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5 min Momo strategy

Discussion in 'Forex Trading Systems and Strategies' started by SXMTrader, Jul 14, 2009.

  1. SXMTrader

    SXMTrader Private

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    Hello,

    I found a very easy and promising strategy, called "The 5 Minute Forex Momo Trade". It is similar to the one I am using right now.

    It is only using Macd standart settings 12,26,9 and 1 Eponential Moving Average 20.

    I use 3 moving averages, 5, 10, 20 and macd, 5 min chart, EUR/USD, USD/CHF, AUD/USD and GBP/USD

    Before I start to explain in my (not so good english) I like to ask you to have a look on the following link and to come back to get your opinion.

    This strategy is from Kathy Lien and Boris Schlossberg and available for everybody.

    www.investopia.com/articles/forex/08/five-minute-momo.asp

    I made 6 trades yesterday all winners! We just have to avoid news!

    Hope to start a thread, because this is a real strategy, easy to use and can be profitable for everyone.

    Holger
     
    #1 SXMTrader, Jul 14, 2009
    Last edited: Jul 14, 2009
  2. rpaco

    rpaco Sergeant

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    Sorry but the link does not work Investopedia will not load in my browser at all. I get a message saying there is a problem with their servers.
     
  3. Sigmund

    Sigmund Recruit

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    Why don't you just give us the strategy?

    Hi SXMTrader,
    You must have noticed by now that the link you provided is not working. Investopedia is inaccessible so why don't you just let us have the details of the 5min momo strategy.
    Thanks.
     
  4. mike boyer

    mike boyer Recruit

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    Google this and some of the terms within. Thats how you will find the web page!
     
  5. mike boyer

    mike boyer Recruit

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    RPACO, Is this still working out for you?
     
  6. rpaco

    rpaco Sergeant

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    Waste of time! If you have the link, post it; otherwise what is the point of starting a thread here, unless your intention is to annoy everyone.

    FYI Google track your every move unless you use "NoSript" and they give all info to one of the many US security services. No only that but that also sell the info to spammers.So I never use Google. 90% of commercial web pages have a google script in them, just run "noscript" in your browser addons.
    I use IXQuick instead of google, it is a lot quicker. (It does not have to report to your NSA)
    Ixquick Metasearch

    It seems the Investopedia site is up again, will have a look later.
     
  7. duck

    duck Private, 1st Class

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  8. SXMTrader

    SXMTrader Private

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    Link!

    Yes, Duck found the link. I was not able to join this tread for a while sorry.

    Sorry that the link is not working. I copy the complete text with the setup and all info you need from the original website:

    Some traders are extremely patient and love to wait for the perfect setup while others are extremely impatient and need to see a move happen quickly or they'll abandon their positions. These impatient traders make perfect momentum traders because they wait for the market to have enough strength to push a currency in the desired direction and piggyback on the momentum in the hope of an extension move. However, once the move shows signs of losing strength, an impatient momentum trader will also be the first to jump ship. Therefore, a true momentum strategy needs to have solid exit rules to protect profits while still being able to ride as much of the extension move as possible.

    In this article, we'll take a look at strategy that does just that: the Five-Minute Momo Trade.

    What's a Momo?
    The Five Minute Momo Trade looks for a momentum or "momo" burst on very short-term (five-minute) charts. First, traders lay on two indicators, the first of which is the 20-period exponential moving average (EMA). The EMA is chosen over the simple moving average because it places higher weight on recent movements, which is needed for fast momentum trades. The moving average is used to help determine the trend. The second indicator to use is the moving average convergence divergence (MACD) histogram, which helps us gauge momentum. The settings for the MACD histogram is the default, which is first EMA = 12, second EMA = 26, signal EMA = 9, all using the close price. (For more insight, read A Primer On The MACD.)

    This strategy waits for a reversal trade but only takes advantage of it when momentum supports the reversal move enough to create a larger extension burst. The position is exited in two separate segments; the first half helps us lock in gains and ensures that we never turn a winner into a loser. The second half lets us attempt to catch what could become a very large move with no risk because the stop has already been moved to breakeven.

    Rules for a Long Trade
    Look for currency pair trading below the 20-period EMA and MACD to be negative.
    Wait for price to cross above the 20-period EMA, then make sure that MACD is either in the process of crossing from negative to positive or has crossed into positive territory no longer than five bars ago.
    Go long 10 pips above the 20-period EMA.
    For an aggressive trade, place a stop at the swing low on the five-minute chart. For a conservative trade, place a stop 20 pips below the 20-period EMA.
    Sell half of the position at entry plus the amount risked; move the stop on the second half to breakeven.
    Trail the stop by breakeven or the 20-period EMA minus 15 pips, whichever is higher.
    Rules for a Short Trade
    Look for the currency pair to be trading above the 20-period EMA and MACD to be positive.
    Wait for the price to cross below the 20-period EMA; make sure that MACD is either in the process of crossing from positive to negative or crossed into negative territory no longer than five bars ago.
    Go short 10 pips below the 20-period EMA.
    For an aggressive trade, place stop at the swing high on a five-minute chart. For a conservative trade, place the stop 20 pips above 20-period EMA
    Buy back half of the position at entry minus the amount risked and move the stop on the second half to breakeven.
    Trail stop by lower of breakeven or 20-period EMA plus 15 pips
    When trading the Five Minute Momo strategy the most important thing to be wary of is trading ranges that are too tight or too wide. In quiet trading hours where the price simply fluctuates around the 20-EMA, the MACD histogram may flip back and forth causing many false signals. Alternatively, if this strategy is implemented in a currency pair with a trading range that is too wide, the stop might be hit before the target is triggered.

    Conclusion
    The Five-Minute Momo Trade allows traders to profit on short bursts of momentum, while also providing the solid exit rules required to protect profits.
    by Kathy Lien and Boris Schlossberg, (Contact Author | Biography)

    Boris Schlossberg runs BKTraderFX, a forex advisory service and is the senior currency strategist at Forex Capital Markets in New York, one of the largest retail forex market makers in the world. He is a frequent commentator for Bloomberg, Reuters, CNBC and Dow Jones CBS Marketwatch. His book, "Millionaire Traders" (John Wiley and Sons) is available on Amazon.com, where he also hosts a blog on all things trading.


    Kathy Lien is an internationally published author and the director of currency research at GFT. Her trading books include: "Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings" (2005), "High Probability Trading Setups for the Currency Market" E-Book (2006) and "Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game" (2007). Lien also runs an FX Signal Service, BKForex Advisor, with Boris Schlossberg - one of the few investment advisory letters focusing strictly on the 2 trillion/day FX market.

    Trading this strategy make sure to trade with the trend. This helps to avoid false signals. Check the 1 hour time frame for the trend and trade on the 5 min time frame. Use it on different pairs and you can get some nice pips every day. If you trade against the trend, which can make some pips, put your stoploss tight!
    Go on google: "the five-minute forex momo trade" and you will find the original post.

    Hope this helps.
     
    #8 SXMTrader, Aug 7, 2009
    Last edited: Aug 7, 2009

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