Today I want to start detailing the entry rules and settings.
The first thing to set is the PotenzaFX indicator.
As you know, PotenzaFX can use many different algorithms to determine the strength/weakness of each currency. For this trading system I’m using Algo 4 that is the one based on the “BB Percent R”.
For those who don’t know the BB%R, it’s a range indicator for the Bollinger Bands. We have a value of 100 (%) when the price is at the upper BB, a value of 0 (%) when it is at the bottom BB, a value of 50% when it is at the middle MA. When the price breaks the upper band we have values above 100 and vice versa, when it price breaks the lower BB we have vales below 0.
Using PontezaFX with Algo 4 we can have values above +100 and below -100. And those two values are our “trigger” levels.
- The currency must close with a value above the +100
- When the currency comes back and closes below the +100 we SELL that currency.
We have to wait a close ABOVE the +100 and a close BELOW the +100. The come back close below the +100 doesn’t need to be immediately after the close above it but it may take one or more bars to come back. It doesn’t matter.
- The currency must close with a value below the -100
- When the currency comes back and closes above the -100 we BUY that currency.
We have to wait a close BELOW the -100 and a close ABOVE the -100. The come back close above the -100 doesn’t need to be immediately after the close below it but it may take one or more bars to come back.
What does it meant to SELL/BUY a currency?
It means that we SELL/BUY it against all the other 7 currencies.
For example. USD goes above the +100 and then it comes back below +100. It means that we have to SELL USD against AUD, CAD, CHF, EUR, GBP, JPY and NZD.
How does it convert?
- We BUY AUDUSD
- We SELL USDCAD
- We SELL USDCHF
- We BUY EURUSD
- We BUY GBPUSD
- We SELL USDJPY
- We BUY NZDUSD
So if USD is the first currency of the pair, we sell that pair (if we have to sell). If it’s the second we buy the pair (if we have to sell USD).
This ways, each entry signal generates 7 trades. Next time I’ll explain more in details how to EXIT each trade and then how to filter trades to avoid opening too many trades and working only with the trades with the higher potential.
I want to remember you that Summer Sales coupons are still valid and that you can get ANY of our indicators and EAs with up to 50% discount.
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Have a great profitable summer!