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The Global Forex trading strategy
An FX trading strategy for anytime
The forex markets trade 24h/5d. Trading volume is not evenly distributed over these 24 hours. Due to the time zones, there are large peaks and drops in the trading volume of each forex pair. The forex trading day is thus, naturally, divided into three sessions:
The Asian FX session
From 02h00 to 11h00 CET
The European FX session
From 10h00 to 19h00 CET
The American FX session
From 15h00 to 24h00 CET
Each session therefore has its own unique character.
|Suitable for||: All Forex pairs|
|Instruments||: Futures and CFD’s|
|Trading type||: Day trading and swing trading|
|Trading tempo||: 1-3 signals per day|
|Using NanoTrader Full||: Manual or (semi-)automatic|
Global forex trading around the clock
Two elements are essential: the high-low channels of each forex session and how each new session is consequential to the previous session.
This example shows the three forex sessions. Asia/Tokyo is yellow, Europe/London is light blue and America/NY is purple. After the end of each session, the high-low channel continues for another four hours (dotted lines). When the sessions overlap, the colours change to green (Asia + Europe) and dark blue (Europe + America).
When to open a forex position?
Traders open a forex position when the price in a session reaches the high-low channel of the previous session. This can only happen in the first four hours after the end of the previous session.
Traders can choose between two signals:
- A breakout signal
- A rebound signal
The high-low channel is a resistance line. A break-out signal occurs when price breaks out of the channel. A rebound signal occurs when price collides with the channel and returns.
The trader chooses which signal he prefers. There is no set rule. To make their choice, traders rely on the size of the channel, the direction of the trend, indicators and any economic figures.
This example shows a signal in the European session. The price of the forex pair USDJPY reaches the top of the high-low channel formed by the Asian session that preceded it. This trader chose a rebound signal. This was the right choice.
This example is a signal in the US session. The price of the EURGBP forex pair reaches the top of the high-low channel formed by the European session. This trader chose a break-out signal.
When to close a forex position?
The Global Forex strategy works with a price target order and a stop loss order. The two orders are placed based on the ATR indicator which reflects the current volatility. The profit target is 2x the ATR. The stop loss is 1x the ATR. This gives a return/risk ratio of 2. This is the minimum for traders. Other settings are possible.
This example is a breakout signal in the U.S. forex session. The price rises above the top of the channel formed by the European session. The green line is the profit target (2x ATR). The red line is the stop loss (1x ATR). The trading platform can place these orders automatically.
This example shows a breakout signal in the European forex session. The GBPUSD drops through the bottom of the Asian session. The trader opens a short sell position. The price target is reached. The position is closed with a profit.
A flexible forex strategy
The Global Forex strategy is very flexible. Traders can adjust many parameters.
- Choose between breakout and rebound signals.
- Show one, two or three forex sessions in the chart.
- Change the beginning and end of each session.
- Change the return-to-risk ratio.
- Activate an alarm when a signal appears (sound, pop-up...).
Tip: NanoTrader probably has the best back-test module of any trading platform. Test results appear in real-time! Combinations of forex pairs, forex sessions, price targets and stop orders can be tested quickly and easily. Just activate the equity chart for this purpose.
Using the NanoTrader Full follow these steps:
- Open a chart of the instrument you want to trade.
- Select the template study "WHS Global Forex" in the "WHS Strategies" folder.
- If required, adapt the parameters as described above.
- To trade semi-automatically, activate TradeGuard+AutoOrder in the chart. To trade automatically, activate AutoOrder in the chart.