Step Trading With Opportunities
One of the main concepts in trading is trading with opportunities or possibilities. To do this, we will look at various techniques and strategies in some time frame to determine if we are worthy of open positions (OP). Keep in mind, however, this is not a mechanical / automated trading system. Instead, it is a system where you will receive technical input and make decisions based on it. The key is to find a situation where all (or most) of the technical signals are heading in the same direction. The trading situation with this highest chance, in turn, will generally be profitable.
Creation of Signs on Graph
We will use the free program provided by any forex broker called Meta Trader to illustrate this trading strategy. However, many other similar programs can also be used to get the same results. There are two fundamental things a program or trading platform must have:
Ability to display three different time frames simultaneously
Ability to plan and display technical indicators, such as moving averages (EMA and SMA), relative strength index (RSI), stochastics and moving average convergence divergence (MACD).
We should be able to make a mark on the price chart, such as support and resistance lines, Fibonacci, trend lines and so forth.
Setting up the Indicator
Now we will see how to set this strategy in Meta Trader trading platform. There are several sets of technical indicators with rules associated with it. This indicator technique is used as a filter for your trading decisions.
If you choose to use more indicators than shown here, you will create a more reliable system that will result in fewer trading opportunities. Conversely, if you choose to use fewer indicators than shown here, you will create a less reliable system that will generate more trading opportunities. Here are the settings we will use for this article:
- RSI (15)
- Stochastics (15,3,3)
- MACD (Default)
Chart 1 Hour
- EMA (100)
- EMA (10)
- EMA (5)
- MACD (Default)
Daily candlestick chart
- High School (100)
Adding in Other Studies
Now you want to combine some subjective studies, such as the following:
- The significant trending lines you see in one of the time frames
- Fibonacci retracements, bows or fans you see in hourly or daily charts
- Support or Resistance that you see in one of the time frame
- Pivot points are calculated from the previous day’s charts to hourly and minute charts carefully
- Price graphs you see in one of the time frames
This will be the initial setting for you who want to trade with opportunities with multi timeframe.