Trading method using multi time frames for long term and scalping - YAS1R (Trading method using multi time frames f)
I will try to summarize my trading strategy based on a thread that unfortunately no longer exists in Forex Factory. I've been trading this method for almost a year now and it's proven to be very successful for me, so I hope you all can benefit or learn from it. My method differs from the original method in a few ways, mainly the original method was scalping on the 5 minute timeframe, but I also use it on longer timeframes. I've put together all the indicators I use and tried to explain how to use each one effectively.
Money management
This is the most important step in trading, remember that 95% of Forex traders lose money and without a good money management plan your account will go bankrupt sooner or later. Many people learn their lesson too late, so make a trading plan and stick to it. Don't try to become a millionaire overnight because it's not going to happen. Taking losses is part of the game, so be sure to set a stop loss and don't use psychological stops as they don't work. At the end of each week, month or year, you need to have more winning trades than losing trades and you will become one of the 5% of traders who make money. If you get stopped out, don't start worrying about what losses you need to make up, as this will most likely lead to more bad trades. Instead, focus on making your next trade profitable.
When I first started trading this method, I risked 0.5% per trade and had a 1% return. I have been using this method for 3 months and the winning rate is very high. After 3 months, I increased the risk to 1% and the reward to 2% while still maintaining a 1:2 risk to reward ratio and continuing to maintain a high win rate. Currently, I'm using 2% risk and 4% reward, and tend to narrow the risk based on the setups I see. This is a high-risk strategy and I don't recommend it. I would say start with a smaller risk to reward ratio until you feel confident in the system and have positive returns over a significant period of time.
I trade the following currency pairs using this method;
GBP/JPY GBP/USD EUR/USD GBP/CHF EUR/JPY USD/JPY
It works on most currency pairs and can also be used on indices like the Dow and commodities like gold and oil.
index
60-day and 200-day exponential moving averages
200 is red, 60 is blue
auto-rotate
Use Sunday data - should be set to false
Laguerre – ACS1
Fixed minimum value -0.05 on "General" tab Fixed maximum value 1.05 for both lags.
Blue Laguerre – Input tab – gamma 0.6 – max bar 1000
Red Laguerre – Input tab – gamma 0.8 – Max bar 1000
Level: 0.15, 0.45, 0.85
Stoch histogram – 14,3,3
Smoothed Moving Average Convergence and Divergence – 12,26,9
Gann high and low V2
Bollinger Bands
CHANDRA-SAS5
How to use indicators
Emma's
I have two ways of using them:
1 – Crossover – I mean when 60ema crosses 200ema and vice versa. Looking at the 1 minute entry chart, once the price is above the 200 EMA, this would be a safe entry point for the bulls, with a stop below the 60 EMA or below the recent lows would be safer. Since the 2 EMAs cross each other and the 200 EMA is below the 60 EMA, the trade will be safe by moving the stop loss below the 200 EMA and eventually below the 60 EMA as the trade progresses. In this case, the price moves above the daily pivot, so once the crossover occurs, you know that is the direction of the trade. This applies to all time frames. On a day of one-way movement, you will notice that crossovers will occur on the 1-minute chart, then the 5-minute, 15-minute, and so on. Between these crossovers, price action will move back to the moving averages to allow for a crossover on the higher time frames. Keep in mind that not all time frames will show moving average crossovers.
2 – Use them as support and resistance levels – again you can use this on all time frames. For example, when exiting a trade on the 1-minute chart, the candle closed below the 60 EMA, consistent with other indicators giving sell signals. Also, looking at the 30-minute chart, it failed to break above the 200 EMA and showed a clear reversal pattern in the form of a doji. I move my stops based on moving averages on either the 1 minute or 5 minute charts, but I will explain this in more detail later.
pivot
These are your support and resistance levels. You should consider entering or exiting a trade at these levels. For example, if you look at the 30 minute or 1 hour chart, you will see that the price bounced off S1, with a clear reversal pattern on both time frames.
