Forex Trading System

Forex Trading System
The "RickyD" System

After many attempts I found the only way to get it was write down what I did and thought about as I was trading and that is what has become the Ricky D Strategy / System.

I have worked the settings on these indicators until they work. They can be used on the 15, 30 minute, and 1 hour with success. They will even work fairly well on the 5 minute if anything really does. I like to use the 30 minute and just so you know I don't check other time frames, I just park and trust the indicators.
I trade the 4 majors and trade from 2:00AM till about 10:00AM or the volume drops EST or (-5 GMT). I try not to be in a trade during news releases.

I have found as many have said, a trend is not a trend until it starts to move. I follow what the chart is doing, not what I think it will do. I used to give up to many good trades thinking the market was in a certain trend. My bias did not help me but hurt me and my trades. You can only act upon what is happening on the charts so anything else will kill your trades.

Four Indicators:
CCI (5) Line at +100, 0, and -100
Forecast Oscillator: Rperiod (15) t3_period (3) and b(0.7) Line at 0
Relative Vigor Index (1) Line at 0
ADX (14) Line at 20
(�Pivot� custom indicators / BT1 / BT2Sig / BT2Stop / Volume /)

Directional Indicators:
5MA (Linear Weighted/Close) Red
20MA (Linear Weighted/Close) Blue
100MA (Linear Weighted/Close) Green
200MA (Linear Weighted/Close) Sandal wood

* The cross of the 5MA with the 20 MA favors the direction of the trade, (5MA on top favors Long trade, 5MA on bottom favors Short trade. And don�t trade too close to the 100MA, acts as a resistance line).

Entry (Long):
The CCI needs to be greater than (0).
Forecast Oscillator needs to have both lines above the 0 line with the blue line on top.
The RVI needs to have both lines above the 0 line and the style (Blue) line on top.
The ADX Main and DI+ need to be at least 20 and rising.
No BT2Stop in the way of the entry bar.
Must be 15 pips away from a support or resistance line. (�Pivot� in custom indicator folder)
The 100MA(LW/Close) no closer than 20 pips in the direction of the entry.


Entry (Short):
The CCI needs to be less than (0).
Forecast Oscillator needs to have both lines below the 0 line with the red line on top.
The RVI needs to have both lines below the 0 line and the red line on top.
The ADX Main and the DI- need to be at least 20 and rising.
No BT2Stop in the way of the entry bar.
Must be 15 pips or more away from support or resistance line.
The 100MA(LW/Close) no closer than 20 pips in the direction of the entry.

Exit: The RVI lines cross with the wrong color on top and a slight separation in them (0.2) (or) the RVI Style line crosses the 0 line against the trade. (up while in a short / down while in a long) which ever happens first.

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Free Forex Signal

Free Forex Signal, 30 September 2008
Update every day at 01.30 am GMT ( 08.30 WIB )

Today update 01.40 am GMT

All Pair � Stop loss 30 Pips

EUR/USD
Pivot : 1.4420
Avg. Daily Range : 242 point
BUY at 1.4434 Exit Target 15 pips
SELL at 1.4354 Exit Target 20 pips

GBP/USD
Pivot : 1.8105
Avg.Daily range : 302 point
BUY at 1.8078 Exit Target 15 pips
SELL at 1.7967 Exit Target 20 pips

USD/JPY
Pivot : 104.90
Avg.Daily range : 212 point
BUY at 104.02 Exit Target 15 pips
SELL at 103.31Exit Target 20 pips

AUD/USD
Pivot : 0.8094
Avg.Daily range : 244 Point
BUY at 0.8060 Exit Target 15 pips
SELL at 0.7914 Exit Target 20 pips

CHF / USD & USD/CAD � Stop loss 35 pips
GOLD � Stop loss 350 pips ( 3,5 USD )

USD/CHF
Pivot : 1.0926
Avg. Daily range : 204 point
BUY at 1.0988 Exit Target 15 pips
SELL at 1.0878Exit Target 20 pips

