Back With the Future

Ciao a Tutti,

the post of today illustrates a style of trading with FuturoFX that is completely different from scalping. I’m talking about “end-of-day trading” that requires only 5 minutes per day, 5 times per week. The profit potential is about 300 pips per month when trading EURUSD, so you’d better take note of this novel approach.

Before you get too excited looking at the equity above (6 months of testing, tomorrow I’ll add the results of other 6 months), let me explain that this technique can only be used by traders who have a fairly good experience with markets. A solid understanding of support/resistance concepts is absolutely required.

Here is the basic logic for using FuturoFX as an end-of-day trading tool:

  • open two FuturoFX charts around 00 GMT each day: H1 and H4 timeframes
  • make sure the “average projection” and “best projection” don’t look messy on either charts
  • determine if the projections on the two charts show “some agreement” (I’ll explain better this point later)
  • if you can figure out the probable price pattern for the next day then enter a pending order with fixed SL and TP and with expiry 24 hours later
  • in few cases (“strong agreement” beteween charts) a market order is required instead of a pending order, but always with fixed SL and TP levels
  • SL and TP must be placed according to both price action suggested by FuturoFX and relevant support/resistance areas
  • when you open the trading platform the next day at 00 GMT you should close the trade from the day before, if it is still open; then you can look at the H1 and H4 charts for deciding the next trade
  • do not enter any trade if the charts look messy and you cannot figure out the probable price action for the next day (usually you’ll enter only 2 or 3 trades per week)

Don’t worry, the technique is not so complex as it may seem. Let’s make a couple of examples. The following two charts were opened at 00 GMT on the 30th Nov 2011:

As you can see both H1 and H4 charts suggest a clear upsurge of EURUSD, but with a possibility of a small retracement before the actual bullish movement. That’s why I decided to enter a Buy Limit @1.3300 with TP @ 1.3400 and SL @1.3250. Both SL and TP were chosen looking at recent price action on the H1 chart.

The next example is more complex (it shows “some agreement” between the two charts). The following two charts were opened at 00 GMT on the 13th Jan 2012:

You can notice how the most probable direction according to the H4 chart is bearish. However the H1 chart also suggests a false breakout of the recent high before the actual bearish move. That’s why I decided to enter a Sell Limit @ 1.2860 with TP @1.2700 and SL @ 1.2900.

Most of the times the Risk/Reward ratio on these trades is extremely low. Many trades don’t get triggered and only 58% percent of trades are winners, however the average win is more than twice the average loss.

I believe this is a system for making some serious pips when used by a trader with some experience. We are also considering if we should launch a signal service based on this technique, which is simple and robust at the same time.

Tomorrow I’ll post other 6 months of testing (from April to October 2012) using this technique, along with other information on FuturoFX.

Stay tuned! 😉

PS. Don’t forget that this week is our “Free From Guardian Celebration Week” and you can get a 15% discount on ANY product on this website using this coupon: PIMP-YEKA-NOGU

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