Technical Trading Strategies

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Technical Trading Strategies

The Trend Trade

This strategy works best when combined with Fundamental and Sentiment Trading Strategies.

The trend trade attempts to capture a trade in the direction of the overall market trend. This is a trade that should be in line with the current sentiment driving the particular currency and tends to be a day trade because it uses pivots and pivots change every trading day.

Trade Setup:

• In an uptrend wait for the market to pull back.
• Apply the Fibonacci retracement tool from the extreme low to the extreme high.
• Apply trader pivot points.

What we are looking for is a confluence of one of the Fibonacci retracement levels to match with one of the pivot points in the buying zone.

There should be less than 10 pips between the Fib level and the pivot point. The fewer amounts of pips between the 2 levels the better the setup.

The pros are that you can use a small stop loss and have good pinpoint accuracy with the entry. The cons are that price may not pullback for you to get a trigger. Sometimes a confluence will be hard to find.

The same trade management would apply to this trade as pretty much all other trades. We would look to target just before the prior extreme high and place the stop in an area that the market should not hit if you are correct in your analysis.

The trade works in the exact same manner in reverse for a short trade.

The Profile Trade

This strategy works best when combined with Fundamental and Sentiment Trading Strategies.

The profile trade strategy involves buying or shorting the break of the most recent fractal. We talked earlier about how you can take advantage of the market profile changing as a way to get you back into the fundamental trend after it has had a period of price action going against the overall big picture.

Trade Setup:

• Identify the most recent fractal swing high and wait for the price to break that high by one pip then enter a long position. This applies to fundamentally strong pairs.
• Identify the most recent fractal swing low and wait for price to break that low by one pip then go short if the fundamentals are pointing down.
• The stop loss placement goes on the other side of the opposite most recent fractal swing.

One of the best way to use this strategy is with the overnight trades. For example, if there was a strong news release and the London traders moved a currency up through the London session then look to get in on a break of a fractal swing high during the US session. The break of the high during the US session gives us confirmation that the US traders are going to buy the pair up as well.

This strategy is best on a 5 minute chart for intra-day trading but can be on any time frame.

The 4 hour time frame is a nice time frame to get an idea of how price is behaving in relation to the big picture. Sometimes a break of the 4 hour fractal back in the direction of the fundamentals can signal to us that the market is done moving price in the opposite direction and ready to start trading the pair back in line with the big picture.