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DISCLAIMER: the below strategies have been submitted to us by members of PowerTradeLive.com. These strategies should not be taken as trading advice, nor are they necessarily the opinion or recommendation of PowerTradeLive.com. It is the responsibility of the user to thoroughly test any strategies before using live funds and to only use risk capital in any trading account.
Bellevue Strategy
Thanks to the Bellevue, Washington group for putting together this great strategy!
First let's talk about which currency pairs to trade. Because some currencies can move hundreds of pips in a short time it is important to find pairs that share close correlations and to trade what are called "Currency Rings".
A Currency Ring is any set of currency pairs that share the same amount of currencies.
Here are some examples of individual currency rings:
AUD/JPY
AUD/USD
USD/JPY |
CHF/JPY
CHF/USD
USD/JPY |
EUR/JPY
EUR/AUD
AUD/JPY |
EUR/USD
EUR/AUD
AUD/USD |
GBP/JPY
GBP/USD
USD/JPY |
EUR/CAD
EUR/USD
USD/CAD |
EUR/CHF
EUR/GBP
GBP/CHF |
EUR/CHF
EUR/USD
USD/CHF |
NZD/JPY
NZD/USD
USD/JPY |
EUR/JPY
EUR/GBP
GBP/JPY |
EUR/USD
EUR/GBP
GBP/USD |
EUR/JPY
EUR/USD
USD/JPY |
GBP/CHF
GBP/USD
USD/CHF |
GBP/JPY
GBP/CHF
CHF/JPY |
Now that we know which pairs to trade, how often should we get in and how often should we take profit?
The basic strategy is to get in at 25% of the currencies daily range and take profit at 50% of the currencies daily range. This would be considered aggressive compared to getting in at 50% of the daily range and taking profit at 100% of the daily range. Because each currency pair is different from the others in daily range we need to use the daily range indicator.
Once you have set up one currency ring per trading account, you need only monitor the account and make sure you are not overtrading by using too many lots per trade.
It is good to trade multiple accounts and spread your risk out, by being conservative with the quantity of lots you trade from the beginning.
If you had $10,000 to trade and intended to trade a total of 0.1 lots, you could start by trading only 0.03 lots and wait until the currency pair with the largest amount of average monthly movement had moved one half of a months worth of pips. Then, increase your lots to 0.06 lots and wait until there was an additional one half of one months movement before increasing to 0.1 total lots.
The currency ring that has the most activity is the GBP/USD, USD/JPY and GBP/JPY.
Load all three of theses charts on the trading station and add the USD/CAD to the group as a place holder for arranging the charts in a two up fashion. The USD/CAD also gives you a place to drag and drop the Cash Grabber if you are going to use it.
So now that you have chosen your charts, you need to attach the Power Trader Template to the chart. Make sure your charts are on "D1" as the time period. (see example)
A Daily Range Indicator is included with the Power Trader to help you find the daily range of a currency. Look for the "ADR" in the left hand corner of each chart that Power Trader is attached to. You may want to have a calculator on hand to help in determining the entry and exit points for your trades.
Now that you have loaded your template to each chart, click on the smiley face of a chart and choose the "Common Tab". Un-check the "Enable Alerts" as these tend to be annoying.
Next, click the "Inputs" tab and Double click the word "false" and change it to true. You do not need to input the account number on demo accounts.
Next, double click the "0" to the right of the word "Grid_Size", this is where you type the value of how often you want Power Trader to enter a trade as the currency pair moves.
Next, double click the "0" to the right of the word "Take_Profit", this is where you type the value of how often you want Power Trader to exit a profitable trade.
Now click the "OK" button at the bottom of the box and you are done with that currency pair. You must repeat this for each currency pair.
Don't worry if you make a mistake, just click "Reset" or "Cancel" and start over by re-clicking on the smiley face.
Remember to never click on the buttons that say "Load, Save".
Note: the easiest way to measure the success of a currency ring is to only trade one ring per account.
Click here for a screen shot of what your trading station should look like when it is set up correctly.
→ → →
Happy "pip"ing!
 A Currency Ring is any set of currency pairs that share the same amount of currencies. 3 currency pairs that contain 3 currencies.
If you do not understand the concept of a currency ring, let's start at the beginning.
1) If you buy the EUR/USD, that means you are buying the Euro and selling the US Dollar.
2) If you buy the USD/CHF, that means you are buying the US Dollar and selling the Swiss Franc.
3) Therefore, if you buy both currency pairs, you are effectively buying the Euro and selling the Swiss Franc (the EUR/CHF, what we call the cross-pair.)
An example of a completed ring:
1 lot of the EUR/USD
1 lot of the USD/CHF
.8 lots of EUR/CHF completes the ring.
(approximate - see below calculator)
When you buy the EUR/USD and USD/CHF, you are effectively buying the cross-pair (EUR/CHF). By adding the cross-pair to your trading, you can create an equalized currency ring that helps to stabilize your PowerTrader strategies.
For the curious mathematicians:
The product is 1 and we can confirm by calculating the numbers below.
Prices as of May/21/2007, 04:00 EST
EUR/USD = 1.3506
USD/CHF = 1.2273
EUR/CHF = 1.6578 The total of the ring:
1.3506 (EUR/USD) * 1.2273 (USD/CHF) * (1 / 1.6578 (EUR/CHF))
The result is "1"
(note - small variations such as .9998 or 1.00001 are due to inefficiencies in broker pricing)
Please fill out the WHOLE form. The results will show at the top of this page.
Please use the following as guide:
Pair 1:
Pair 2:
Cross-pair: |
Currency #1 / Currency #2
Currency #2 / Currency #3
Currency #1 / Currency #3 |
Example:
Example:
Example: |
EUR / USD
USD / CHF
EUR / CHF |
The Bellevue Group can be reached and joined at Meetup.com
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