Forex Trading Techniques: Three efficient cases
Expert: Adrian Aquaro, Head of Trader College LLC and True Market LLC
Start: March 7, 2006 - 15:00GMT 10EST
End: approx. 16:00GMT 11EST
Topics that will be covered for above session are:
- Alexander Elder: Effective filter
- Walles Wilder: ADX
- D´Agostino Technique: Intraday Trend Analysis.
Who is Adrian Aquaro?
Adrian Aquaro has been a trader for the last 3 years, specializing in the International Foreign Exchange Market and acting as an Introducing Broker for the Latin America market. He heads True Market Services LLC and is also the director of Trader College LLC. He has vaste experience in forex education, making of him a leader in this particular part of the financial services industry.
Speech Material:
Analysis Techniques
Alexander Elder Technique: Effective filter. Introduction
Alexander Elder, is a famous trader that has wrote the bedside book “Trading for a living”. One of the numerous systems and techniques he describes in this book, is this trading system based in a filtered way to get into the market, that we can describe like this:
Getting into the market, bull or bear is based on a combination of Momentum of 14 sessions, and a MA of 13 or 20 sessions; it works like this:
1. When Momentum crosses the 100 line, is an alert
2. The price, must close below or above the selected MA (this requirement is called first momentum condition filter)
3. When conditions, 1 and 2 are accomplished, we get into the market, bull or short.
4. We have submitted this strategy to a big number of test, and we find out it gives very good results, in EUR and GBP charts, in 30 minutes and 1 hour, with a 25 pips for trade.
5. Stops must be placed whenever a condition disappears.
Visually: Click to enlarge:
Walles Wilder Technique: Directional Movement Tendency detector
J. Walles Wilder developed the Average Directional Index (ADX) in order to evaluate the strength of the current trend, be it up or down. It's important to determine whether the market is trending to or if it is moving sideways, because different indicators give more useful information depending on what’s the market doing.
ADX is derived from two other indicators, also developed by Wilder, called the Positive Directional Indicator (sometimes written +DI) and the Negative Directional Indicator (-DI).
ADX combines, the +DI (blue line in the chart, representing the bullish directional movements) and the –DI (bearish directional movements, red line in the chart) and then smoothed the information with a moving average, that shows an average of the tendency strength. Because of the use of both + DI and – DI, ADX (green line in the chart) it doesn’t give a certain information about the tendency, but determinates the exact strength. Generally, readings over 40 indicates a strong tendency, and readings under 20 a poor one. To take a tendency since it’s beginning, you must look for ADX coming over 25. On the contrary, you can assume the actual tendency weakness when it’s starts to come down from 40.
Interpretation: Click to enlarge
1. Selling cross: -DI (red line) crosses over +DI (blue line). Notice that green ADX line shows a range over 25%
2. Buying cross: +DI (blue line) crosses over –DI (red line) and after, +DI crosses over ADX, confirming the tendency is going on with its directional movement.
3. Selling cross: and then –DI crosses over green ADX line, shows the movement is holding on.
4. ADX line crosses over 40 and come back: shows a possible exhaust of the tendency.
5. False signal and signal correction: notice that the indicator immediately gives an out of the market signal, in a loosing trade, and at the same time, gives a contrary into the market signal: meaning you have to leave the bullish trade, and go short.
6. Buying cross: see how the ADX line works as a resistance for the +DI line, and then, the price can not find new maximums and the movements gets LATERAL
D’Agostino Technique (IT). Horizontal analysis intraday tendencies
Dr. M. d’Agostino, cofounder of Trader College, has developed a trading technique, denominated IT (intraday trading). Is a short term strategy, that takes advantage of two conditions: at first, it looks for the maximums and minimums of the last four sessions, candles or bars, in a 1 hour chart, excluding the actual one.
1. You have to establish support and resistance, in the maximum and minimum of those last 4 sessions. That’s the first condition that gives us a market alert.
2. Use as filter a MA of 10 sessions, typical price (Max+Min+Close/3), and then wait for the break of the support and resistance established in 1., and the price to be at 8 pips from the typical price.
3. Taking bullish positions: when the price has broke the resistance of the last 4 sessions maximum (excluding the actual one) and passed over 8 pips from the TP moving average.
4. Taking bearish positions: when the price has broke the support of the last 4 sessions minimum (excluding the actual one) and passed down 8 pips from the TP moving average.
