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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4-hour MACD FOREX strategy

Posted on June 13th, 2008 by admin, under online forex trading.

4-hour MACD FOREX strategy

Time range: H4

Used indicators: MACD, EMA, SMA

Transaction Volume: –

Algorithm of tactics:

According to the author, this forex strategy yields an average +300 points of profit per month. This forex strategy was successfully tested on historical data and more than two years traded on a real bill. Signal for entrance are patterns of MACD indicator on 4-hour schedule. Target profit and stop-loss levels are determined by the levels of support and resistance, as well as moving averages or Fibonacci levels.

Used tools

Moving Averages:
365 Exponential Moving Average (365EMA)
200 Simple Moving Average (200SMA)
89 Simple Moving Average (89SMA)
21 Exponential Moving Average (21EMA)
8 Exponential Moving Average (8EMA)MACD:
Fast EMA 5
Slow EMA 13
MACD EMA 1Horizontal Lines:Three sets of horizontal lines above and below zero should be set directly in a window of MACD indicator.

Level +0.0015
Level +0.0030
Level +0.0045
Level -0.0015
Level -0.0030
Level -0.0045

This is how your schedule should look like

Patterns, that MACD creates are very profitable as a rule. However one should execute only those signals which have high probability of success. The strongest patterns are represented in figures below.

At A and D patterns, MACD moved beyond the level of 0.0045, as a rule, this suggests a possible correction or a change of trend. This are contrtrend patterns. Patterns B and C are trend ones, they allow to enter in the direction of the prevailing trend. The red circles indicates to signal of the entrance. One should enter at the opening of the next bar.

Head and shoulders

Double Peak and basis

When MACD decreases to a zero line and it is launched back aside a dominating trend, being kept hardly above a zero line is a signal of a proceeding tendency. Such movement should be taken, as usually it happens strong.

Round peaks and bases. A good signal for action. Just be careful when MACD is within the first zone of 0.0000 0.0015 above or below zero. Pattern should be considered a good signal if rounding formed at least 5 bars.

Examples of patterns MACD on real schedules

The graph below shows how the price like playing, revolves around the levels of support and resistance. The first entry was above average sliding profits and the first goal will be around fast moving average (8EMA and 21EMA). The second goal arrived around will be slow moving average (89SMA and 365EMA). The third goal arrived on the price level will be 1.2100, etc., etc., etc. This is an example of how to plan your trade in advance to take partial profit until the sale is completed.

A level that was last tested by price should be near the entry point so that a stop-loss could be set to this level.

SLP Trading Group

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