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[Vlad RF]

How to Trade the "Day Movement" Strategy

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will look at the short-term strategy "Day Movement". It is based on identifying and trading a sideways price range (flat) formed before the start of the European trading session.

Description of the “Day Movement” strategy

The "Day Movement" strategy is based solely on technical analysis – it does not use any additional indicators. The main prerequisite for trading this strategy is the presence of a flat. The flat is a sideways price movement without a strict upward or downward direction. Local maximums and minimums of price fluctuations are located at approximately the same level, and quotes move within a limited range.

According to the rules of this strategy, it is necessary to wait for a sideways range to form on the chart before the start of the European session. The time of formation of the range is from 18:00 server time (GMT+2) on the previous day to 08:00 am on the current day. If the range is formed, two pending buy and sell orders are placed: Buy Stop and Sell Stop, 10 points above and below the limits of this channel, respectively.

In pending orders, it is possible to set Stop Loss and Take Profit values immediately or do this immediately after opening a position. The Stop Loss level for a pending buy order (Buy Stop) is set just below the bottom line of the price channel. The Stop Loss level for the order to sell (Sell Stop) is established a bit higher than the upper line of the side channel. The Take Profit is set twice as high as the distance to Stop Loss, but no more than 100 points.

If the price has not reached any of the pending orders by 15:00 (GMT+2), they should be deleted, or the expiry time should be set when the order is initially placed. The strategy applies to currency pairs such as EUR/USD, GBP/USD, and AUD/USD. The recommended time frame is H1. If the market is currently experiencing a strong trending movement, then this strategy should only be used in the direction of the trend.

How to buy using the “Day Movement” strategy

The conditions for opening a buy position:

1. A local sideways range (flat) should form on the H1 chart of the currency pair EUR/USD, GBP/USD, and AUD/USD. The time of its formation is 18:00-08:00 (GMT+2).
2. A pending Buy Stop order is placed 10 points above the top of the range.
3. The Stop Loss limit is set beyond the lower limit of the sideways corridor, and the Take Profit is set at twice the Stop Loss value.
4. If the price has not reached the Buy Stop order by 15:00 (GMT+2), it should be deleted or originally set for expiration at this time.

An example of buying by strategy

• On the H1 time frame of the currency pair GBP/USD, a sideways price corridor was formed between 18:00-08:00 (GMT+2) within the time frame set by the strategy, with the boundaries of 1.2253-1.2290
• A pending Buy Stop order is set 10 points above the top of the price range at 1.2300
• During the European session, quotations rise, breaching the upper limit of the range. A Buy Stop order is activated, and a buy position is opened. Stop Loss is placed beyond the lower limit of the range, and Take Profit is set at twice the Stop Loss.

How to sell using the “Day Movement” strategy

The conditions for opening a sell position:

1. On the H1 chart of the currency pair EUR/USD, GBP/USD, AUD/USD should form a local sideways range (flat). The time of its formation is 18:00-8:00 (GMT+2).
2. A pending Sell Stop sell order is placed 10 points below the lower limit of the range.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

Situational Vs. Systematic Trading: Which One is More Efficient?

Author : Andrey Goilov

Dear Clients and Partners,​

To be successful on financial markets, you need a neat trading system that will give you a clear understanding of how to enter and exit the market either with a profit or a loss. The rules of money management are also worth sticking to as they will psychologically prepare you for a series of losing trades as well as profitable ones.

Trading with a high-quality system is different from trading without one is also better in the sense that you do not need to think about whether the situation on the market is good enough to enter. You simply follow the rules and open or close trades, moving along the price chart.

Unfortunately, no one can tell if the current pattern will be executed or you will have to close it at the Stop Loss. To find out, you just have to trade the chosen method. Of course, you can use certain lifehacks and take measures to increase the probability of the execution of the signal, such as trading on a demo account until you receive two losing positions and only then moving to a real one. There are plenty of ways and methods of trading in the world, and every day millions of traders try to conquer the market.