5. Stop Loss: this system is quiet secure, because the stop must be placed 17 points plus spread under (bullish) or above (bearish) the into the market price. Or, when the hour session is finished, above (bearish trades) or beside (bullish trades) the 10 typical price MA
6. Take profit: We recommend to put a trailing stop every each 15 pips (that means, moving your stop loss in the way of the trade) securing at least 10 pips from the into the market price. Example: buy 1.2050, initial stop loss 1.2030, actual price 1.2065, then move your stop to 1.2060, and so on.
Graphically:Click to enlarge
Session Transcript:
FXstreet Moderator (Mar 7, 2006 9:56:29 AM)
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Some good new I am pleased to announce that the full transcripts are back for all who would like to enjoy their contents. Please check out our new web blog and post comments and make it a interesting educational place for traders to meet. available after the session
FXstreet Moderator (Mar 7, 2006 9:59:41 AM)
Today I am delighted to welcome our guest speaker Adrian Aquaro, Head of Trader College LLC and True Market LLC
Adrian Aquaro (Mar 7, 2006 9:59:46 AM)
Good morning, good afternoon or good evening. My name is Adrian Aquaro, from Trader College, and I´m very pleased to be here with you again.
Adrian Aquaro (Mar 7, 2006 10:00:06 AM)
Today, we will be talking about three types of analysis techniques.
Adrian Aquaro (Mar 7, 2006 10:00:20 AM)
We have some pre registered questions.
Adrian Aquaro (Mar 7, 2006 10:00:38 AM)
So, we will begin answering them, and after, you can make live questions. Let´s begin
Adrian Aquaro (Mar 7, 2006 10:00:56 AM)
Q: ADX crosses. ¿How many points or pips means a efectively cross? ¿What are the better time frames for this technique? Thanks - Jose Manuel
Adrian Aquaro (Mar 7, 2006 10:01:20 AM)
A: Well, it will depend of the time frame you use. For example, if you are working with 30 minutes chart, an effectively cross could be about 25 points.
Adrian Aquaro (Mar 7, 2006 10:01:40 AM)
If you work with hour chart, 40 points, and for 4 hour chart, 85/90 points.
Adrian Aquaro (Mar 7, 2006 10:01:56 AM)
Actually, you can use ADX in all time frames
Adrian Aquaro (Mar 7, 2006 10:02:29 AM)
but if you are a day trader, you have to work in hour, 30 and 15 minutes charts
Adrian Aquaro (Mar 7, 2006 10:02:48 AM)
Q: For a day trader, what chart should s/he should be initially looking at to make an entry point decision? ahmed.a.salman
Adrian Aquaro (Mar 7, 2006 10:03:07 AM)
A: If you are a day trader, you should look at 4 hour chart to see which is the main trend for the next 12 hour.
Adrian Aquaro (Mar 7, 2006 10:03:27 AM)
Then, you can trade using 30 and 15 minutes charts, they are the most effective ones.
Adrian Aquaro (Mar 7, 2006 10:03:45 AM)
This type of trades allows you to enter a trade and go out of the market in a few minutes, looking for 15 pips, and putting a stop loss close to the actual price, about 12 or 15 points.
Adrian Aquaro (Mar 7, 2006 10:04:14 AM)
Q: What indicators & decision rules should I use to maximize profit on 15 Min & 30 Min chart trades? ngaproperties
Adrian Aquaro (Mar 7, 2006 10:04:34 AM)
A: In these charts, we recommend to use stochastics, if you have a no trend market, and momentum if you have a trend market.
Adrian Aquaro (Mar 7, 2006 10:04:48 AM)
Also, MACD could be a good indicator in this small charts.
