good progress!

forex is still a steep slope for me, but im making good progress. i seem to have found a niche in volatile markets. been trading it the past week, and made a tidy sum (of demo money). i dont know how i discovered it, but it just made sense when i did it.

the system uses bollinger bands and candlestick interpretation. some additional indicators i've gotten used to having on my screen is the parabolic SAR and stochastics, which kinda help. the basic premise is that the market moves up and down. this is especially visible in a volatile 15minute chart.

so i just look for a volatile 15m chart, and see if its good for me to enter. the 15min chart should be as horizontal as possible; just have a look at the bollinger bands if they seem to favour any direction. otherwise, only trade in the direction of the 'trend'.

so we see in the above image the 15 min USDCHF i traded this week. i've drawn in yellow what i mean by the lines zigzagging up and down. i try to look for volatile markets that have make up/down cycles of more than 50 pips. in this example, it is a horizontal trending market (at that time) but toward the end of the example it goes downwards. the trick is knowing when it's 'peaking' and then trade the other direction. this is where candlestick interpreting comes in. check out the following example.

so basically we see an upward cycle here, and i start keeping an eye out once it goes beyond the bollinger band. we get a clue when we see a hanging man appear. you may or may not choose to enter immediately after the hanging man. i notice that most of the big moves appear immediately after an indication of change of direction, as in the next candle where it suddenly moves down. in this example, i would have gone in at the hanging man, and exited when it crossed the stochastics middle line (i try not to stimulate my greed). the red X is just to show my eXit. if i had held on a little longer, i might've gotten more out of it. maybe i should exit when the stochastics shows oversold or starts to go up. hmmm.

the market then seems to calm down after so i stay out of it. the next big move happens here:

i might not have entered on this one, it prolly depends on how the next candle moves. if it showed signs of a bull run, i would've entered. the logic i seem to see is that after a huge black candlestick, everybody'll close their positions before the market bounces back. if we look carefully, we do see the next candlestick trying to push for a lower low, but gets rejected and catapults back up.

here are the rest of the possible trades:

we see the market deliberating where to go from there, whether to start ranging up or to go back down toward the bollinger centerline. it was oversold and a confused market so i went for a sell. set my take profit point at the middle mark. again i could've made more profit if i waited for the market to reach oversold. but then again, i try not to milk every last penny out of my trades.

these are the trades i really took.

i really dont know what the heck i was doing for the first one. heh. but i used 5 lots for all of them and didnt make a loss. the other theory of my method is that the trade will eventually come back around to you, so dont sell at a loss. this prevents my itchy and fearful fingers from making a call too early. (i like to panic and close my position)

of course this is just a guideline, and if you see the market obviously going in a direction away from your current point (like you suddenly decide to look at the daily chart and see that its on a huge downward trend). close it. losses are part of forex. :)

happy trading!