In this article, we shall have a look at the pros and cons of both systematic and situational trading, discuss their differences, and speak about the practicability of each of them.

Systematic trading

Here, we are talking about a simple indicator-based system that will give the same signals to a dozen of different traders. As a rule, systematic trading does not allow for more than one opinion about the current market situation; the trader just needs to open a position and wait or to wait for a signal to enter the market.

In one of our posts, we spoke about the Ichimoku indicator. At first glance, it seems too complicated, but it boils down to trading the trend and waiting for the entrance signal to form. After that, we open a position and wait for the signals to form. For example, if the price breaks through the Ichimoku Cloud bottom-up, then you can buy.

If the price breaks through the Cloud top-down, the trend is likely to be descending, so you can sell. You do not need much time to make a decision, following the rules is enough.

Sure, in the times of a flat, you will be getting the breakaways all the time and either be opening and closing too many positions bringing no profit or suffering a series of insignificant losses. However, as soon as a trend begins, the market will be bringing the prices farther and farther from the entrance point. In such a case, you simply need to move the SL and hold the profit until the market reverses and closes your position.

Pros of trading along with the rules

It can often be heard that a good system is no more than 20% of success on the market while the remaining 80% is the ability to follow the rules of money management and stick to your own rules in the hard times, which will happen periodically.

As Victor Niederhoffer used to say: "In investments, as well as in life, the question is not whether you will be knocked down but when it will happen and whether you will manage to get up and keep fighting. The risk of failure is an essential part of human experience which is especially visible on financial markets dominated by speculation, which is the readiness to accept commercial risks".

A huge advantage of such an approach is the easiness of market analysis and decision-making. The lines have crossed — we sell, the lines have crossed back — we close the position and open a new one. If we hand the method to other traders, they will see the same crossings and will sell the same way due to the signal lines crossing. What is more, the trader feels less emotional pressure as he leaves decision-making to the system.

A drawback here is the behavior of the system in a flat. In such a situation, the prices remain in place, while the trader receives signals both to buy and to sell, constantly locking in losing positions.

Situational trading

This approach to trading and market analysis is different from the systematic one. In most cases, situational trading is graphic analysis where traders look for various patterns, such being, for example, Head and Shoulders, the Wolfe Waves, or any other pattern of technical analysis.

The difficult part here is that on D1 the Head and Shoulders pattern may be inversed, while on H1 it may be normal, and this is perplexing. What is more, if other graphic traders look at the very same chart, in the same lines they might see a Triangle or any other pattern, or simply say that it is not worth entering against the trend here.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the CopyFX project by RoboForex' invites you to take part in the following competitions:

The 143rd competition of "Demo Forex" and 399th competition of "Week with CFD" have just started.
The 533rd competition of "Trade Day" begins on 08.02.2023 at 12:00.
The 447th competition of "KingSize MT5" will start on 09.02.2023 at 20:00.

If you are visiting our website for the first time and want to become a participant of our demo competitions, you just need to create an account and upon completing a simple registration procedure you can participate in any of the contests you like with just a couple of mouse clicks.

We invite everyone to our contests and wish you all good luck!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How To Trade the Abandoned Baby Pattern

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will get acquainted with the candlestick analysis strong reversal pattern "Abandoned Baby". Let's look at the features of its formation, and the trading techniques for this pattern.

How the “Abandoned Baby” pattern is formed

The Abandoned Baby candlestick pattern is a rare, strong reversal pattern that forms on the local highs and lows of the price chart. It consists of three candlesticks. The first one has a normal body, and the second one is a doji candle (it has practically no body, the open and close prices being almost the same). The third one closes in the opposite direction to the first candlestick. The second candlestick should have gaps (price gaps) on both sides.

As noted by the guru of candlestick analysis Steve Nison, the appearance of a doji after a strong white candlestick indicates the current overbought state of the financial instrument. And vice versa: the appearance of a doji after a black candlestick indicates an oversold condition of the asset. In the "Abandoned Baby" pattern, a doji opens with a gap from the first candlestick, followed by a gap in the opposite direction, with the third candlestick closing thereafter to confirm the reversal.

