Strategies

1. Simple Strategy based on Moving Averages [Thruster]

A simple but effective strategy for those that cannot or do not want to spend their time monitoring the charts.  A picture is worth a 1000 words so …

momo alerts

A simple strategy based on 100 and 200 MA

An alert to a potential trade is generated when either the 8 or the 21 EMA are between the 100 and 200 MA.

A trade is entered when price breaks or closes through the 200 MA.

A stop loss order is placed above, in the case of a short trade, or below, in the case of a long trade, the 100 MA.

The target is 1.5 to 2 times the risk.  The risk is determined by the difference between the entry price and the stop loss price.

momo trade

Trading strategy based on simple moving averages

Examples of the Trading Strategy in Operation:

momo-trade-ex1

momo-trade-ex2

Exit Strategies

Trailing the stop  behind the 100 MA, setting the target profit stop at 1.5 – 2 times the risk or taking some profit at 1:1 risk and letting the remainder run with a stop behind the 100 MA – the choice is yours :-)

Trade Timeframe

3 to 10 days

FibbinArchie monitors 32 different currency pairs/commodities over 7 different timeframes looking for signals as described above.  In general, trending currency pairs on the H1/H4 timeframe prove to be the most profitable.

2. Turns or Continuation based on Price Action [Big Wick]

This strategy involves looking for candles with, in the case of going long, large lower wicks and a bullish body and with, in the case of going short, large upper wicks and a bearish body:

Bullish Candle

Bullish Candle

Bearish Candle

Bearish Candle

Characteristics of a bullish candle are:

  • Long lower wick
  • Bullish coloured body
  • Lower wick longer than upper wick and generally longer than body too

Characteristics of a bearish candle are:

  • Long upper wick
  • Bearish coloured body
  • Upper wick longer than lower wick and generally longer than body too

Upon identification of such candles, a trade can be entered upon the close and a stop placed below the low, in the case of a long, or the high, in the case of a short.

The target is 1.5 to 2 times the risk.  The risk is determined by the difference between the entry price and the stop loss price.

Big Wick Trades

Big Wick Trades

Exit Strategies

Setting the target profit stop at 1.5 – 2 times the risk or taking some profit at 1:1 risk and letting the remainder run – the choice is yours :-)

Trade Timeframe

This is dependent upon the timeframe that the trade was originally placed

FibbinArchie monitors the underlying timeframe and can observe in advance of the candle close whether or not the outcome will be bullish or bearish.

3. Buy in Dips, Sell on Rallies [BidSoR]

Wouldn’t it be great if we knew when and where to buy the dip and sell the rally?  Unfortunately life isn’t that simple but this technique certainly helps.

Imagine the following scenario: you are looking at an hourly chart and price action is going down but on a 15 minute chart price action is showing bullish behaviour.  Furthermore, the four hourly chart is still in uptrend.  This scenario is typical of buying the dip into the longer term price action [4 hourly uptrend with the turn out of the dip confirmed by the shorter term 15 minute bullish action, the expectancy being that the hourly chart will rejoin the bullish trend of the 4 hourly chart]

The chart below is a 4 hour EURCAD.  Notice that the 21 EMA is above the 8 EMA, indicating an uptrend, and that price action is dipping.

Buy in Dips, Sell on Rallies

Buy in Dips, Sell on Rallies

The hourly chart below is showing that price action is going down, 21 EMA less than 8 EMA but trying to turn up from support at around 1.5120:

Buy in Dips, Sell on Rallies

Buy in Dips, Sell on Rallies

Looking to the lower timeframe, 15 minute, chart for indications that the market is taking a bullish turn, it can be seen that the 21 EMA is crossing above the 8 EMA thus giving a BidSoR BUY signal with a stop beneath recent lows in the 1.5120 zone:

Buy in Dips, Sell on Rallies

Buy in Dips, Sell on Rallies

Exit Strategies

Setting the target profit stop at 1.5 – 2 times the risk or taking some profit at 1:1 risk and letting the remainder run – the choice is yours :-)

Trade Timeframe

This is dependent upon the timeframe that the trade was originally placed.

Fibbinarchie monitors the markets for two type of BiDSoR.  The illustration above is one of buying a dip into a rally evident in a single timeframe above.  This is known as BiDSoR1.  Another model is buying a dip into a rally that is evident in both of the two timeframes above.  This is known as BiDSoR2 and, whilst not as common, can be a stronger signal.  Conversely the same is true of selling on rallies into a downtrend

Strategies 1, 2 and 3 in Combination

Having a strategy is paramount to effective trading.  Having a combination of strategies that support and compliment each other reduces risk and adds confidence when placing a trade.  By using the Big Wick in combination with the Thruster method [for market turns] or the Big Wick with the BiDSoR method [for market continuation], the trade signals generated have reduced risk and an increased probability of being effective.  Such signals can be found on the TRADE IDEAS page.

The Trade Ideas page, along with all Trend and Alert pages, is updated at the close of every 5 minute bar/candle.  The web pages automatically refresh every two minutes ensuring that the latest data and signals are continuously available.

4. Trading with Fibonacci

Details of how Fibonacci levels are used in trading can be found in this document, Technical Analysis – Fibonacci Levels.

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