
• method of analysis (technical or fundamental), by which

trader will be guided;
• Time trading interval: weekly, daily, intraday;
• rules to work only on the trend, or against it;
• use of figures of forex technical analysis;
• use a candle forex analysis, etc.

Can I use strangers Forex trading strategies? There are no rigid rules. Try it. However, an effective forex trading strategy of one player, may be totally unacceptable for another. To compare Forex trading strategies and systems it is necessary to establish criteria for their evaluation.

With the development of computer technology forex market analysis methods become more complicated. More and more complex indicators from the mathematical point of view are created and trader go further away from the real prices of conduct, and looks at it as if through a filter. Today there are almost no players who can read ticker tape and conduct the tenders without computer.

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Forex Strategy of Larry Williams

Posted on June 17th, 2008 by admin, under online forex trading.

Forex Strategy of Larry Williams

Larry Williams is perhaps a symbol of short-term trading. The man who every year proves that the trade exchange can earn hundreds and thousands per annum.

Once he increased his capital from 10 000 to 1 170 000 dollars for one year!

I suggest you to familiarize with one of his strategies.

The Forex strategy is to buy at the price of 3-bar sliding average of minima, if according to technique of identifying the trend by turn points, trend is positive, and to close a position on 3-bar sliding average of maxima.

The signals on sale are exactly the opposite.

This means that you will take short positions on 3-bar sliding average of maxima, and close them to 3-bar sliding average of minima. It would be silly to do so without having a reason to take only signals for short sales.

A major reason for this could be fact that our system of turn on points of fluctuations had prompted us that the trend will go downwards. Then, and only then, you should sell on a maximum and close on a minimum.

Now we will try to put all this into some order. Figure 9.5 shows the imposing 3-bar sliding averages on the line of fluctuations. I noted the point where the trend changes its direction, so we switch from buying on minima to enter short positions on maxima, following the trend turns.

Entry points on 3-bar maxima and minima are shown also. The game goes as follows: trend unfolds upwards, therefore we buy on line of 3-bar minimum, we take profit on a 3-bar maximum and we wait for rollback to a 3-bar minimum.

If, however, the 3-bar minimum creates a turn of a trend for the sale, it is necessary toskip the deal. Short sales are made in exactly the opposite way: it is necessary to wait for a trend turning downward, and then sell at all 3-bar maximum and take profits on 3-bar minima.

Example of timetable is shown on picture below.

Treasury bonds

Turns of every trend are marked on the image, so you can start a paper trade, seeking inputs and outputs for buying and selling. I propose to walk on this schedule, to get a sense of how to trade using the approach with a very short-term actions. Note this are hour bars, but the concept will work in other time scales: from 5 - minute up to 240 - minute bars.

Another way that Larry Williams offers is usage shock days and finding a market that marks time.

“Then I mark shock-day and acts accordingly, as soon as the breakthrough maximum or minimum shock of the day comes through. I recognize the fact that we are likely to see a breakthrough field of congestion of the prices (breakout of the congestion), if the shock-day immediately deploy. Such reminds
of market, which moved there where all the stops were, and covered all “babies ofbreakthrough” who arranged their warrants there.”

I noted examples of the figures shock of the day in trading ranges.

The breakthrough is a signal for traders to take up the case, and they do it. What kills them is an immediate turn that happens the next day. They can not not believe in such “good luck” and decide to stay despite the
turn: a few days later they leave their positions, adding energy movement, which we caught through the day of shock figure.

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