Effective Range Trading Method

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SYNERGY Trading Method

The Synergy Trading Method was developed by Dean Malone and is an effective Forex trading method developed to simplify trading decisions with high probability precision. It combines the market forces of Price Action, Trend, Momentum and Market Strength to produce higher probability trades. The Synergy trading method depicts. in real-time. the interaction of these market forces providing traders the means to make trading decisions with greater confidence and less emotional hassle.

With Synergy, traders identify and use two important trading components in real-time: Price Action and Sentiment.

Price Action is market movement, such as the oscillation of Open, High, Low and Close prices. Too often, traders are mesmerized by trivial price flucuations and lose sight of the underlying trend of the market. Many traders tend to jump in and out of the market instead of staying with the trade as a trend develops. Synergy is designed to eliminate price distortions. It reveals periods of market strength and trend and periods of consolidation.

Sentiment is the intuitive feeling or attitude of traders and investors in the market. For example, if the sentiment of the market is bullish, then traders and investors expect an upward move in the market. Often, sentiment is an indication of optimism or pessimism in the market based on recent news announcements or political events. The Synergy method uses a hybrid custom indicator developed to show postive (buyers) sentiment or negative (sellers) sentiment.

Working in unison, Price Action and Sentiment give traders a distinct trading advantage. When both are in agreement, favorable trading conditions exists. For instance, when price action is showing upward movement with buyers sentiment, there is higher probability of a Long position having a favorable outcome. Similarly, when price action has a downward movement in conjunction with sellers sentiment, a short position has a favorable outcome.

Aim of this thread is to backtest and optimize the strategy and finally to make an EA out of it. In this first post you find the up-to-date indicators and templates.

First backtests show that the strategy works best on the 1H or 30M timeframe with the GBPUSD, EURJPY, EURUSD, GBPJPY, USDCHF, USDJPY and CADJPY. Here are some average results:

160 pips per month

104 pips per month

100 pips per month

95 pips per month

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85 pips per month

82 pips per month

75 pips per month

To setup this strategy, please unzip Synergy.zip and copy all indicators into \experts\indicators\ in your metatrader directory. Then copy the template into \templates in your metatrader directory. After restarting metatrader and choosing the template you can see arrows and crosses which shows entries and exits according the trading method. Each cross displays a number which means the profit or loss of the closed trade. The yellow numbers at the end of the chart displays the overall result when every signal was traded. But be careful: due to some technical problems with the template at the beginning of a chart no guarantee can be given. A filled arrow shows the first time a new trade can be entered. A hollow arrrow means “add to buy” it is only used as a confirmation signal.

For backtesting the some options of SynergyInd indicator can be adjusted:

UseEntry68_32: When this is true, the indicator enters a long position even when RSI is above 68 or a short position when RSI is below 32.

UseSmallerExit: When this is true, the system closes a position when the actuall candle is smaller than the previsous candle. “DefineSmaller” needs to be a value.

ReqRedYellowCombo: When this is true, the TSL must be above the MBL before entering a long position or the TSL must be below the MBL before entering a short position.

UseVolExpanding: If this is true, positions are only opened when volatility increases (measured by the Bellinger Bands of the TDI).

UseChaikin: If this is true, positions are only opened when colatility increases (measured by the Chaikin’s Volatility indicator).

Use4Trend: If this is true, long positions will only be opned when the 4H trend is up and short positions will only be opened when the 4H trend is down.

Use Alert: . I think everybody knows this feature.

So far the following settings seem to work most suitable: UseEntry68_32 false, UseSmallerExit false, ReqRedYellowCombo false, UseVolExpanding true, UseChaikin false, Use4Trend false.

To get faimilar with the Synergy trading method, please read the pdf in the appendix or have a look at the webinar, which can be found here.

Weekly Range Method

I wanted to design a method so simple that my tend year old son could trade it and didn’t take much time. I have visually backtested it and it seems to work most weeks or else doesn’t produce a trade.I’m wondering if it’s just too mechanical to work long-term. I would love some feedback and any suggestions for improvement would be greatly appreciated
Weekly Range Method � Version 1

Tested on GBP/USD.

After the market closes for the week, mark the past 2 weekly ranges(high/low) and the halfway point of the most recent weekly range(which I�ll refer to as the weekly median).

Your directional bias is determined by comparing these weekly ranges

FADE: If the most recent week�s range is greater than the previous week�s range, then look to fade the most recent weekly direction. Trade it in this way:

If last week was bearish, Buy at Friday�s median, place your limit at the weekly median and place your stop at the weekly high.

