Forex Trading Rules

My Trading Rules

My Trading rules for trading SimonsADR401 indicator and script on Pepperstone Account.

SimonsADR401 indicator

This is a privately developed indicator that is in beta testing. It uses historical analysis of Forex charts to determine the average wicks and candle body size for bull and bear candles over a selected time period or number of previous candles. This information is used to predict and print the next candle for selected time periods. The indicator is written in MT4 code and is code compatible with MT5.

Typical Chart showing predicted daily candles on a 15 minute chart.

More charts can be viewed here:- http://ozff.org/forex/

Trading Plan

See Contingency Plans below when things don’t go according to plan.

Each Day the following trades could be entered and watched to trail stop losses every 20 pips. If the reward for any of these trades is less than 20 pips the trade should not be taken.

  1. At the start of the day place ONE trade against the SimonsADR candle direction (predicted daily direction) with profit stop at or near wick price nearest the candles stop loss on or a few pips before an appropriate resistance point such as a previous days low or high or a previous recent resistance or support level.  Stop loss should be placed at Risk : Reward of 1:2.
  2. Place a pending at the profit stop placed on the days first trade with stop loss at least 10 pips away ensuring there is plenty of room. Consider the predicted candles stop loss as a possibility taking into account any recent support or resistance lines. Profit stop should be the nearest support or resistance level near the other end of the predicted candle preferably between the close and high/low value depending on whether the candle is a bull/bear.
  3. Monitor these entries throughout the day particularly at 10am, 12am, 2am (New York Midnight) and 4pm (Frankfurt open).
  4. If you’re awake between 3am and 6am the next day consider entering a trade market value back to predicted candles close price.

Other Possible Trades

  1. Trade from Entry Point to closest wick (wick closest to the stop loss) with risk : reward of 1:2.
  2. Trade Entry point to close with a risk :reward of 1.1: 1.
  3. Pending trade from wick to close with stop loss at the setting computed from the predicted candles open or trade entry price i.e. in trade 2. above.
  4. Trades to have a risk reward of 1.1 that are in the candles direction where stop loss is determined by multiplying 1.1 by the potential profit that is the Entry Price to the take profit.
  5. Trades against the candles direction to be half the risk to reward i.e. risk : reward should be 1:2.
  6. Entry Points can and should be influenced by obvious supply/demand or support/resistance or previous daily high and low points. The objective is to use the most likely price points remembering that SimonsADR predicted candle is the most probable based on historical data and should not be considered as a perfect predictor of future events but a best approximation of the most probable price points.
  7. Trades should be set at the beginning of the Asia Range day GMT+9. On the Pepperstone Charts which have a time zone of GMT+2. The Pepperstone daily start candle at 0 is equivalent to 7am AEST (Australian Eastern Standard Time not day light saving time).
  8. It is best to not view the trades again until the following day otherwise there is a chance of self sabotage by panicking with sudden changes in price direction due to news events. The risk:reward setting for GBP/USD has been determined to work best at either 1.1:1 to 1.4:1 and should be enough to soak up wild movements due to news events. The logic is if the daily direction is correct the stop loss should be set to save the account from a disaster, so should be placed far enough away that it won’t prematurely close out the trade before it’s had a chance to move in the preferred direction.
  9. The normal scenario is for the daily movement to be against the trend until the start of Frankfurt or London open or even up to the start of New York trading day which often moves against London. There is often news at 6:30pm AEST or 9:30am – 10am GMT. The first trade will play out up to 4pm AEST when it should be assessed to see if it needs to be manually closed. Seriously consider closing the first trade before the end of Asia. At the same time look at seeing whether the pending trade 2. should be adjusted. Once it turns around 8pm AEST or 11am GMT or 9am New York the major trades should be in profit.
  10. Let the system play out over night and assess the results in the morning AEST time and set the trades for the new day.
  11. If for any reason the trades are cancelled no new trades should be opened as this would compromise the daily risk    !!!!!!!!!

Contingency Plans

When things don’t go according to plan!!! <to be completed>