"Abandoned Baby" is very similar to "Morning Star" and "Evening Star" in its formation principle, but differs in the appearance of a doji candlestick with a gap on both sides. "Morning Star" and "Evening Star" do not require the average candlestick to be a doji or have gaps on both sides, so they are much more common on price charts.

“Bullish” pattern “Abandoned baby”

This is formed during a downtrend, at the lows of the price chart. The first black candlestick appears first. Against the backdrop of negative market sentiment, the next trading session opens with a gap down, but the "bears" do not succeed, and a doji appears on the chart. Seeing the weakness of the sellers, the bulls seize the initiative: the third candlestick opens with a gap up and closes with a confident white body.

A bullish "Abandoned Baby" reversal pattern forms on the chart as a result. Buyers have managed to seize the initiative, and are ready to keep pushing the price up. If the "bears" fail to close the gaps and drop the quotations below the doji low, the "bulls" are likely to go on the offensive and initiate an upward correction or even a trend reversal.

How to buy on the bullish “Abandoned Baby” pattern

• During a downtrend, a bullish "Abandoned Baby" pattern appears on the local lows of the price chart
• It is advisable to open a buy position when the price rises above the maximum of the third white candlestick in the pattern. Stop Loss is set at the doji low
• To set Take Profit, you can be guided by Fibonacci retracement levels from the previous downtrend, significant support, and resistance levels

How to sell on the bearish “Abandoned Baby” pattern

• During the upward trend, a bearish "Abandoned Baby" pattern is formed at the local highs on the price chart.
• A sell position can be opened after the price decreases below the third black candlestick in the pattern. Stop Loss is set at the doji's maximum.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Choose a Timeframe for Trading?

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will speak about choosing a timeframe for trading. This is an important part of your trading strategy.

What is a timeframe?

A timeframe is a time interval for representing the quotations on the chart. As a rule, price movement is represented on the chart as candlesticks (or bars) with the same period, corresponding to the chosen timeframe. The larger the timeframe, the bigger "volume" of the price movement is shown by each candlestick on the chart.

You may set up any timeframe for the price chart but normally traders use basic conventional timeframes:

• MN is a monthly timeframe, each candlestick shows the price movement during a month.
• W1 is a weekly timeframe, each candlestick shows the price movement during a week.
• D1 is a daily timeframe, each candlestick shows the price movement during a day.
• H4 is a four-hour timeframe, each candlestick shows the price movement during four hours.
• H1 is an hourly timeframe, each candlestick shows the price movement during an hour.
• M30 is a 30-minute timeframe, each candlestick shows the price movement during 30 minutes.

The timeframe is chosen in the trading terminal. In such popular terminals as MetaTrader 4 and MetaTrader 5, there is a table of active buttons for the main timeframes on the Instrument board. Left-clicking the buttons, you can quickly switch from one timeframe to another.

How to choose a timeframe?

To analyze the price chart, we normally use not one but several timeframes. Analyzing the price movements on several timeframes, the trader receives a vaster picture of the dynamics of the financial instrument. This helps to forecast price movements for different intervals depending on your trading strategy.

While for the general analysis of your financial instrument you may use all timeframes at once, for making trades you need a "narrower horizon". In many trend strategies based on the main rules of tech analysis, we usually choose two timeframes:

Timeframes for long-term trading

Long-term trading normally means a relatively small number of trades that remain in the market for a long time - from several weeks to several months. This trading style is similar to investing: you choose an instrument that promises a substantial movement and make decision mostly based on fundamental analysis.

Criteria for long-term trading:

• Little time for trading: you spend less than 1/5 of your worktime on it.
• The deposit is large, you may enter the market with a large position for a long term, place big Stop Losses, and withstand deep drawdowns (from 50,000 USD).

