Automated Forex Signals posted to this site. Beta update.

I have been working for several months on how to best publish automated forex signals on this site. My tentative conclusion is that I am able to publish the following signals at present, along with charts and will endeavour to have this up and running, free of all charges, within the next 1 month.

I will provide the following signals, as they occur, for educational purposes only.

These will be provided at the following operational timelevels

DAILY; HOURLY; 15 minute (30 minute – see below)

On the following instruments

EURUSD

USDCAD

GBPJPY

US500 (S&P500) cash index

The signals are informative rather than signs to absolutely execute a trade in the market.

They should be watched and studied and in no way constitute investment advice. Past performance does not inicate future performance, your capital is at risk and this website and its owner will not be held responsible or liable in case that any educational information on this site is read to constintute trading or investment advice.

SIGNAL 1: MOMENTUM MU (μ)

  1. An advance warning signal that momentum may be changing direction on a currency, commodity or stock market index (Warning 1).
  2. A second warning signal that momentum may be changing direction on currency, commodity or stock market index (Warning 2).
  3. An unfiltered* signal to the effect that momentum seems to have changed to a particular direction (Warning 3).

*in sideways and choppy markets, warning 1,2,3 might signal in either direction. I like to see warning 1,2,3 come together in that order, and within 3-5 candles on the operational timeframe.

Many more pairs and instruments will be provided in a private members area that I am setting up. Check back regularly for updates.

SIGNAL 2: ‘STRONG’ REVERSALS

  1. These signals will show where a reversal candle has been posted, demonstrating strength as defined by an algorithm I have been working on recently to improve filtering of reversal candles.
  2. Reversal candles should in the vast majority of cases be used as a guide to an imminent reversal. As such, it is invariably best to use the following two rules of thumb.
  3. Rule of thumb (i). Seek to enter on a 38.2%, 50% or 61.8% retracement of the reversal candle – for example, when the signal posts, the closed reversal candle will be visible as the most recent or second most recent candle to have closed. Entry should be by buy limit (for up reversals) at a retracement area, not immediately, sell limit (for down reversals) at a chosen retracement area.
  4. Rule of thumb (ii). A stop is invariably placed between 3 and 10 pips/ticks above the reversal candle, depending on timeframe used and the target.

SIGNAL 3: MOMENTUM NU (v) – 30 minute chart only

  1. These signals will fire off when the price reaches a point that a proprietary measure of momentum is aligned across multiple timeframes.
  2. The two entries are:
    1. Immediately on the signal firing (aggressive)
    2. Awaiting a retracement to the 50% level on the M30 or H1 charts.

SIGNAL 4: OVERBOUGHT / OVERSOLD

  1. These signals should be used as a signal that a reversal might be imminent, or that the immediate market may have become overheated.

 

Coming soon... signals every day. Pepperstone Group Limited

Gold and Aussie updates

Both Gold and Aussie have reached their targets with not much sign of abating. Here are the update charts.

These relate to this post on trading the Aussie dollar and this post on gold trading.

Firstly the Aussie dollar you will recall the entry from this post on entry signal for Aussie dollar US dollar.

This outcome has been powerful following that trend and from buying a new entry into zone 3 (NB the zones have been marked slightly off, the numbers in the chart – 1,2,3,4 should be LOWER down within the respective channel).

Follow up to channel trading Aussie

We will go through each part as a summary.

Firstly, we were looking at waiting for a retrace into zone 4, followed by a strong reversal back into zone 3. This occurred 21 candles from the right, counting left (see the first image – I have redrawn the channel lines so they may be slightly different).

We said it is worth waiting for a 40, 50 or 60% retrace of such an entry candle and this occurred during the next candle, giving us our entry.

A possible first target then becomes the top of zone 2.

Note, there are other possibilities for targets. For instance, you could use the level of ZONE 2’s top and ZONE 1’s top AT THE TIME OF ENTRY for alternative (and more conservative targets.

The stop marked on image 2 is a sensible position to put the stop, underneath the most recent swing low. It could also follow a break of say 10-15 pips below the channel bottom. I prefer the swing low stop, because sometimes the market will spike below a channel, but then close back inside the channel to and the channel may remain valid.

Target 2 is the level of the top of zone 1.

It can easily be seen that the risk:reward ratio for this trade no matter which target is outstanding. Getting it right only 40% of the time if aiming for target 2, would yield a profitable result if consistently maintained over the long term.

The stop loss: 35 pips (30+2 spread+3 slippage)

The take profit at each target and risk:reward ratio

T1: 55 points profit vs. 35 pips potential loss. = 1:1.5 risk reward

T2: 100 points profit vs 35 pips potential loss. 1:2.85 risk reward

100 trades at 1:2.85 risk reward, with 60 incorrect (40% success rate)

= -1(35 x 60) + 1(100×40)

= -2100 + 4000

= 1900 pips (net profit).

As for the gold trade, this has also reached the extension target mentioned in the earlier post.

Here was intial trade call – NB I was sick over Christmas, hence the use of a mobile app image.

Daily gold chart – buy on the close of the day after the first retrace day of a strong upmove

Here was the first follow up image, including a target area for the extension.

Gold Daily – has followed though from Quantisi Ltd’s entry.

And here is the result, I am delighted to present:

Let’s go through this post-analysis.

Firstly, we’ve been through the entry several times, I suggest going back over the previous posts on gold for the entry.

I’ve added into this chart the possible options for stops we could have used. I opted on a discretionary basis for the option 2 stop or thereabouts, essentially in case of a nasty spike down at a higher level, which did not occur. Therefore, I had to scale down position sizing in order to be able to reasonably accept the potential loss of the stop, unfortunately, but that is the nature of discretionary decision making.

Stop options 1a, 1b, and 1c would have meant that the market had to take out the low of the day prior, the day prior to that, or 3 days prior to the entry candle, again all reasonable and increasingly liberal places to put a hard stop and effectively, accept a loss.

None of these stops would have been hit.

Target 1 is not an unreasonable first target to aim for because it is a hit of the top Bollinger Band. These bands are simply an extension above and below the 20 day simple moving average. The distance from the moving average above and below the bands are 2 standard deviations of the price during that 20 day period. These are the standard settings. Assuming normally distributed prices around the moving mean (the simple moving average), the price ought to stay within the bands approximately 95% of the time. Therefore, when the price hits or exceeds above or below the bands, it can be a time to look for reversals. There are notable exceptions to this, just as there are notable reasons one might consider ‘obeying’ the Bollinger Bands. We’ll go through this in another post.

As can be seen, yesterday and today, the extension target (2) has been hit at 1200. Although there are chances of gold going much higher, I will be coming back to gold later now this trade cycle has completed itself.

Coming soon... signals every day. Pepperstone Group Limited