If last week was bullish, Sell at Friday�s median, place your limit at the weekly median and place your stop at the weekly low

TREND: If the most recent week�s range is smaller than the previous week’s range, then look to trade in last week�s direction. Trade it in this way:

If last week was bullish, buy at the weekly median, place your limit at the weekly high and place your stop at the weekly low.

If last week was bearish, sell at the weekly median, place your limit at the weekly low and place your stop at the weekly high. Do not chase the price. If it doesn’t pullback to the median, just let it go and don’t trade. The idea when trading with the trend is to enter on a pullback and avoid whipsaws.

The whole method in one sentence: if last week was an expansion week, trade in from the outside and if last week was a contraction week, trade out from the inside.
I hope this makes sense. I’ll follow with examples if anyone’s interested.

Ken

  • Post # 2
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  • Edited at 10:50pm Sep 14, 2006 10:19pm | Edited at 10:50pm

Well, a system this simple and mechanical cries out for an EA, so I’ll whip one up.

Should work well for backtesting too.

EDIT: I’d like to see some examples so i can be sure I interpret your rules correctly.

  • Post # 3
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  • Sep 14, 2006 10:24pm Sep 14, 2006 10:24pm

It sounds simple enough. I’ll check into it also as a long term system.

  • Post # 4
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  • Sep 15, 2006 8:16am Sep 15, 2006 8:16am
  • Post # 5
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  • Sep 15, 2006 8:28am Sep 15, 2006 8:28am
  • Post # 6
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  • Sep 15, 2006 9:34am Sep 15, 2006 9:34am

Example 2: Again GBP
Most recent week(27aug to 1sept) opens at 1.8870 closes at 1.9055 so it is a bullish week. Its High is 1.9093, its low is 1.8862 so its range is 231 it’s median is . The previous weeks high was 1.8997 and its low was 1.8806 so its range was 191. So, as with previous example, last week’s range was bigger than the previous week’s range so our bias is to FADE.
The MRW was bullish so the FADE bias means we are looking to go short at Friday’s median: 1.9013. The profit target is the weekly median:1.8977. The stop is at the weekly high:1.9093. The trade is triggered on 5sept and closed a few hours later for 43 pips profit. It did continue to fall to a low of 1.8628.
Food for thought there as well in terms of optimisation. We take 43 pips profit in a week where the price moves another 385 pips. We risk 84 pips to acheive this result. Hmmm.
Example 3: one week further back.
MRW(20aug- 25aug) opens at 1.8814 closes at 1.8870 so it is a bullish week. Its High is 1.8997, its low is 1.8806 so its range is 191 and its median is 1.8901. The previous weeks high was 1.9025 and its low was 1.8776 so its range was 249. So, unlike the previous examples, last week’s range was smaller than the previous week’s range so our bias is to TREND.
The MRW was bullish so the TREND bias means we are looking to go long at weekly median:1.8901 . The profit target is the weekly high:1.8997. The stop is at the weekly low:1.8806. The trade is triggered soon after the open and closes within a few hoursfor 96 pip profit. We miss out on another 100 pips by closing at the weekly high but at least the RR ratio is down to 1:1 on this one.
There is obviously room for improvement with this concept but I’d like to know if the prototype works longterm before trying develope it into a more efficient model.

  • Post # 7
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  • Sep 15, 2006 9:38am Sep 15, 2006 9:38am
  • Post # 8
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  • Sep 15, 2006 1:56pm Sep 15, 2006 1:56pm

Ken,
Thanks for sharing.

Too many traders get tunnel vision on the intraday charts and often learn to late how much better the daily and weekly charts can be in identifying sets-ups, putting on trades, and implementing effective money management techniques.

I hope a lot of the newbies take note of this thread like Dialist’s “Observe” thread in the Beginner’s Forum:

4 Effective Trading Indicators Every Trader Should Know

When your forex trading adventure begins, you’ll likely be met with a swarm of different methods for trading. However, most trading opportunities can be easily identified with just one of four chart indicators. Once you know how to use the Moving Average, RSI, Stochastic, & MACD indicator, you’ll be well on your way to executing your trading plan like a pro. You’ll also be provided with a free reinforcement tool so that you’ll know how to identify trades using these forex indicators every day.