Laguerre
I also use them in two ways:
1 – The lag needs to be below or above both the 0.85 and 0.15 levels to give a buy or sell signal. The blue lag will move first, followed by the red lag, but the red lag is stronger. When the lag moves above or below the 0.45 level or holds firmly at the top or bottom, you will see larger moves in the corresponding direction. I use lags with stochastic histograms, using them in order over 1 minute on all timeframes. For example, looking at the 1 minute, 5 minute and 15 minute charts, as the time frame increases, the stochastic histogram changes from negative to positive, giving a buy signal.
2 - Another approach is to use a blue lag of 60ema and a red lag of 200ema, so blue to blue and red to red. Basically, the idea is to use the lag of the EMA to calculate the strength of the move when the lag is at an extreme (top or bottom) on a specific time frame. In this example, the lag is at the top of the 5-minute chart. If both the blue and red lags are at the top and stay there, the price should break above the 60 EMA and 200 EMA as it did before. On the 1 minute timeframe, the blue lag and red lag dropped at different points to test the 60 EMA, but even when the red lag disappeared, it failed to break below the 60 EMA, telling you that there is more room to rise. Therefore, I moved my stop loss based on the EMA. Another example is looking at the blue lag on the 4 hour chart. It rose, hit a top and fell back, but failed to hit the 60 EMA, showing more potential downside.
MACD, Gann, B line, etc.
Moving Average Convergence and Divergence - Crossings of the lines must correspond to trades, and above and below the 0 mark can also indicate direction.
Gann - When the price is above the Gann Line, it is a buy signal; when the price is below the Gann Line, it is a sell signal.
B Band – Bollinger Bands can be used to look for a breakout of the midline, or a reversal pattern where price breaks out of a top or bottom. For example, a 30-minute chart with a Doji formation.
These are additional indicators that I use, if you are already using other indicators you may be able to use them through this method. For example, I also use Fibonacci retracements and extension levels.
Some knowledge of candlestick patterns is essential and well worth the effort to learn them. I will post trading charts and refer to some patterns. First, I tend to look at the weekly chart and look for candlestick patterns with lagging direction. Then, the main chart I use is the daily chart because it gives you the general direction for the day and the coming days. All you need is to discover underlying patterns and general directions.
After looking at the daily chart, lower the time frame to the 4 hour chart and again try to spot patterns forming and use the lag of other indicators to find trades in the general direction. Below I have posted the daily and 4 hourly charts, on the 4 hourly chart we have the bullish hammer so we look for the best entry point for the longs by going all the way down to the 1 minute chart
Money management
This is the most important step in trading, remember that 95% of Forex traders lose money and without a good money management plan your account will go bankrupt sooner or later. Many people learn their lesson too late, so make a trading plan and stick to it. Don't try to become a millionaire overnight because it's not going to happen. Taking losses is part of the game, so be sure to set a stop loss and don't use psychological stops as they don't work. At the end of each week, month or year, you need to have more winning trades than losing trades and you will become one of the 5% of traders who make money. If you get stopped out, don't start worrying about what losses you need to make up, as this will most likely lead to more bad trades. Instead, focus on making your next trade profitable.
When I first started trading this method, I risked 0.5% per trade and had a 1% return. I have been using this method for 3 months and the winning rate is very high. After 3 months, I increased the risk to 1% and the reward to 2% while still maintaining a 1:2 risk to reward ratio and continuing to maintain a high win rate. Currently, I'm using 2% risk and 4% reward, and tend to narrow the risk based on the setups I see. This is a high-risk strategy and I don't recommend it. I would say start with a smaller risk to reward ratio until you feel confident in the system and have positive returns over a significant period of time.
I trade the following currency pairs using this method;
GBP/JPY GBP/USD EUR/USD GBP/CHF EUR/JPY USD/JPY
It works on most currency pairs and can also be used on indices like the Dow and commodities like gold and oil.
index
60-day and 200-day exponential moving averages
200 is red, 60 is blue
auto-rotate
Use Sunday data - should be set to false
Laguerre – ACS1
Fixed minimum value -0.05 on "General" tab Fixed maximum value 1.05 for both lags.
