A SIMPLE TRADING SYSTEM

A SIMPLE TRADING SYSTEM

10 August 2016, 11:24
Daniel Stein
42
13 994

The tools we are talking about are FX TrendFX Power and Lighthouse published by Stein Investments.

If you like to use an automated trade management you can add the Powerplay Trade Manager as well


HOW TO COMBINE THESE TOOLS IN A PROFITABLE WAY ?


The three most important analysis before entering a trade are

1. The trends of the underlying symbol -> FX Trend

2.  The strength of the involved currencies -> FX Power

3. The support and resistance levels of the underlying symbol -> Lighthouse

 

Let me explain it with this AUDUSD example chart

1. You'll see that the trends on AUDUSD are in line from M1 - D1 (FX Trend)

2. You'll see that the strength delta between AUD and USD increases (FX Power)

3. You'll see that the price struggles at the red resistance level cluster but once it's gone through it's a clear BUY (Lighthouse)


AUDUSD

 

You don't need to wait for any arrows because they are just orientation marks.

It's based on three simple rules

1. If the trends are in line (all trends are BUY or all trends are SELL)

2. the strength momentum is given (the strong currency is > 6.0 and the weak one < 3.0) and

3. there are no support and resistance levels directly in front of your planned trade

you can go for it

 

If the next support and resistance levels are far away you can use them as profit targets.

 

And that's how it looks after this breakout 

AUDUSD2 



You want to see more trading examples? -> click this link to get dozens of trading charts


ADDITIONAL TRADING TIPS

1. Trading on small time frames like M15 is suitable for advanced and professional full time traders.

    I highly recommend all part time traders to trade on H1 which is much more comfortable to deal with.

   To trade this system on H1 i recommend touse FX Power with an analysis period of 1 Day.


2.  Study the Dow Theory of higher highs and lower lows to optimize your timing and increase your profits.

     ->click here to read more about the Dow Theory from the Investopedia University


3. All trend trading systems benefit from volatility caused by a high trading volume.

    The highest trading volume is available during the London and early New York trading session.

    ->click here to get more detailed information about the Forex market hours

   If you are unable to trade the London/New York session i highly recommend to trade on H1


4. Especially in the beginning i recommend to stay with the major USD pairs like EURUSD, USDCAD, AUDUSD, etc.

    If you trade cross pairs like GBPAUD you have to check and consider GBPUSD and AUDUSD as well.


5. Check if there are any upcoming high impact news events for your currency pair.

    Common sources are the economic calendars of forexfactory.com anddailyfx.com


6. Discipline and patience is the key to success!


Don't hesitate to contact us if you like to get further assistance.

Best regards 

Daniel 


-> click here to read this article in chinesegermanportugueserussian and spanish


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