Usd/Cad
Pivot : 1.0407
Avg.Daily range : 123 point
BUY at 1.0486 Exit Target 15 pips
SELL at 1.0439 Exit Target 20 pips

GOLD
Pivot : 898.71
Avg.Daily range : 4791 point
BUY at 916.10 Exit Target 150 pips
SELL at 897.90 Exit Target 150 pips
Note : Gold � Stop Loss 350 pips ( 3.5 usd )

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Free Forex Signal

Free Forex Signal, 29 September 2008
Update every day at 01.30 am GMT ( 08.30 WIB )

Today update 02.05 am GMT

All Pair � Stop loss 30 Pips

EUR/USD
Pivot : 1.4617
Avg. Daily Range : 216 point
BUY at 1.4519 Exit Target 15 pips
SELL at 1.4477 Exit Target 20 pips

GBP/USD
Pivot : 1.8413
Avg.Daily range : 235 point
BUY at 1.8304 Exit Target 15 pips
SELL at 1.8254 Exit Target 20 pips

USD/JPY
Pivot : 105.83
Avg.Daily range : 164 point
BUY at 107.05 Exit Target 15 pips
SELL at 106.51Exit Target 20 pips

AUD/USD
Pivot : 0.8300
Avg.Daily range : 180 Point
BUY at 0.8347 Exit Target 15 pips
SELL at 0.8263 Exit Target 20 pips

CHF / USD & USD/CAD � Stop loss 35 pips
GOLD � Stop loss 350 pips ( 3,5 USD )

USD/CHF
Pivot : 1.0882
Avg. Daily range : 159 point
BUY at 1.0989 Exit Target 15 pips
SELL at 1.0942 Exit Target 20 pips

Usd/Cad
Pivot : 1.0347
Avg.Daily range : 109 point
BUY at 1.0375 Exit Target 15 pips
SELL at 1.0334 Exit Target 20 pips

GOLD
Pivot : 884.87
Avg.Daily range : 4065 point
BUY at 880.90 Exit Target 150 pips
SELL at 865.90 Exit Target 150 pips
Note : Gold � Stop Loss 350 pips ( 3.5 usd )

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Forex Indicator

Forex ; Fibonacci Swing
We were asked to post some strategies that will work on smaller time frames.
Here is one very nice trading system that can be worth your attention.
When a trader chooses to use small time frames (like 10 min, 15 min, 30 min even 1 hour) risks to be wrong are always higher than with larger time frames.
Therefore, it is very important to have a really good Forex trading system that can advise on entries with high chances to win and what's more important it should be able to tell exactly where to exit without need to constantly monitor the price.
Note also, the more traders look at charts, the more they tend to have controversial feelings about the success of a current open trade...
With all this long introduction, it is only left to mention that this strategy will require from traders basic knowledge of use of Fibonacci tool.
What is Fibonacci tool and how to use it? Simply Google "forex fibonacci" phrase and you'll find a lot of information about it.
...This is probably the only reason we classified this trading system as Complex one, not every trader is comfortable with using Fibonacci studies in Forex.
Trading setup:
Time frame: any over 5 min and less than 3 hour.
Currency pairs: any.
Indicators: 5 WMA
Rules:
Look at the price waves. Find the most recent swing high and the most recent swing low = so called Fibonacci A swing and B swing.
Pull Fibonacci from A to B.
To know which direction to pull (up or down) simply look at the trend; if it is unclear, find appropriate AB swings and set Fibonacci in both directions.
Once set, wait and watch the retracement from AB swing to unfold.
During the retracement there are three conditions to be met in order to consider trading:
1. The price must touch 5 WMA.
2. The price must at least touch 0.382 Fibonacci retracement level.
3. The 0.618 Fibonacci retracement level must not fail. Here it means the price should not close below (uptrend) / above (downtrend) 0.618 retracement line. It can touch or poke it, but the level must withstand the "attack".
When all three criteria are met, enter once the candle is clearly closed above 5 WMA for Long entry, below - for Short.
Stop order is placed always 4-5 pips above (downtrend) / below (uptrend) the 0.618 Fibonacci retracement level.
Profit target is set to 1.618 Fibonacci expansion level derived from point A.

