AZB Price Action | Forex Indicator Download - MT4/MT5 Resources
Hello everyone
I started this post mainly to share my very simple but effective trading system that uses PA and just an EMA and a standard stochastic indicator as a guide. The second idea behind building this thread is to track my personal trading and get other people's suggestions to improve it.. So this thread is also like an interactive diary in a way, so I invite everyone to join the discussion about this method, and of course I welcome any suggestions about this system and will appreciate your contribution.
The main tools used in this system are the 70 EMA (closing price) and the stochastics (8, 2, 4), which mainly help us determine the trend direction of the market (using EMA) and the OB-OS situation.
The 70 EMA (Close Price) is used to identify the main trend direction and is our signal line to enter or exit a trade. Stochastic is used to verify whether the market is in OS or OB status, to partially close a position or to add another position in the direction of the market trend.
However, the main tool we use most often is PA. You just need to know some of the basic candlestick patterns with larger weights such as Pinbar, Bullish and Bearish Engulfing, Dark Cloud, Hanging Man, Hammer, Morning Star and Evening Star patterns.
Of course, since we are dealing with randomness, we will discuss other definitions such as divergence and OB OS conditions, you need to already know the basics of them because they will be of great help in deciding to open or close a position.
These patterns repeat over and over in every market and you can find them on every time frame, but we know that the higher the time frame, the more weight these patterns have... So we use the H1 time frame, which is not as long term as daily, nor a wash pattern like 5M... so we will keep the middle but effective time frames. Now:
tool :
1- EMA 70 (Close)
2- Random(8,2,4)
rule :
1- We open a position (long or short) as soon as the candle closes above or below the EMA 70... So if the market is below the EMA we go long, then the candle closes above the EMA 70 and vice versa, if the candle closes below the EMA we go short.
2- We place our stop loss just below the candle's low that closes above the EMA (for long positions) and the candle's high that closes below the EMA + the spread (for short positions).
3- I would rather take arbitrary action when it comes to setting price targets, i.e. it depends on the strength of the trend and I will hold the position until there is a significant PA on the chart or the final candle closes on the other side of the EMA. Since this part requires some graphical examples, we'll discuss them in detail later.
4- The main advantage of this system is that there is patience behind it, waiting for big results and not for 50 - 60 pips profit. The basis for obtaining such results is to add positions according to the current market trend and use PA (as an entry signal) and Stochastic (as a guide). I'll elaborate on this in more detail with examples.
cheers
I started this post mainly to share my very simple but effective trading system that uses PA and just an EMA and a standard stochastic indicator as a guide. The second idea behind building this thread is to track my personal trading and get other people's suggestions to improve it.. So this thread is also like an interactive diary in a way, so I invite everyone to join the discussion about this method, and of course I welcome any suggestions about this system and will appreciate your contribution.
The main tools used in this system are the 70 EMA (closing price) and the stochastics (8, 2, 4), which mainly help us determine the trend direction of the market (using EMA) and the OB-OS situation.
The 70 EMA (Close Price) is used to identify the main trend direction and is our signal line to enter or exit a trade. Stochastic is used to verify whether the market is in OS or OB status, to partially close a position or to add another position in the direction of the market trend.
However, the main tool we use most often is PA. You just need to know some of the basic candlestick patterns with larger weights such as Pinbar, Bullish and Bearish Engulfing, Dark Cloud, Hanging Man, Hammer, Morning Star and Evening Star patterns.
Of course, since we are dealing with randomness, we will discuss other definitions such as divergence and OB OS conditions, you need to already know the basics of them because they will be of great help in deciding to open or close a position.
These patterns repeat over and over in every market and you can find them on every time frame, but we know that the higher the time frame, the more weight these patterns have... So we use the H1 time frame, which is not as long term as daily, nor a wash pattern like 5M... so we will keep the middle but effective time frames. Now:
tool :
1- EMA 70 (Close)
2- Random(8,2,4)
rule :
1- We open a position (long or short) as soon as the candle closes above or below the EMA 70... So if the market is below the EMA we go long, then the candle closes above the EMA 70 and vice versa, if the candle closes below the EMA we go short.
2- We place our stop loss just below the candle's low that closes above the EMA (for long positions) and the candle's high that closes below the EMA + the spread (for short positions).
3- I would rather take arbitrary action when it comes to setting price targets, i.e. it depends on the strength of the trend and I will hold the position until there is a significant PA on the chart or the final candle closes on the other side of the EMA. Since this part requires some graphical examples, we'll discuss them in detail later.
4- The main advantage of this system is that there is patience behind it, waiting for big results and not for 50 - 60 pips profit. The basis for obtaining such results is to add positions according to the current market trend and use PA (as an entry signal) and Stochastic (as a guide). I'll elaborate on this in more detail with examples.
cheers
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