I will be posting my thoughts and trades on a simple forex trading method which I have been using for a few weeks now. I encourage everybody to participate by reading and discussing the method so that we can all learn from each other.
This method is based on following two market principles which I believe to be true most of the time:
1. Impulse moves/thrust often initiate sustainable trend
2. Once a trend begins, the odds of its continuation is higher than the odds of its reversal.
To identify the impulse moves, I will use Keltner channels which are pretty standard on most of the charting packages. These channels are based on average true range functions placed above and below a moving average. The moving average I use is 20 period exponential moving average and the channels are drawn at 1.5 times this moving average. IMO, the move to 1.5 times its average true range is a warning that there are motivated buyers or sellers in the market.
My entries and exits are based on 30 minute charts. I also look at 4 hour chart and most of the time take only those trades which are in the same direction as the trend on the 4 hour chart. Basically, my entry is triggered if the price touches either the upper (for long) or lower (for short) keltner channels. My initial stop is the other end of the kelter channel and once the trade moves in my favor, I use volatility trailing stops. The goal is to catch a piece of the trend which started with this initial thrust.
For this thread, I will use EUR/USD, GBP/USD, USD/JPY and USD/CAD as trading instruments. I will be posting charts from tc2000. A free web version is also available at (.