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What is Forex? Advanced technique #9 (System Selection Technique)


How to profit trading
Forex
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Advanced strategies Subm itted by Edwa rd Re vy o n Se pte m be r 18, 2008 - 10:21.
Range-bound Trading Choosing the right strategy for trading is a strategy by itself. (from Edward)
Money Management & All credits and special thanks to Arsalan, the author of this technique.
Exit Strategies
Forex Scalping --------------------------------------------------------------------------
Tips and Facts
Forex Brokers Hello everyone and thank you Mr.Edw ard Revy for publishing my ADX+EMA SY STEM.
Scalping systems
I want to share one very good idea w ith everyone.
Forex systems with MT4 This is not a trading strategy but a technique to determine w hich system to use and w hen. There are many systems
custom indicators
available to use some are trend follow ing systems like moving average crossover and some are oscillator based system
Systems in development
Trading methods & ideas which utilize indicators such as Stochastic, Rsi and William %R but if all these systems are good then w hy they w ork
Create own Forex system sometimes and sometimes they fail?
Forex Trading Tips
The reason is selection of a good system at wrong time. New! Simple 714 system
Forex Polls - results
FSR Forex Forum We can overcome this problem with the use of one simple indicator ADX(14) New! Indicator trend line
system
The level of ADX can help us to decide w hich system to use at a given point of time.
Now let me explain you how to accomplish this goal. Exits: Keep every pip

PLOT ADX(14) ON CHART FOR YOUR CURRENCY PAIR. Pivot points - 25% rule
IF...
MACD + Fast Stochastic
1)ADX is below 20 - USE OSCILLATOR BASED SYSTEM(RSI,STOCHASTIC ETC.)
Search
Black Magic system
2)ADX is above 30 - USE TREND FOLLOWING SYSTEM(MOVING AVERAGE,MACD ETC.)
Custom Search
Black MACD simple strategy
3)ADX is at 45 or above it - BOOK PROFITS.(Wait for new entry)

4)ADX IS RISING FROM LEVEL BELOW 18 AND THEN GOING ABOVE 23 - USE TREND FOLLOWING SYSTEM. SuperSar strategy

5)ADX DECLINING FROM LEVEL ABOVE 30 AND THEN GOING BELOW 27 - USE OSCILLATOR BASED SYSTEM.
A Poll for Live Traders
The above mentioned method w ill help you select right system at right time. This system selection technique w orks very share your live experience or
well according to my experience. read what others have to say.
I want to tell you again that this technique only helps to select right system at right time and it is not a holy grail.

I hope everyone will like this system selection technique and use it to improve their trading.I use this for trading in stocks
and hope it w ill w ork w ell in the forex market. Who's online
A GOOD SYSTEM NEVER FAILS IT FAILS ONLY BECAUSE IT IS USED AT A WRONG TIME. There are currently
online.
Happy trading,

Regards,

Arsalan.

-----------------------------------------------------------------------------------------------------

Greetings from Edward!

As an update I'm posting a screshot and explanations to it, to help everyone to understand this great method from
Arsalan.

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10/19/2010 Advanced technique #9 (System Sele…

You can help thousands


improve their trading!

There are 3 blocks:


1. The market is moving sideways
2. The market is trending
3. The trend is weakening, re-evaluation of forces begins

Block #1:

The market is moving sideways.


We can simply see it, but also we can get clues from ADX indicator, which now stays below 20.
Signals of which indicators should use for trading in this conditions? We use everything but trend indicators:
- Bolliger bands - the price will bounce off BB levels.
- RSI - react to oversold/overbought zones
- Stochastic - Stoch crosses, especially those in oversold/overbought zones.
As you can see in Block #1, they all give true signals.
Unlike MACD, which is revolves around zero line, crossing back and forth. It is useless.
Also Moving averages (which I didn't put on the chart, it is too messy already :), they also will give false signals, and thus
should be ignored.

