I posted this elsewhere a while back, but I thought I'd put it in /forex
and not on the blog, because it's my absolute favourite tool in all of Forexland.
James Stanley is a (very good) trader and educator at DailyFX (Twitter: @JStanleyFX
). He's also very friendly and helpful on Twitter if you have serious questions. Here's the link to the original article
but what I'm going to do is explain it in a little more detail, show you how James uses it, and then explain how I use it for finding entries on longer term trades and breakouts.
There's also this helpful video you can watch: http://www.youtube.com/watch?v=RrxOiAhIlaQ
Right, so before I explain what it is, here's a checklist for WHEN the Fingertrap strategy is effective:
If the answer to all those questions is yes, you're ready to go: 1:
- Is the market trending TODAY? (short term trend, not choppy action)
- Is it nowhere near a place it could? stop (important fib, trendline, the basic stuff)
- Is it the morning of the NY session? (it works best during this time)
- Is it a fairly active pair with a tight spread? (if you're going to be scalping)
switch to an hourly or 2hr chart, so you can see what movement on the day is like. You should be able to spot a strong directional bias if there is one, and you may have already done analysis to find important support and resistance. 2:
Add two indicators: an 8 period EMA (Exponential Moving Average) and a 34 period EMA. I don't know why those numbers, and different combinations might work better on different pairs (EUJPY tends to throw a lot of false signals with this, as does gold, so it's worth experimenting). We use EMAs and not SMAs because they respond more quickly. Here I'm looking at EUJPY on 2hr chart, on 26 April 2013): http://i.imgur.com/9wqd36U.png 3:
Is price clearly above or below BOTH moving averages (eg. it's a downtrend and price is below both, or an uptrend and it's above) AND has the 8 EMA crossed over the 34 EMA (crossed to the downside if you're looking at a downtrend). These two factors are a strong confirmation of a trend, if you need one. 4:
Once you have confirmed that a trend is in place, switch to your preferred scalping timeframe. I usually use 5m or 1m charts. You'll now see that the 8EMA (which is the only one we're looking at from now on) hugs the price quite closely. 5:
If we're in a downtrend, what we are looking for is for price to ideally break through some kind of support, and then to rebound to the 8EMA. It can push through it, even close a whole candle above it, but should eventually move back down below it. This is your signal to enter short.
As you can see from the chart below (same time, 5m chart), it's essential that you determine that there is a trend first and not just some jumping around. http://i.imgur.com/pvjgeKg.png 6:
The idea is to use relatively small trade sizes, and scale in and out of the trade rapidly. When price extends quite a bit away from the 8EMA, that's the time to take partial profits, wait for a rebound to the 8EMA, and then enter again. 7:
The game ends when the 8EMA crosses the 34EMA again, and price is on the other side of both of them
The idea is that, even with strong moves, there are quick pullbacks. This strategy helps to give you an edge in determining where those pullbacks are likely to stop. It's not perfect, but no strategy is. The point is that it gives you a higher probability of entering at a good time (buying relatively low, or selling relatively high), and it also means you can have a lower risk entry (being closer to the last swing high).
Now, I don't get to do a lot of scalping because I have a day job, but I do use this for breakouts, and just any regular old entry as a matter of habit (unless I'm doing a fairly long term trade and 10 pips either way doesn't matter that much to me).
What I will do is wait for a breakout or a strong move in the direction I want. Then I put my Fingertrap template on, and wait for price to "reload" to the moving average before getting in, placing my stop above a nearby swing high. My stop will always be placed while thinking about how long I plan to hold the trade. If I'm looking for a move in GBP/USD from 1.56 down to 1.50, I'm not going to place my stop above the nearby swing high on the 5m chart - I'm going to place it around 1.5650. So you have to use your discretion obviously.
For example, I will be watching EUUSD very closely for a break of 1.3000 or 1.2950, and then employ it from there.
For scalping, the nearby swing high is definitely a good place to put it - if the trade goes that badly away from you, you definitely want to be out.
Give it a try, and let me know if you find it to be helpful! Let me know if you have any questions.
I don't like EUUSD, and I don't like breakout orders. So here's a breakout trade on EUUSD.
I mention it because the last time I saw this was on EUAUD, and that worked out so well I'm kicking myself for taking profit on only 1/3rd of the move.
Here's the trade. 1hr Chart. Pretty straightforward: http://i.imgur.com/YaBJXXG.png
You could use an OCO order, but I personally will be watching it and actively trading it (applying the "Fingertrap" strategy
I just posted about). I've just set up price alerts so my phone will buzz if it hits either of those levels. Notice the two big spikes through 1.2950 - don't like those.
I personally am short from just below 1.300, but given the event risk, and those two big failures to penetrate 1.2950, It's not my favourite trade at the moment.
I don't want to see it break to the upside, because the corresponding USD selling will be terrible for my massively risk-short tradebook. But hey, the market will do whatever it wants ;)
While I no longer scalp much due to the time commitment scalping generally takes (particularly in instruments most effectively traded during the NY session), I used to scalp a great deal when I was in spot forex. The simplest scalping technique I have come across and used exclusively was the "fingertrap method." Although I am not sure who is the originator of the technique, I learned about it ... Forex News; Wednesday, November 18, 2015. Forex : Fingertrap Scalping with James Stanley (Using Tradingview Charts) Forex : Fingertrap Scalping with James Stanley (Using Tradingview Charts) ... James Stanley's "Fingertrap" Scalping Strategy (also good for longer term trading) Indicators. Close. 9. Posted by. 7 years ago. Archived . James Stanley's "Fingertrap" Scalping Strategy (also good for longer term trading) Indicators. I posted this elsewhere a while back, but I thought I'd put it in r/forex and not on the blog, because it's my absolute favourite tool in all of Forexland. James ... Forex : SSI Fingertrap Scalping Forex : SSI Fingertrap Scalping. Posted by Tune Media at 09:00. Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest. No comments: Post a comment. Newer Post Older Post Home. Subscribe to: Post Comments (Atom) About Me. Tune Media View my complete profile. Blog Archive 2016 (956) April (1) March (69) February (405) January (481) 2015 (4119 ... Forex Factory is where professional traders connect to the forex markets, and to each other. Home; Forums ... Trades News Calendar Market Brokers Login Join 1:06am Sister Sites. Metals Mine; Energy EXCH; Crypto Craft; FingerTrap Demo Account XXXXX96 Starting Nov 10, 2014; Expand; Retract; Last Sync: Jul 24, 2015; Overview. Trade Report. Trade Graph. Trade List. Period : All History. Equity ... Fingertrap Scalping with James Stanley (Using Tradingview Charts) 2015-11-18 19:40:00 James Stanley, Strategist. Share: DailyFX provides forex ... While I no longer scalp much due to the time commitment scalping generally takes (particularly in instruments most effectively traded during the NY session), I used to scalp a great deal when I was in spot forex. The simplest scalping technique I have come across and used exclusively was the "fingertrap method." Although I am not sure who is the originator of...