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FREE FOREX SIGNAL

Free Forex Signal, 26 September 2008
Update every day at 01.30 am GMT ( 08.30 WIB )

Today update 02.15 am GMT

All Pair � Stop loss 30 Pips

EUR/USD
Pivot : 1.4649
Avg. Daily Range : 252 point
BUY at 1.4693 Exit Target 15 pips
SELL at 1.4629 Exit Target 20 pips

GBP/USD
Pivot : 1.8449
Avg.Daily range : 318 point
BUY at 1.8463 Exit Target 15 pips
SELL at 1.8348 Exit Target 20 pips

USD/JPY
Pivot : 106.30
Avg.Daily range : 169 point
BUY at 106.10 Exit Target 15 pips
SELL at 105.65Exit Target 20 pips

AUD/USD
Pivot : 0.8361
Avg.Daily range : 186 Point
BUY at 0.8382 Exit Target 15 pips
SELL at 0.8347 Exit Target 20 pips

CHF / USD & USD/CAD � Stop loss 35 pips
GOLD � Stop loss 350 pips ( 3,5 USD )

USD/CHF
Pivot : 1.0876
Avg. Daily range : 180 point
BUY at 1.0860 Exit Target 15 pips
SELL at 1.0820 Exit Target 20 pips

Usd/Cad
Pivot : 1.0342
Avg.Daily range : 129 point
BUY at 1.0347 Exit Target 15 pips
SELL at 1.0325 Exit Target 20 pips

GOLD
Pivot : 878.55
Avg.Daily range : 3771 point
BUY at 883.30 Exit Target 150 pips
SELL at 870.80 Exit Target 150 pips
Note : Gold � Stop Loss 350 pips ( 3.5 usd )

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FOREX INDICATOR

Forex Indicator Report
Be Prepared! U.S. New Home Sales at 14:00 GMT.
We encourage our customers to get involved in the most intense market events. As such, we think you should know that the U.S. New Home Sales figures are expected tomorrow, September 25th, 14:00 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general, but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. New Home Sales, please read below.
What is the U.S. New Home Sales?
U.S. New Home Sales is a leading economic indicator used to measure the annual number of new single-family homes that were sold during the previous month. While this is a monthly figure, it is reported in an annualized format. This report predominantly helps to validate trends seen in other forward-looking housing indicators, such as the Existing Home Sales.

It is a leading indicator of economic health because the sale of a new home impacts a wide variety of consumer spending, such as furniture and appliances that are purchased for the home, a mortgage that's being sold by the financing bank, and brokers that are paid to execute the transaction. Also important is the inclusion of mandatory and optional insurance on these new homes.

As a result of the mortgage crisis in the U.S., which has continued to threaten world markets, the importance of the housing sector has increased significantly.

Expectations for this month are suggesting that the U.S. New Home Sales will reach 510K in August, reflecting a 5K decrease since July. Such a result could demonstrate a shrinking housing sector in the U.S., which has been one of the U.S. economy's greatest concerns. It is widely known that this crisis was initiated as a result of the non-covered mortgages that dropped mortgage banks one by one, and have just recently taken the 160-year-old Lehman Brothers bank to the point of filing for bankruptcy protection. A decreasing figure will most likely be interpreted by investors as yet more proof that the American people are avoiding buying new homes, and that the mortgage banks are reluctant to offer mortgages as freely as they used to. Such a scenario will probably extend the greenback's bearish movement, and the EUR/USD might rise to test the 1.4800 level.

When the actual figure is higher than forecasted, traders are likely to see the USD appreciate against its currency pairs and crosses. The radical trading week we have just experienced, which included an extremely volatile trading session, concluded with significant weakness for the USD. Investors are now following the opportunity to make profits out of their open positions on the USD, and a better-than-expected figure on the New Home Sales survey, such as 540K will possibly provide them that exact opportunity. Such a figure is good because it will ease global market concerns regarding an expanding mortgage crisis. U.S. citizens feeling confident enough to purchase new homes is the best news that the American leadership can hope for, and the USD will rise in accordance. In this turn of events, the EUR/USD might correct itself down to reach as low as the 1.4400 level.

