I'm just funded a live Oanda account and am waiting to go live on this method next week.
Memorise these words, because they're all you need to know:
(method thread on FF: http://www.forexfactory.com/showthread.php?t=52515)
This method is perfect for Australians IMO. Especially equities traders on here - once you've finished with the ASX around 4-5, you've got a decent break til around half 6, then at 7 you spend 30-60 minutes scalping your pips.Originally Posted by linuxtroll on ForexFactory
Just to save you the hassle of reading all 125 pages of the thread at FF (although if you like what you see here, I HIGHLY recommend reading every single post of that thread or buying LT's e-book), a summary of the development of that thread & the method to date;
What you need:
1. Choose one currency pair and note the times when it is at its most active - this method is best used on/after London open (7pm in AEDT or 5pm in AEST) when Paris, Frankfurt, London, Tokyo, Hong Kong & Singapore are all trading with each other.
2. Lots and lots of screen time - best way to learn this method is sign up for demos with Oanda/EFX and just jump in and out all over the place and learn like how a baby does when it touches a hot stove - that's the beauty of Forex.
once you're ready to go live you need:
1. A live Oanda account with your chosen currency pair on a 5sec 'Average Price' chart (see below for different rainbow setups)
2. A live account with a ECN broker (Market makers (IG, CMC, IBFX, GFT etc) are not recommended, although Oanda has been described the most transparent MM broker to use for this method if ECN broker is not an option) - most popular on FF is EFX: www.efxgroup.com - they're about to announce they'll accept accounts denominated in currencies other than Uncle Sam's Dollar - this is why I'm going live with Oanda initially (as they offer AUD already).
*** Oanda's FXGame (demo) has a new beta that allows you to have multiple chart profiles
Rainbow #1. This is the one I will be using. Not a colourful rainbow, but a rainbow nevertheless!
- In Oanda, select your currency pair, set it to Average Price and 5 seconds (I like to colour the price line differently (red) to the rest of the rainbow so you can clearly see the movement when the WMAs compress)
- Next start filling the chart with WMAs. Bottom left: Add Study, select WMA, then in the textbox next to the Add Study drop down list, put in '10' and click the '+' symbol.
-- Repeat this step incrementing the WMAs by 10 until you reach 240. (10, 20, 30, 40.....210, 220, 230, 240).
- Colour all the WMAs the same colour, and I also colour the slowest WMA something different as well - this is what people at FF will refer to as the spine.
- Go to Tools Menu, and select Save Current Profile (otherwise you'll lose the WMAs next time you log in).
Rainbow #2. A real colourful rainbow! Essentially you're doing the same as #1, except the WMAs are tighter and coloured differently according to their group.
- Again do your Average Price line (I colour it red so as it matches the first 4 WMAs)
- Start your WMAs at 6 and increment by 6 until you reach 150.
-- Colour the first 4 WMAs red - this is referred to as the flame.
-- Colour the next 3 WMAs orange
-- Colour the next 4 WMAs yellow
-- Colour the next 2 WMAs green
-- Colour the next 3 WMAs light blue
-- Colour the next 3 WMAs dark blue
-- Colour the next 5 WMAs purple
-- Again, with the spine I like to make it stand out (I colour it white).
- Tools > Save Current Profile.
Whichever rainbow you choose, make sure your Oanda chart is zoomed right out (bottom right corner there's a '+' and '-' which alter the zoom level) so as the timeframe across the top and the corresponding vertical lines are in 5 minute blocks - this is important because high probability entries are triggered when price (is above the spine and) moves through these timeframes as well as price levels of 10 (i.e .10, .20, .30, .40, .50, .60, .70, .80, .90, .00 etc etc).
Patience and Discipline are very much key: wait for the trend to be set after London open - look for the support / resistance ranges and when you see breakout commence scalping in the same direction. Remember, all you need is 10 pips a day, and as the great man LT says, go out and golf thereafter (although, for the vast majority people reading this thread, we'll all be ready for bed soon after grabbing our 10 pips ).
I've been keenly observing AUD/JPY whilst demoing and will go live with this pair for serveral reasons:
- It's one of the cheapeast JPY crosses to trade on EFX (whose commission is $5 USD per 100,000 USD traded) - 1 pip round trip on EFX, whereas GBP/JPY (the JPY cross that moves the most) costs over 2 pips round trip in commission. Oanda (although not recommended but my only option initially) has a fixed 4 pip spread and no commission.
- It's also a pair that you can leverage highly depending on your account denomination (i.e if you're denominated in AUD or USD, you can buy a lot more AUD/JPY than GBP/JPY or EUR/JPY) and money management.
- It moves very nicely along with GBP/JPY and EUR/JPY around European and American opens
- It moves nicely (naturally) around Tokyo open
Watch this space.