As the main timeframe for long-term trading, on which you will define the main trend and its aim, the MN (monthly) and W1 (weekly) timeframes will be the best. As an additional timeframe for finding entry points, use D1. In the picture, you can see these timeframes in use:

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project will continue, as usual, with the following demo competitions:

The 143rd competition of "Demo Forex" has been running since last Monday.
The 400th competition of "Week with CFD" has just started.
The 534th competition of "Trade Day" will start on 15.02.2023 at 12:00.
The 448th competition of "KingSize MT5" will start on 16.02.2023 at 20:00.

We remind you that all winners of our contests receive prize funds to their real accounts, and they can use them to earn money on the Forex market instead of investing their own savings as the initial deposit.

Join us!

Sincerely,
RoboForex Contest

 

[Vlad RF]

RoboForex: upcoming changes to the trading schedule in view of Presidents' Day in the US

Dear Clients and Partners,​

We are informing you that there will be some changes to the trading schedule during the Presidents' Day in USA.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading on CFDs on US indices (US30Cash, US500Cash, USTECHCash) and Japanese index JP225Cash

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual

.
Schedule for trading on Metals (XAUUSD, XAGUSD) and CFDs on oil (Brent, WTI)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

Schedule for trading on CFDs on US stocks

• 20 February 2023 – no trading.
• 21 February 2023 – trading starts as usual.

R StocksTrader platform

Schedule for trading on US Stocks, US ETFs, CFDs on US Stocks and ETFs

• 20 February 2023 – no trading.
• 21 February 2023 – trading starts as usual.

Schedule for trading on Metals (XAUUSD, XAGUSD), CFDs on Crude Oil (BRENT.oil, WTI.oil) and US Indices (US500, US30, NAS100)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

cTrader platform

Schedule for trading on Metals (XAUUSD, XAGUSD)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

Please take note of the above trading schedule changes when planning your trading activity.

* – This schedule is for informational purposes only and may be subject to further change.

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, a RoboForex project called ContestFX will offer you the following competitions:

The 143rd competition of "Demo Forex" has gained "cruising speed".
The 401st competition of "Week with CFD" has just kicked off.
At 12:00, February 22nd, 2023, the 535th competition of "Trade Day" begins.
At 20:00, February 23rd, 2023, the 449th competition of "KingSize MT5" begins.

It does not take much effort and time to participate in our competitions - all you need to do is to go through a simple registration procedure on our website, and then you will get access to all of our contests in just a couple of mouse clicks.

Good luck!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How To Use the Rate of Change (ROC) Indicator in Trading

Author : Victor Gryazin

Dear Clients and Partners,​

In this material, we will introduce you to the Rate of Change trading indicator. We will consider the peculiarities of its work, the formula for its calculation, and the signals that can be used in trading.

What the Rate of Change indicator shows

Rate of Change is a technical indicator showing the magnitude and speed of price change over a specific period. It compares the quotation of the current time period with the past ones, indicating the percentage of change in the price. The obtained data helps to evaluate the current dynamics of the selected financial instrument. Rate of Change is like the popular Momentum indicator.

ROC helps to determine what kind of trend the market is currently in and whether it is accelerating or slowing down. The greater the growth of the indicator, the stronger the optimism of the market crowd and the higher the probability that prices will continue to rise. A drop in the indicator value indicates an increase in pessimism in the market and the likelihood that prices will continue to fall.

Rate of Change is plotted in a separate window below the price chart and is represented as one main calculation line and a horizontal 0 level. The ROC line confirms (or does not confirm) the breakdown and rebounds from the support and resistance lines on the price chart, and helps determine the direction of the current market trend:

• A rising ROC above 0 confirms that an upward trend is in force
• A below 0 and falling ROC confirms the presence of an active downtrend

The formula for calculating the Rate of Change

ROC = (Close(i) - Close(i-n)) / Close(i-n) * 100%

Where:

• Close(i) - the last closing price.
• Close(i-n) - closing price of n periods ago.
• n - is the period of the indicator.

This indicator in its classic version is used with a default period of twelve. It is always possible to experiment, evaluate its work with other periods on historical data, and choose the most suitable one for your trading.