---- by; myForex Brokers ------

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Using Divergences to Identify Market Reversals

Using divergences correctly can help spot key market turns

Many traders and analyst use price-momentum divergence to identify trend reversals. For those of you who are not familiar with this term divergences may be defined as follows:

* Bullish divergence: When price lows are lower in a trend but momentum lows are higher

* Bearish divergence: When price highs are higher in a trend but momentum highs are lower

Basically what this is effectively saying is that momentum, that is the pace of the trend, slows then the underlying momentum indicator will not confirm the new price extremes by making new momentum extremes.

For example, it is easy to see from this chart that there has been a strong uptrend.

Below the price chart is a form of the Relative Strength Index (RSI)

Note how the RSI is showing a bearish divergence. As you can see price highs are still rising but the RSI peaks have begun to fall. This is a feature that often accompanies a stronger reversal in the trend.

Is this a confirmed reversal signal ?

Let�s see what happened next:

In fact the uptrend continued in spite of the divergence.

While this special version of RSI provides better divergence signals it is vital that price also confirms a reversal. This can be done using several methods.

Firstly, by considering the definition of an uptrend:

Price is making higher highs and higher lows.

To confirm price reversal then we should wait for it to decline below the last significant low. In the first chart price had declined very little and therefore the risk of price continuing its uptrend remains.

Secondly, by looking for break of a trend support:

In this case no break of the support line was seen until after the 2.1160 peak. This was also accompanied by a bearish divergence and therefore confirmed the reversal of the trend.

Note that after breach of the trend support how price later moves back to retest the line. This often provides excellent trade opportunities.

It is a common error that traders anticipate a trend reversal merely because there is sign of a divergence. However, this is not a 100% safe strategy. Unless there are other indications to confirm it is safer to wait for confirmation of the reversal.

Good luck

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MA and bollinger tighten

Bollinger bands are very useful in determining price direction. You will notice that whenever the bands tighten, price explode out in a direction that is pretty much determined by the attitude of the 200 EMA.

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A useful directional oscillator

Have you ever looked for an indicator that could provide you with a broad indication of price direction? Well, here�s a nifty little indicator that could help.

It�s very similar to MACD but tends to suffer fewer whipsaws in flatter corrections. The basic concept behind the MACD indicator is instead of using the crossover signals of two moving averages to base signals, it assigns one (exponential) moving average to represent price and a second, longer (exponential) moving average to represent the underlying direction of price.

The problem with just using the crossovers of two moving averages is that the signals can come very late and much of the directional move can be complete when the signal is finally generated.

The MACD, by measuring the width between the averages, is more sensitive to how fast the averages are moving apart (divergence) and also how quickly they are moving together (convergence.)

The drawback of MACD is that it can be so responsive to changes in direction that it can provide a signal too quickly.

The challenge is therefore to devise an oscillator that will remain responsive but avoids some of the premature signals.

Therefore, what I did was use a linear regression average. While all averages have a lag due to the look back period the linear regression average tends to remove some of the lag and move closer with price itself.

What we could do as an indication is merely take the close price and deduct the value of the linear regression average. However, as you can see from the following image it produces a rather choppy result from which signals are not obvious or even useful.

Therefore the challenge was to provide a signal that was more a reflection of the underlying direction. To achieve this I took an average of the linear regression average but to retain sensitivity I used and exponential moving average that gives more weighting to recent values. I used the same period for the exponential moving average as I did for the linear regression average.

Then to avoid whipsaws from price I used a 10 period linear regression average of price. Now, the result is far more useful�

Basically using the crossover of the oscillator through the zero equilibrium line we can generate signals. Very clearly such simple signals are rather raw and we should at least use some basic common sense.

For example, to the middle right of the chart we can see a period of consolidation that caused the oscillator to drop below zero and then recover. When seeing this we should remember that using indicators blindly can make us ignore very simple rules.