Adrian Aquaro (Mar 7, 2006 10:05:18 AM)
As you can see in the text, D`Agostino technique is so useful in short time frames
FXstreet Moderator (Mar 7, 2006 10:05:53 AM)
Thank you so much for that Adrain
FXstreet Moderator (Mar 7, 2006 10:06:00 AM)
lets open the floor to questions
FXstreet Moderator (Mar 7, 2006 10:06:20 AM)
interaction is the key to a educational session
FXstreet Moderator (Mar 7, 2006 10:06:26 AM)
Please post your quetsions noq
cdp (Mar 7, 2006 10:08:24 AM)
In D´Agostino technique I don´t understand the relationship between the Tp and the MA of 10 sessions. Could you explaint it, please? The MA must be an exponential simple MA? Thanks. cdp
Adrian Aquaro (Mar 7, 2006 10:09:09 AM)
well, we use the 10 period simple moving average as a filter
Adrian Aquaro (Mar 7, 2006 10:09:32 AM)
and you have to wait until price crosses this ma to enter a trader
Adrian Aquaro (Mar 7, 2006 10:10:12 AM)
the main thing in this technique, is to wait until price goes above or under the max or min taking the last 4 candles
Adrian Aquaro (Mar 7, 2006 10:10:21 AM)
but also, we have this ma as a filter
Guest (Mar 7, 2006 10:10:44 AM)
Does the D'Agostino Technique work best at certain times of the trading day? Thanks. Jerry
FXstreet Moderator (Mar 7, 2006 10:10:51 AM)
Does the D'Agostino Technique work best at certain times of the trading day? Thanks. Jerry
Adrian Aquaro (Mar 7, 2006 10:11:02 AM)
As you can see in the text, D`Agostino technique works better in small time frames,
Adrian Aquaro (Mar 7, 2006 10:11:17 AM)
and usually, our day trader use it
Adrian Aquaro (Mar 7, 2006 10:11:54 AM)
we recommend to use this technique in 30 and 15 minutes chart
gcx (Mar 7, 2006 10:12:18 AM)
If you use the stochastics in 30 m chart, what is a good setting? thanks
Adrian Aquaro (Mar 7, 2006 10:12:35 AM)
there are two or three combinations
Adrian Aquaro (Mar 7, 2006 10:12:56 AM)
first, you can use only one stoc. and a fast one can be 5-3-3
Adrian Aquaro (Mar 7, 2006 10:13:21 AM)
this stoc. will give you several signal, but no all of them will be good
Adrian Aquaro (Mar 7, 2006 10:13:33 AM)
also, you can combine 5-3-3 and 14-7-3
Adrian Aquaro (Mar 7, 2006 10:14:02 AM)
using 14-7-3 as trigger, and 5-3-3 as a filter
Adrian Aquaro (Mar 7, 2006 10:14:21 AM)
and you can use stoc 8-3-3, is useful in small charts.
Valeria (Mar 7, 2006 10:14:50 AM)
Would like to know how to interpret MACD lines and the strategies i should adopt as trader
Adrian Aquaro (Mar 7, 2006 10:15:04 AM)
You can use MACD in different forms.
Adrian Aquaro (Mar 7, 2006 10:15:24 AM)
At first you can take the signal line crossing zero line, so when you have a cross above zero, you have bearish signal, and vice versa.
Adrian Aquaro (Mar 7, 2006 10:15:48 AM)
Also, you can identify over sold and over bought zones.
Valeria (Mar 7, 2006 10:16:59 AM)
What do you consider a better tool for tradinf fundamental o technical analysisi
Adrian Aquaro (Mar 7, 2006 10:17:23 AM)
A: I think that fundamental analysis is very important, and you have to follow all macro data before trading.
Adrian Aquaro (Mar 7, 2006 10:17:41 AM)
But really, we use technical analysis to follow the market and to trade.
Adrian Aquaro (Mar 7, 2006 10:18:06 AM)
For example, we use an indicator combination, as MACD, Stochastics and CCI, and you can use MA and EMA, combined with Bollinger Bands
Adrian Aquaro (Mar 7, 2006 10:18:32 AM)
There are several systems, but the main thing is to have a system, always.
varun (Mar 7, 2006 10:19:35 AM)
what are the best times to trade the market ?
Adrian Aquaro (Mar 7, 2006 10:19:46 AM)
well, of course, it depends of your trading strategy
Adrian Aquaro (Mar 7, 2006 10:20:09 AM)
if you are a day trader, you have to work with hour, 30 and 15 minutes charts
Adrian Aquaro (Mar 7, 2006 10:20:40 AM)
if you want to put long time trades, you have to use weekly, and daily charts
Adrian Aquaro (Mar 7, 2006 10:20:55 AM)
actually, we prefer to use small time frames, and short time trades
Lou (Mar 7, 2006 10:22:58 AM)
Do you find it easier to learn only a few strategies and stick to them or use many different ones, especially for day trading?