Installing Rate of Change in the trading terminal

Rate of Change is not a pre-installed indicator, so to use it in the popular MetaTrader 4 terminal, you need to download and install the indicator file. The file can be found on the Internet or on the website of MetaQuotes Ltd.

To install the indicator in the MetaTrader 4 main menu, go to File, select Open Data Folder → MQL4 → Indicators, and copy the file to this folder. After restarting the terminal, ROC will be installed in the Custom Indicators folder.

Next, install it on the chart of the desired instrument through the main menu of the programme: Insert → Indicators → Custom → ROC. It is usually used with default settings (Rperiod=12), you can customise the colour and style of the main line.

Rate of Change trading signals

Rate of Change is not a pre-installed indicator, so to use it in the popular MetaTrader 4 terminal, you need to download and install the indicator file. The file can be found on the Internet or on the website of MetaQuotes Ltd.

To install the indicator in the MetaTrader 4 main menu, go to File, select Open Data Folder → MQL4 → Indicators, and copy the file to this folder. After restarting the terminal, ROC will be installed in the Custom Indicators folder.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Choose a Currency Pair for Trading in Forex?

Author : Victor Gryazin

Dear Clients and Partners,​

A beginner trader often asks themselves: which currency pair should they choose for trading? In this review, I will address the most popular currency pairs and enumerate the criteria for choosing the most suitable ones.

What is a currency pair?

A currency pair is the quotation of two different currencies that constitutes a currency rate and acts as an object of operations in Forex.

The standard view of a currency pair is:

Base currency/Quote currency

A trade operation means that the trader sells or buys the base currency against the quote currency.

The base currency is the one on the left – it is the currency that you sell/buy. The quote currency is the one to the right – it expresses the price of the base currency.

For example, look at the EUR/USD (Euro vs US Dollar) currency pair:

• EUR is the euro, base currency
• USD is the American dollar, quote currency
• The current exchange rate of EUR/USD is 1.1270. which means 1 euro costs 1.1270 US dollars.

Forex is the world's largest financial market, displaying the current dynamics of global trade. It features a huge number of currency pairs – from famous to exotic ones. The most popular currency pairs which constitute the biggest volume of world trade are called major pairs. They are most often used for trading.

The characteristics of major currency pairs

Major currency pairs in Forex and the pairs that consist of the most popular currencies of the world economy. Presently, such currencies are the USD, EUR, JPY, CHF, GBP, NZD, AUD, CAD. It would be logical to add the CNH, or the Chinese yuan, here, but the rate of this currency is controlled by the Central Bank of China, so the CNH is not traded that actively.

• EUR/USD is the euro vs the US dollar. It is the most popular currency pair. The trade volume of the currency pair is maximal here, while the spread is small and volatility is average. It is most active during the European and American sessions and reacts vividly on the news in the Eurozone.
• USD/CHF is the US dollar vs the Swiss franc. Most often, it goes counter the euro/dollar pair; it moves calmly and has a small spread. The Swiss franc is a safe-haven asset, thus the pair may go down during crises. It is most active during the European and American sessions.
• GBP/USD is the British pound vs the US dollar. The currency pair has increased volatility and is popular among traders. It may demonstrate mighty movements of several patterns or trigger nearby Stop Losses by false breakaways. The pound reacts dramatically to political events and economic data in Britain. The pair is most active during the European and American sessions.

How many currency pairs do we use in trading?

Many traders wonder how many currency pairs they should use in trading. I think, there are two approaches to the issue depending on your trading style:

Minimum pairs

This approach is based on the fact that each currency pair is peculiar, and the nuances of its behavior may be studied if you focus on one or two pairs. Spending some time on mastering one pair, learning the factors that influence it (important news, macroeconomic statistics), you may get a certain advantage.

A wide range of pairs

This approach is based on the use of certain trading patterns, Price Action patterns, candlesticks, etc. Having learned to find some pattern on the price chart and having made sure of its efficacy, we may start trading. For this approach, using a lot of currency pairs is reasonable: you scan the charts, find patterns, and get started.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team