We can see that price is consolidating and in these situations it is far wiser to trade on breaks. If price had fallen to break below the first corrective low then it would have been a stronger signal. Until that occurs we can still see that both highs are rising and lows are rising which indicates a potential uptrend.

We may choose to square a long position and then renter once a stronger signal has been generated. If the general trend in a larger time frame (this chart is hourly) we could choose to remain in the position. In this situation it would have paid off.

Good luck !

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Multiple Time Frames combine with RSI and support/resistance

A technique to improve your trading decisions

Have you ever seen RSI overbought and wonder whether it was the right time to sell? Let�s face it, an overbought reading in a momentum oscillator can merely mean that price is strong and may even turn into an uptrend.

Is it a valid overbought signal? Do you sell? Where do you sell? Where should you place your stop?

Quite often using two charts of different time frames can help. For instance, let us suggest you have seen an overbought reading in the daily chart but there is no bearish divergence. What you can do is look at a shorter time frame chart, a 4-hour or 2-hour chart to see what is happening there an whether a more accurate sell signal can be identified. Let us look at recent example in EURUSD:

Above is the daily chart of EURUSD as it approached 1.3258. Daily Rapid RSI was showing an overbought reading but there was no bearish divergence. From this chart alone we probably couldn�t work out whether there was a selling opportunity or not.

This second image is the 2-hour chart of EURUSD but here it can be seen that the peak at 1.3258 was accompanied by a bearish divergence in Rapid RSI. We are therefore on warning that a reversal can occur and that the daily overbought reading may well be correct.

Next we have to identify a selling level and in this case it is on the break of the price support line which has touched price four times before it finally breaks and this is where we can place our sell-stop. The money management stop should ideally be placed above the 1.3258 high but if this is too high and would cause a large loss then we can look at placing a stop above the rising trend line. However, do note that is a rising trend line and could mean that your stop needs to be raised to allow a possible retest of the line.

In this case the trade would have been very profitable with a decline down close to the daily pivot support which rests around 1.3050. A take profit order can be placed just above this to exit the position at a tidy profit.

Utilizing a lower time frame chart to identify when Bollinger support/resistance will hold

Following on from the first description of using multiple time frame charts to both strengthen your analysis and enable tighter entry and exit trades, let us take another look at using these in a different example.

Many traders like to use Bollinger Bands to try and identify entry signals. The problem I have always had with them is that they only provide approximate support and resistance which causes problems in knowing where you should enter and where the stops should be placed. Not only that but sometimes they just don�t seem to work at all as a support/resistance tool and the judgment of when they�ll work appears purely subjective.

Take a look at the daily chart of GBPUSD:

In the center of the chart we can see that price has declined to the Bollinger low and on first touch it does bounce only to fall below the lower band and does so on three consecutive days. On the day before the absolute low Rapid RSI moves into the oversold extreme. Does this mean we can buy? Maybe. Sometimes it works and sometimes it doesn�t.

So what should we do?

The following chart is the 2 hour chart showing the approach to the low at 1.9400.

On the left of the chart we can see that price falls below two identical lows and these can then be considered as pivot resistance. We then see the three pushes lower and on the daily chart we know that the Rapid RSI went into an oversold extreme.

Do we buy at that point because is looks like the Rapid RSI on the 2 hour chart is developing a bullish divergence? The answer is �no.� Divergences should only be traded on a break of a pattern. In this case we have an intermediate downtrend line and it is only after the final low that price breaks above the trend line and thus confirms the bullish divergence in Rapid RSI. You will also note that following the break above the trend resistance that price reverses briefly to retest the trend line which provides a second buying opportunity.

Following the break of the trend line which was the day after the daily oversold reading price rallies by 200 points. That�s a good profit� Not only that, by waiting and observing the 2-hour chart you can avoid trying to pick the bottom as suggested in the daily chart.

Remember, it is normally best not to try and pick tops and bottoms as these will often provide losing trades. Waiting patiently for the right signal by fine-tuning the entry on a shorter time frame chart can reduce losing trades and make the final trade a more profitable one.

Good luck !

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