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Source :
http://olesiafx.com/Kathy-Lien-Day-Trading-The-Currency-Market/Step-Two-dete
rmine-Trading-Time-Horizon.html

Once you have determined that a currency pair is either range-bound or
trending, it is time to determine how long you plan on holding the trade.
The following is a set of guidelines and indicators that I use for trading
dif-ferent time frames. Not all of the guidelines need to be met, but the
more guidelines that are met, the more solid the trading opportunity. 

Intraday Range Trade Rules 

.  Use hourly charts to determine entry points and daily charts to confirm
that a range trade exists on a longer time frame. 

.  Use oscillators to determine entry point within range. 

.  Look for short-dated risk reversals to be near choice. 

.  Look for reversal in oscillators (RSI or stochastics at extreme point). 

.  It is a stronger trade when prices fail at key resistance or hold key
support levels (use Fibonacci retracement points and moving averages). 

Indicators Stochastics, MACD, RSI, Bollinger bands, options, Fi-bonacci
retracement levels. 

Medium-Term Range Trade 

Rules 

.  Use daily charts. 

.  There are two ways to range trade in the medium term: position for
upcoming range trading opportunities or get involved in existing ranges: 

Upcoming range opportunities: Look for high-volatility environ-ments, where
short-term implied volatilities are significantly higher than longer-term
volatilities; seek reversion back to the moan environ-ments. 

Existing ranges: Use Bollinger bands to identify existing ranges. 

.  Look for reversals in oscillators such as RSI and stochastics. 

.  Make sure ADX is below 25 and ideally falling. 

.  Look for medium-term risk reversals near choice. 

.  Confirm with price action-failure at key range resistances and bounces on
key range supports (using traditional technical indicators). 

Indicators Options, Bollinger bonds, stochastics, MACD, RSI, Fi-bonacci
retracement levels. 

Medium-Term Trend trade 

Rules 

.  Look for developing trend on daily charts and use weekly charts for
confirmation. 

.  Refer back to the characteristics of a trending environment-look for
those parameters to be met, 

.  Buy breakout/retracement scenarios on key Fibonacci levels or mov-ing
averages. 

.  Look for no major resistance levels in front of trade. 

.  Look for candlestick pattern confirmation. 

.  Look for moving average confluence to be on same side of trade. 

.  Enter on a break of significant high or low. 

.  The ideal is to wait for volatilities to contract before gelling in. 

.  Look for fundamentals to also be supportive of trade-growth and interest
rates. You want to see a string of economic surprises or disappointments,
depending on directional bias. 

Indicators ADX, parabolic stop and reversal (SAR), RSI, Ichimoku clouds (a
Japanese formation), Elliott waves, Fibonacci. 

Medium-Term Breakout Trade Rules 

.  Use daily charts. 

.  Look for contraction in short-term volatility to a point where it is
sharply below long-term volatility. 

.  Use pivot points to determine whether a break is a true break or a false
break. 

.  Look for moving average confluences to be supportive of trade. 

Indicators Bollinger bands, moving averages, Fibonacci. 

 

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