Adrian Aquaro (Mar 7, 2006 10:23:51 AM)
I think that is usefull to know all about all indicators and several techniques, but, really, it is better to work using only one
Adrian Aquaro (Mar 7, 2006 10:24:23 AM)
this way, you can make a right back testing, and try your own strategy
Adrian Aquaro (Mar 7, 2006 10:24:46 AM)
if you use many strategies, you will not find THE strategy
TraderX (Mar 7, 2006 10:25:22 AM)
hello Adrian...........I believe the DMI system gives too many false signals especially when used in trading on smaller time frames, but it is good using daily charts..................wt u say?
Adrian Aquaro (Mar 7, 2006 10:26:42 AM)
if you refer to D Agostino technique, i think that it will give you better signals in short time frames,
Adrian Aquaro (Mar 7, 2006 10:26:58 AM)
we tried it in several charts, from 5 minutes to daily charts
Adrian Aquaro (Mar 7, 2006 10:27:22 AM)
and we discovered that it`s better in hour, 30 and 15 min charts
jmga (Mar 7, 2006 10:27:58 AM)
how many pips do you consider a MA was broken in the Elder Technique?
Adrian Aquaro (Mar 7, 2006 10:28:55 AM)
if you use a 30 or 15 min chart, you can consider broken this MA when you have a new candle above or under the MA, and 7 or 8 pips after.
Adrian Aquaro (Mar 7, 2006 10:29:28 AM)
if you work in 4 hour or daily chart, you need this new open, and al least 20 pips
khaled200200 (Mar 7, 2006 10:31:34 AM)
can you give us example of using CCI and the best set to it.. what work best with it of the other indicators..thanx..khaled
Adrian Aquaro (Mar 7, 2006 10:32:05 AM)
you can combine CCI with MACD, for example, in all time frames.
Adrian Aquaro (Mar 7, 2006 10:32:30 AM)
if you are working in small time frames, you have to set CCI with 14 or 21 period
Adrian Aquaro (Mar 7, 2006 10:33:02 AM)
and if you trade using 4 hour chart, or daily chart, you can set it with 10 periods
Adrian Aquaro (Mar 7, 2006 10:33:40 AM)
when CCI line crosses zero line, and MACD signal crosses zero line too, you have a right signal
jmga (Mar 7, 2006 10:34:18 AM)
D'Agostino Technique. Do this technique need a volatile market? Do you consider this technique works between the european close and the asian open, for example?
Adrian Aquaro (Mar 7, 2006 10:35:04 AM)
well, it s not necessary to have a volatile market, really
Adrian Aquaro (Mar 7, 2006 10:35:51 AM)
i consider that this technique works rigth in all session, but we prefer to use it in american session, as many other techiniques
Adrian Aquaro (Mar 7, 2006 10:36:22 AM)
because this session is the one which has more volume
Adrian Aquaro (Mar 7, 2006 10:36:32 AM)
but actually, it works in all session
FXstreet Moderator (Mar 7, 2006 10:37:05 AM)
Thats all we have time for today
FXstreet Moderator (Mar 7, 2006 10:37:21 AM)
I would like to thank Adrain for hosting todays session
FXstreet Moderator (Mar 7, 2006 10:37:34 AM)
thank you guys for attending and posting your questions
FXstreet Moderator (Mar 7, 2006 10:37:48 AM)
If your question was not answered during the course of this chat, please contact Email Adrian for a personalized answer: email:
FXstreet Moderator (Mar 7, 2006 10:38:36 AM)
info@tcollegeweb.com
FXstreet Moderator (Mar 7, 2006 10:39:10 AM)
Some good new I am pleased to announce that the full transcripts are back for all who would like to enjoy their contents. Please check out our new web blog and post comments and make it a interesting educational place for traders to meet. Transcripts : http://www.fxstreet.com/chat/transcriptlist.asp Available in 1 hour
Adrian Aquaro (Mar 7, 2006 10:39:12 AM)
I´d like to thank you very much for being here today, and I hope we will be here again very soon
Adrian Aquaro (Mar 7, 2006 10:39:23 AM)
Thank you again, and see you!!!
FXstreet Moderator (Mar 7, 2006 10:39:52 AM)
Please register now for a very special session if you would like to join us you MUST register here
FXstreet Moderator (Mar 7, 2006 10:41:00 AM)
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FXstreet Moderator (Mar 7, 2006 10:41:04 AM)
see you all there
FXstreet Moderator (Mar 7, 2006 10:41:19 AM)
Thanks REMEMBER limited seating only 40 can enter
FXstreet Moderator (Mar 7, 2006 10:41:27 AM)
See you all!
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