Constructing the charts

After being away from these markets for a while I would like to start afresh. The basic idea is to find trades that are simple to identify, simple to manage, have good risk reward profiles and also leave open the possibility of running a balance should a strong trend emerge.

To begin with I have constructed a base template which is based on the  100 and 90 EMA´s. A 95 ema is used to measure the point distance price runs away from the moving averages, thus it gives a good visual as to what the potential risk and reward may be on any particular pair.  Over time I will change the moving averages to suit each individual pairing although I do not want to go back to using my longer moving averages for the moment.

The most difficult part of trading moving averages is of course whipsaw. To that extent I will use three indicators which will assist in keeping me on the positive side of the ledger. The first will be Laguerre with a gamma setting of between 0.66 to 0.8 depending on the volatility of the pair. The second will be a woodies CCI with the settings 100/50. The last will be the usage of a Bollinger Band Stop indicator with the settings based on 21 - 26 periods , standard deviation of 2 and money at risk of 1.0.

Ok thats the basics of the chart. I will also use an ATR based  indicator that paints the forcast high and low projection for the day based on the previous 20 period average true range which will assist in profit taking. Pivot points, an information indicator and a simple EA for management of the position.

For those that are not familiar with EA´s ( Expert Adviser) they are automated programs that run in the MT4 . Update Stops is a simple EA that places the pre programmed stop levels, adjusts the stop to breakeven aftr a set amout of points have been reached and also takes partial profit at predefined levels. Its simple, easy to use and will assist me if I am not at the screen to manually manage the trade.

Basically we are left with a chart that looks like this -