Algorithm strategy Forex «Sedona»:
This forex strategy is based on the ideas described in the textbook Boris Shlesberga «Technical analysis in foreign exchange markets.» The strategy we will use the benefits of trade, which give us the inactive trading hours forex trading.
Consider the essence of forex strategy «Sedora» for example, the currency pair GBPJPY. The largest volume of trades on the cross-rate recorded during the Asian and London trading sessions. At that time, as after the close of the London session, the afternoon trading in New York, large movements of this pair, basically, is not observed. In addition, due to the fact that financial markets in London and Tokyo closed, the important economic news that could have an impact on the yen, pound or not.
Exchange setup forex strategy «Sedora» are simple:
- At the 15-minute chart, we set the indicator EMA with a period of 62 (Exponential Moving Average).
- Just install and indicator RSI (9).
- In addition, we draw a rectangle on the chart, which tells us the beginning and end of the session for the currency pair. That is, if we are trading on the currency pair GBPJPY, the beginning of our session will be the opening of the trading session in Asia, and the end of the rectangle to coincide with the end of the trading session in London (ie, our time period of 20:00 ET — 12:00 ET — the next trading day).
- During the session, we need to fix maximum and minimum, then we need to know whether there were forex indicator RSI during this maximum or minimum in the overbought or oversold. If forex indicator was in the extreme zones, hence we need to place a pending order.
In particular, we are considering an example, the RSI was first in the overbought zone, then into oversold territory, and we can open a trading position to buy because the price is at the bottom of our-drawn rectangle. We can enter the market at any point, which is located in the bottom fifth (ie the bottom 20%) of our rectangle. In our example, the rectangle is restricted trading levels of 239.91 and 236.81 (210 points), we can enter the market at any price that is below 237.3.
Safety stop-loss set at 20% below the bottom (236.39), and the first profit target at the MA EMA62. Then we can either take profits or move stop loss to breakeven and wait until the price on the chart goes to the other side of our «box». If the period of stay in a rectangle, the RSI did not go into extreme zones (overbought or oversold), we should not take any action to buy or sell a currency pair.
Trades are opened only in the range of non-active hours. For our chosen pair — the pair is the interval between 12:00 ET (closing trading in London) and 20:00 ET (the opening of trading in Tokyo).
Fig.1
Fig. 2
Exit the trade deal, according to forex strategy «Sedona»:
All open trading positions should be closed before the start of active trading hours.
Risk Management:
According to this strategy, forex trading, I use different techniques to enter the market. In case of opening the long trading positions, rather than one entry with the risk of 2% of the sales deposit, I put three limit orders at the bottom of the rectangle and at 10 and 20% from the bottom of a risk in this case 0.5% on every order. In this case, if triggered stop-loss, I will lose 1.5% of the deposit, and if the opening of the transaction will go against me, and then unfold in the traded my direction, I still have 2 / 3 trading position at the prices, the best from the first closed .
Propose a more carefully analyze the trade deal, which was written above:
And so according to the chosen risk management, the 1 st trading position was opened at a price of 237.02, then the price went to 236.82 — to the bottom of the rectangle, after which she still turned around, and the last position was at a price of 237.23. Then the price went to the goal at 237.77. We can fix the two trading positions at this level and move the stop loss for the third trading position to break even.
As you can see, before the opening trading session in Tokyo, the price reached the level of 238.40 before the opening happened at the rate of 237.90. If we closed all three trading positions at a price of 237.77, we closed the average profit in the settlements amounted to 75 points, or 205 dollars for a deposit of 10K. Average risk for this transaction amounted to only 63 points or $ 150. Compare this with a profit of 54 pips (128.57 dollars) and the risk of 84 pips ($ 200).
The author of this forex strategy states that also trades on the currency pair GBPUSD. Rectangle for it builds up in between 3:00 ET and 17:00 ET. Commercial transactions concluded in the interval between 17:00 ET and 03:00 ET the next trading day.