Block #2:

The market is trending, w hich is confirmed by ADX, it moved past 20 and is rising.
What indicators and systems to use? Use trend follow ing indicators obviously:
- MACD is good.
- Moving averages would be good.
Unlike now RSI and Stochastic - they will remain in oversold /bought zones (depending on a trend) for a long time.
Unlike also Bollinger bands - the price won't obey its boundaries anymore.

Now , ADX reaches 45 - it is time to think about collecting or protecting profits. The trend is mature. We look for the clues
from our trending indicators. In this case the earliest signal is received from MACD histogram (circled in purple), w hich
changes color from red to green. Later confirmation for those w ho missed, comes from MACD lines crossover; and even
Stochastic and RSI finally come out from oversold zones (small letter "c" - confirmation - on the chart).
When traders are out the trend begins to weaken, ADX starts to fall, price retraces upw ards.

Block #3:

- ADX is falling, w hich means the trend has gone, at least temporarily.
We don't know whether it is going to continue or not, so w e seek advice from indicators, but not a single one - a group of
them.

ADX in this case becomes useless until it begins to rise again.


Why? While ADX is falling two things may happen: first - the trend w ill take a break - ADX w ill continue to fall; second -
the new trend (uptrend in our case) may begin sharply - ADX will also continue falling only confirming that a downtrend is
weakening yet more. (During sharp turns in the trend ADX is late w ith a responce, a recognition of new trend. During
slow turns it is accurate.)
So, whether a new uptrend begins sharply or an old downtrend w eakens, ADX w ill show the same tendency - it w ill fall
suggesting no clear trend... That's why we don't use ADX when it is falling.

So, later in block #3 we get a strong Sell signal from all 4 indicators:
- price meets BB and retreats,
- RSI overbought,
- Stochastic overbought,

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10/19/2010 Advanced technique #9 (System Sele…
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Subm itte d by User o n Se pte m be r 20, 2008 - 00:09.

very insightful.
could u post some charts to illustrate?

Subm itte d by Edward Re vy on Septe m ber 20, 2008 - 03:46.

Done!
»

Subm itte d by Arsala n on Septe m ber 20, 2008 - 12:59.

Hi,

There is no need for any visual explanation through chart because all you have to do is plot adx for your currency pair
and look for the level of adx if it is 30+ then use trend follow ing system and likewise you can check at what level is adx
and then decide w hat kind of system to use whether trend following or oscillator based and then just use your
systems buy sell signal to trade.I have clearly explained at what level what kind of system to use in my strategy.
I think there is no need to explain this method through chart because it is so simple to understand and apply.

Let me give you an example of how to use this method.


Eg.Suppose i plot adx(14) for currency xyz and the level of adx for it is at 33 i.e. it is above 30 so according to my
system selection technique i will use trend following system like Macd, moving average crossover etc. to trade this
currency and all i will have to do is to use my trend following systems buy sell signal and in the similar way if adx level
w ould have been below 20 i would have used oscillator based system like stochastic,rsi etc.I hope you after reading
the aforementioned example all your doubts will get clear and if you still do not understand then ask about your doubt
specifically and so that i will be able to answer you easily and clear your doubt.

Happy trading,

Regards,

Arsalan

Subm itte d by Andy o n Se pte m be r 21, 2008 - 17:37.

Look very good.


Thank you so much for detailed description and bothering to share it with us!

Andy

Subm itte d by ve nka ts on Septe m be r 22, 2008 - 12:41.

Hi Arsalan,

It seems to be a very good explanation for using an appropriate system.It is indeed very insightful,and thank you very
much for this guidance.

venkats.

Subm itte d by Arsala n on Septe m ber 23, 2008 - 02:59.

You are welcome Andy

Arsalan

Subm itte d by Arsala n on Septe m ber 23, 2008 - 02:59.

You are welcome Venkats

Subm itte d by User o n O cto ber 8, 2008 - 20:00.

hello,
great system. please i'm not very conversant with the uses of ADX. please can you explain to me its uses. because
w hen i checked it on he chart i noticed 3 different lines.I w onder which line w ill I consider.

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