The Benefits of a Simple Strategy

Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Traders often feel that a complex trading strategy with many moving parts must be better when they should focus on keeping things as simple as possible. This is because a simple strategy allows for quick reactions and less stress.

If you’re just getting started, you should seek the most effective and simple strategies for identifying trades and stick with that approach.

Discover the Best Forex Indicators for a Simple Strategy

One way to simplify your trading is through a trading plan that includes chart indicators and a few rules as to how you should use those indicators. In keeping with the idea that simple is best, there are four easy indicators you should become familiar with using one or two at a time to identify trading entry and exit points:

  • Moving Average
  • RSI (Relative Strength Index)
  • Slow Stochastic
  • MACD

Once you are trading a live account a simple plan with simple rules will be your best ally.

Using Forex Indicators to Read Charts for Different Market Environments

There are many fundamental factors when determining the value of a currency relative to another currency. Many traders opt to look at the charts as a simplified way to identify trading opportunities – using forex indicators to do so.

When looking at the charts, you’ll notice two common market environments. The two environments are either ranging markets with a strong level of support and resistance , or floor and ceiling that price isn’t breaking through or a trending market where price is steadily moving higher or lower.

Using technical analysis allows you as a trader to identify range bound or trending environments and then find higher probability entries or exits based on their readings. Reading the indicators is as simple as putting them on the chart.

Trading with Moving Averages

One of the best forex indicators for any strategy is moving average. Moving averages make it easier for traders to locate trading opportunities in the direction of the overall trend. When the market is trending up, you can use the moving average or multiple moving averages to identify the trend and the right time to buy or sell.

The moving average is a plotted line that simply measures the average price of a currency pair over a specific period of time, like the last 200 days or year of price action to understand the overall direction.

Learn Forex: GBPUSD Daily Chart – Moving Average

You’ll notice a trade idea was generated above only with adding a few moving averages to the chart. Identifying trade opportunities with moving averages allows you see and trade off of momentum by entering when the currency pair moves in the direction of the moving average, and exiting when it begins to move opposite.

Trading with RSI

The Relative Strength Index or RSI is an oscillator that is simple and helpful in its application. Oscillators like the RSI help you determine when a currency is overbought or oversold, so a reversal is likely. For those who like to ‘buy low and sell high’, the RSI may be the right indicator for you.

The RSI can be used equally well in trending or ranging markets to locate better entry and exit prices. When markets have no clear direction and are ranging, you can take either buy or sell signals like you see above. When markets are trending, it becomes more obvious which direction to trade (one benefit of trend trading ) and you only want to enter in the direction of the trend when the indicator is recovering from extremes.

Because the RSI is an oscillator, it is plotted with values between 0 and 100. The value of 100 is considered overbought and a reversal to the downside is likely whereas the value of 0 is considered oversold and a reversal to the upside is commonplace. If an uptrend has been discovered, you would want to identify the RSI reversing from readings below 30 or oversold before entering back in the direction of the trend.

Trading with Stochastics

Slow stochastics are an oscillator like the RSI that can help you locate overbought or oversold environments, likely making a reversal in price. The unique aspect of trading with the stochastic indicator is the two lines, %K and %D line to signal our entry.

Because the oscillator has the same overbought or oversold readings, you simply look for the %K line to cross above the %D line through the 20 level to identify a solid buy signal in the direction of the trend.

Trading with the Moving Average Convergence & Divergence (MACD)

Sometimes known as the king of oscillators, the MACD can be used well in trending or ranging markets due to its use of moving averages provide a visual display of changes in momentum.

After you’ve identified the market environment as either ranging or trading, there are two things you want to look for to derive signals from this indictor. First, you want to recognize the lines in relation to the zero line which identify an upward or downward bias of the currency pair. Second, you want to identify a crossover or cross under of the MACD line (Red) to the Signal line (Blue) for a buy or sell trade, respectively.

Like all indicators, the MACD is best coupled with an identified trend or range-bound market. Once you’ve identified the trend, it is best to take crossovers of the MACD line in the direction of the trend. When you’ve entered the trade, you can set stops below the recent price extreme before the crossover, and set a trade limit at twice the amount you’re risking.

Learn More about Forex Trading with our Free Guides

If you’re looking to boost your forex trading knowledge even further, you might want to read one of our free trading guides . These in-depth resources cover everything you need to know about learning to trade forex such as how to read a forex quote, planning your forex trading strategy and becoming a successful trader .

You can also sign up to our free webinars to get daily news updates and trading tips from the experts.

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