Forex Signals Details

Before reading further please make sure you have read my previous post.

Overview:
Each day signals are generated between  6PM to 8AM EST ( 8AM to 10PM AEST, 7AM to 9PM JST, 10PM to 12PM GMT) It may vary slightly depending on daylight saving time. On FXDD charting platform it would be 0000 to 1500. Read here to understand why we use FXDD charts. This include complete Asian and European Session and few hours into US session. From my experience I’ve noticed that market would trend in one direction during these hours and would likely to reverse after that. Our goal is to catch trending market and hence later hours of US session are not very ideal. The pairs we will trade are GBP/USD, EUR/USD , A DUSD, USD/CHF, USD/JPY, AUD/JPY, CHF/JPY.

Signal Description:
The signals will consist of Order ID, Entry Point,  Stop Loss and Take Profit Level 1 and Level 2. Updates would be send out if the order is filled and if it hits  Stop Loss or Take Profit.  I will update blog at the end of the our trading day with the summary of trades.  To receive timely updates I would suggest using Twitter. http://twitter.com/FirePips

Some orders may not get filled in time and those orders would need to be cancelled. I’ll send updates to keep you informed. Open trades at the end of the our trading day would be managed on per trade basis and I’ll send update for those as well.

Stop Loss and Take Profit levels include spreads already. I’ll assume 2 Pips spreads for GBP/USD, EUR/USD, AUD/USD, USD/CHF, USD/JPY and 3 pips for AUD/JPY and CHF/JPY. If your broker has higher spread then you would need to add the difference. See the example below.

Each signal would consist of two Take Profit Levels. Once the Level 1 has been reached we would then move the  Stop Loss close to Break Even point. We leave a margin of two pips so that we don’t get stopped out due to a sudden pullback. See example below. For sake of consistent record keeping we will use Bid price from FXDD platform.

Money Management:
For each trade risk not more than 1% of your account equity. The easiest way to find out how many lots you can trade is by multiply your account equity by 0.01. Divide that number by pips of  Stop Loss.
Further to be very accurate divide the resulting number with the Pip Cost.  This will give you the exact number of lots that you can trade.

Most brokers would list Pip Cost on their trading platform. A Pip Cost is different from general assumption that  1pip=$10 on a standard account. These days it is between $11 to $14. It is quite important if you are trading with large account.

Example:
Lets say there is a Sell signal on EUR/USD. Signal would look like this:

Order ID: 1
Entry:  EUR/USD Sell 1.4100
Stop Loss:  1.4150
Take Profit 1: 1.4050
Take Profit 2: 1.4010

When placing trade divide the total lots (derived from Money Management section above) by 2. Set the same Stop Loss initially for both and different Take Profit levels. If the Order gets filled and reaches Take Profit 1 we need to move  Stop Loss for second half of the position. In example above once the price reaches 1.4050 we then move the  Stop Loss to 1.4104 ( 2 pips for safety margin and 2 pips for spreads).

Remember to add more pips if you broker has higher spread. Say your broker has 3 pips spread then your initial stop loss would be 1.4151. After the Take Profit 1 is reached your Stop Loss would move to 1.4105. Same goes for Take Profit level.  Take Profit 1 would then become  1.4051 and Take Profit 2 to 1.4011. Remember that I’ve already added 2 Pips for spread at the time of sending the signal.

In  case of a Buy order only the Entry price needs to be modified if your broker has higher spreads. So if the order is to Buy at 1.4100 then you buy at 1.4101. There is no need to modify  Stop Loss or Take Profit levels.

Updates:
Regardless of an Order gets filled or not I’ll send an update to let everyone know. There would be regular updates via Twitter as we go along the trading day. Updates would look like this:

  • Order ID: 1 Filled at Entry.
  • Order ID: 1 Reached Take Profit Level 1. Move  Stop Loss to 1.4104
  • Order ID: 1 Reached Take Profit Level 2.
  • Order ID: 1 No Fill. Cancel.
  • Summary 07/14: 90 Pips Profit.

That’s all there is to it. Lets get started.

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5 Responses to “Forex Signals Details”

  1. Riaan van Eeden 31 July 2009 at 7:08 am #

    Looks very promising!

  2. Deja 31 July 2009 at 9:14 am #

    Hello, your signals look good but I dont know how to get them quickly? Twitter doesnt do sms (unless its to vodaphone) nor send email updates – so if we are not at our computer with twitter page on screen how are we supposed to know when a trade is sent or amended plz?

    Hope u can help – thx

    Deja

  3. David McClain 3 August 2009 at 1:42 am #

    Hello,where and How do i sign up to get the trading signals to my e mail inbox?

  4. admin 4 August 2009 at 8:47 am #

    Hi Deja,

    I see your point. Other traders have mentioned the same issue. I am thinking of introducing SMS service for a very small fees, I'll let everyone know once I've worked it out.

    Regards

  5. Jerome 24 August 2009 at 10:09 pm #

    Yes please an sms service would be very much appreciated for us folks not in usa or uk, looking forward to it.


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