Blue Laguerre – Input tab – gamma 0.6 – max bar 1000
Red Laguerre – Input tab – gamma 0.8 – Max bar 1000
Level: 0.15, 0.45, 0.85
Stoch histogram – 14,3,3
Smoothed Moving Average Convergence and Divergence – 12,26,9
Gann high and low V2
Bollinger Bands
CHANDRA-SAS5
How to use indicators
Emma's
I have two ways of using them:
1 – Crossover – I mean when 60ema crosses 200ema and vice versa. Looking at the 1 minute entry chart, once the price is above the 200 EMA, this would be a safe entry point for the bulls, with a stop below the 60 EMA or below the recent lows would be safer. Since the 2 EMAs cross each other and the 200 EMA is below the 60 EMA, the trade will be safe by moving the stop loss below the 200 EMA and eventually below the 60 EMA as the trade progresses. In this case, the price moves above the daily pivot, so once the crossover occurs, you know that is the direction of the trade. This applies to all time frames. On a day of one-way movement, you will notice that crossovers will occur on the 1-minute chart, then the 5-minute, 15-minute, and so on. Between these crossovers, price action will move back to the moving averages to allow for a crossover on the higher time frames. Keep in mind that not all time frames will show moving average crossovers.
2 – Use them as support and resistance levels – again you can use this on all time frames. For example, when exiting a trade on the 1-minute chart, the candle closed below the 60 EMA, consistent with other indicators giving sell signals. Also, looking at the 30-minute chart, it failed to break above the 200 EMA and showed a clear reversal pattern in the form of a doji. I move my stops based on moving averages on either the 1 minute or 5 minute charts, but I will explain this in more detail later.
pivot
These are your support and resistance levels. You should consider entering or exiting a trade at these levels. For example, if you look at the 30 minute or 1 hour chart, you will see that the price bounced off S1, with a clear reversal pattern on both time frames.
Laguerre
I also use them in two ways:
1 – The lag needs to be below or above both the 0.85 and 0.15 levels to give a buy or sell signal. The blue lag will move first, followed by the red lag, but the red lag is stronger. When the lag moves above or below the 0.45 level or holds firmly at the top or bottom, you will see larger moves in the corresponding direction. I use lags with stochastic histograms, using them in order over 1 minute on all timeframes. For example, looking at the 1 minute, 5 minute and 15 minute charts, as the time frame increases, the stochastic histogram changes from negative to positive, giving a buy signal.
2 - Another approach is to use a blue lag of 60ema and a red lag of 200ema, so blue to blue and red to red. Basically, the idea is to use the lag of the EMA to calculate the strength of the move when the lag is at an extreme (top or bottom) on a specific time frame. In this example, the lag is at the top of the 5-minute chart. If both the blue and red lags are at the top and stay there, the price should break above the 60 EMA and 200 EMA as it did before. On the 1 minute timeframe, the blue lag and red lag dropped at different points to test the 60 EMA, but even when the red lag disappeared, it failed to break below the 60 EMA, telling you that there is more room to rise. Therefore, I moved my stop loss based on the EMA. Another example is looking at the blue lag on the 4 hour chart. It rose, hit a top and fell back, but failed to hit the 60 EMA, showing more potential downside.
MACD, Gann, B line, etc.
Moving Average Convergence and Divergence - Crossings of the lines must correspond to trades, and above and below the 0 mark can also indicate direction.
Gann - When the price is above the Gann Line, it is a buy signal; when the price is below the Gann Line, it is a sell signal.
B Band – Bollinger Bands can be used to look for a breakout of the midline, or a reversal pattern where price breaks out of a top or bottom. For example, a 30-minute chart with a Doji formation.
These are additional indicators that I use, if you are already using other indicators you may be able to use them through this method. For example, I also use Fibonacci retracements and extension levels.
Some knowledge of candlestick patterns is essential and well worth the effort to learn them. I will post trading charts and refer to some patterns. First, I tend to look at the weekly chart and look for candlestick patterns with lagging direction. Then, the main chart I use is the daily chart because it gives you the general direction for the day and the coming days. All you need is to discover underlying patterns and general directions.
After looking at the daily chart, lower the time frame to the 4 hour chart and again try to spot patterns forming and use the lag of other indicators to find trades in the general direction. Below I have posted the daily and 4 hourly charts, on the 4 hourly chart we have the bullish hammer so we look for the best entry point for the longs by going all the way down to the 1 minute chart
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