Roadmap - A Way To Read Markets

Hi,

First of all, I want to say that I am not here to sell anything. All information shared is free and always will be free. I'd also like to thank everyone I've used indicators from. There are too many people to thank individually, please accept collective thanks.

I recently decided to stop lurking and join Forex Factory. Trading has provided me with a wonderful lifestyle over the years and I love giving back to the community. Until recently, I had been coaching a trader privately, but he had progressed to a level where he didn't need much input from me. So I thought I'd try to shed some light on my approach to trading in the hope that it might help someone out there who is struggling or looking for a new approach.

I call this entire setup a roadmap because instead of sudden buy and sell signals, it gives you a wealth of information that you can then choose to act on. Before we explain how to use a roadmap, let’s take a look at a diagram labeled with a description of all the elements.



Don't worry about recreating it manually. I will provide all relevant indicators and templates later. The purpose of a roadmap is to provide as much information as possible without cluttering the screen. Each to their own, but a screen with 20 indicators just doesn't work for me. I hope you find this thread easy to follow.

If anyone finds it easier to learn "live", I've created a Slack group where I'd love to trade with you. This is how I mentored my former students, so I was used to communicating through this platform. I usually trade during the London session, but I also frequently trade the Dow Jones during the New York session. If you would like to join, please send me a private message and I will provide an invitation . EDIT: Due to high demand, I have had to temporarily freeze invitations. Please contribute to the topic and I'll try to make sure regular contributors are added to the Slack group.

Okay, back to the diagram. Let’s take a look at the SMA200 first. That tells me a lot about what the instrument has been doing and what it's doing now, based on where the price is relative to it. I chose the SMA200 for two reasons. As you can see from this chart, it is widely used and traded, and has a good stop-loss history.



In addition to the SMA200 on our selected timeframe chart, we can also see at a glance whether the price is above or below the SMA200 thanks to the multi-timeframe dashboard in the lower right corner. Green means the price is higher, red means the price is lower. I recommend not to ignore this bias, especially the 4 timeframes that are most relevant to your trading style. If you trade short time frames, you especially want to focus on M1-M30. If you are a long-term trader, pay most attention to the H1-W1 time frame. As a general rule, you want at least 2 relevant timeframes to be green (for longs) or red (for shorts).

Next, we create a channel using the high and low prices of EMA8. We focus on two things on the channel side. Price's relationship to it and the channel's relationship to SMA200. I originally used Raghee Horner's 34EMA channel, but I have changed to the 8EMA as it confirms deviations faster. I'm going to talk a little bit about bias in the thread, which gives us the first bias. If the channel is below the SMA200, the bias is short, and vice versa, the bias is long. There is also a slightly more advanced way of using channels, which is to look for "channel failures" where the channel attempts but fails to go above/below the SMA200. This is an example of a channel failure.



We also mark the previous day's high and low on the chart. These levels often act as support/resistance, so it's worth knowing about them. This is an example of price being stopped out at the previous day's low.



The daily opening line is also on the chart. I schedule every day starting at midnight based on my broker's time (Central European Time). It appears on the chart because it is common for price to seek a path back after moving away from the daily opening line. This line can also cause price stops and reversals.

Also on the chart are the projected ADR high and low lines. These are dynamic and will change throughout the day until they are "locked". These are not used for forecasting but will become relevant once locked. This occurs when the instrument completes the average daily range. When this happens, the line turns solid red and does not change again for the day. A more advanced element of the roadmap is the use of ADR to find potential reversal points, but I'll wait a while to discuss that. I would rather initially focus on the trend following element of the strategy. However, here's a quick picture showing what the ADR line looks like when locked.



There is also composite RSI data on the screen. This, together with the MTF dashboard, provides an overview of deviations. Above 50 is bullish, below 50 is bearish.

I like to think of all these elements as a suite of information. There are different elements suitable for different trading styles. Alternatively, the entire package can be used together. The roadmap is very flexible in terms of tools and timelines. It can be used for anything between scalping and position trading. Before we continue, let's look at some more charts.







Above you can see an example of a potential entry and exit zone, simply using the 8EMA channel for timing. There's also an example of using stop-loss and reverse strategies, as well as an example of the big moves you can catch from time to time.

I hope this information provides a useful overview of the roadmap. I trade every day, so I post charts, discuss trades, and answer any questions.

Thank you for reading.

Laura

(Templates and indicators in next article)

EDIT - For those who have issues with the RSI tool - attach it to your chart - set to 240,1440,10080,0,500 - this will give you a historical picture of the RSI values, but the current values ​​are also visible in the indicator window.

Attachment

[MQ4] CompRSISelectv2.mq4 2 KB | 7,643 downloads | Uploaded at 11:51 on April 20, 2020

EDIT - You can find my diary here, which includes summaries of important aspects of trading:
https://www.forexfactory.com/showthread.php?t=995014

EDIT - Part 5 of my diary demonstrates experimental ideas for a CompRSISelectv2 setup related to 1 million index/oil trades:
https://www.forexfactory.com/showthr...5#post12910815

EDIT - Hannover has made a tool to make finding roadmap trades easier, you can get it here: https://www.forexfactory.com/showthread.php?t=994835

EDIT - freeman03 made a template for Tradingview:
https://www.tradingview.com/script/Y...RoadMap-Panel/

Editor - MikeHanson made the indicator for cTrader:
https://www.forexfactory.com/showthr...8#post12913838

EDIT - indalico made an indicator combining TrendStrengthRSI and SMA200 MTF dashboard:
https://www.forexfactory.com/showthr...5#post12980075

EDIT - pedrobhs created new TradingView script:
https://www.forexfactory.com/thread/...0#post13580610