FREE FOREX SYSTEM – CASH BANDS

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d old tree publishing new funnel tradeology cash 3
d old tree publishing new funnel tradeology cash 3

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Introduction

We want to establish all the fundamental ideas of trading the Cash Bands strategy using this system. The MACD Histogram, Bollinger Bands, and Williams%R indicator are all combined in this strategy.

This is an excellent technique when the value of the currency is fluctuating horizontally rather than heading up or down. It is advised that you utilize this strategy just when the value of the currency is fluctuating if you are a newbie. Let’s start by talking about the numerous indications that make up the system’s foundation.

Moving Average Convergence Divergence (MACD)

Definition/Description

Moving Average Convergence/Divergence (MACD) fundamentally implies moving toward one another (convergence) and moving away from one another (divergence) (divergence). Divergence also has another meaning, although that word is found in a completely another handbook. This indicator is based on three moving averages: a 12-period exponential moving average; a 26-period exponential moving average; and a 9-period simple moving average of the difference between the two.

A crossing of the MACD above or below its zero line, indicating the probable start or end of a trend, would occur each time the EMAs crossed on the charts if a 12 EMA and a 26 EMA were also shown alongside the MACD.

The strength of the trend – divergence – increases with the distance between the 12 and 26 EMAs. The convergence tendency becomes weaker as they grow closer together.

This indicator, which goes above and below a zero line to show market bias, was created in the 1970s by Gerald Appel as a trending momentum indicator. A reading over zero indicates an increasing tendency in the market. The market is in a bearish trend if it is below the zero line.

Moving averages are no longer visible in the MACD; instead, a histogram is used to display them. The signal line leaving the histogram is another signal in addition to the zero line crossing. Our signals will be based on this.

Image 1

Application & Settings

We’ll load our MACD in the same way we did previously, but this time we’ll switch to Oscillators.

1. Insert

2. Indicators

3. Oscillators

4. Left-click on MACD

Image 2

Then, as with the SMA, a pop-up window appears. We’ll plot MACD Histogram Settings (9, 12, 26, Close, Exponential) and keep MACD at the default settings of Fast EMA – 12, Slow EMA – 26, and MACD SMA (single line) 9, applied to close, so your window should appear like the one below.

Image 3

Now we’ll adjust the colours on the second tab, Colors. We’ll go with Red as the main colour (histogram).

Image 4

Next, pick the thickness option as shown….

Image 5

Next, we’ll alter the Signal Color to Blue and have it set to the second thickness level, as shown…

Image 6

Next, go to the Levels tab, hit the Add button, and then press OK twice to add the MACD to your platform.

Image 7

Once on your charts, the Macd will appear like this:

Image 8

Bollinger Bands

  1. Definition/Description

Bollinger Bands, invented by John Bollinger in the 1980s, provide a visual depiction of market volatility. The Bollinger Bands are divided into three sections:

Upper Band – 2 standard deviations higher than the Middle Band. The lower Band is two standard deviations lower than the Middle Band. 20 SMA is the middle band.

The Bollinger Bands contract, or compress together, when the market is calm. When the market is active, the price pulls the bands outward, causing them to widen. When the price is outside the bands, the market is strong. Also, when the price produces bottoms outside the bands and then lower lows, but those lows stay within the bands, the price is likely to turn higher. On the other hand, if the price produces highs outside the bands, then additional highs, but those second highs are within the bands, the price is likely to revert downwards.

When price travels away from the top band, it tends to move to the lower band, and when price moves away from the lower band, it tends to move back to the upper band. This may present targets with chances as well as dynamic support and opposition. Another outstanding aspect of the Bollinger Bands is that when the price is at the higher band, it is regarded as overbought, and when it is at the lower band, it is deemed oversold.

II. Application and Configuration

We’ll use the Bollinger Bands in the same way we used the other indicators:

1. Insert

2. Indicators

3. Trend

4. Make a left-click on Bollinger Bands.

We’ll keep MT4’s default settings when the pop-up window displays, but we’ll alter the colour to orange. The Period is 20 and the Shift is 0, while the Deviations are 2 and the Style is Orange.

Image 9

The Bollinger Bands will then appear on your chart as seen in the illustration below:

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\BB.jpgImage 10

Williams %R indicator

Definition/Description

Plot Settings for Williams%R: Williams%R = 9.

Williams%R = ON inverted

You don’t need to understand how Williams%R was determined or what it refers to in order to use it. You just need to accept cues from it.

Williams%R, a momentum indicator created by Larry Williams, is the opposite of the Fast Stochastic Oscillator. Williams%R, by which it is also known, denotes the level of the close in relation to the highest high during the look-back period.

The Stochastic Oscillator, in contrast, displays the close distance from the lowest low.

By dividing the raw value by -100, %R accounts for the inversion. The only difference between the lines produced by the Fast Stochastic Oscillator and Williams%R is the scale.

Williams%R fluctuates between 0 and -100.

Readings between 0 and -20 are regarded as overbought. A reading of -80 to -100 is regarded as oversold.

II. Settings & Application

This indicator will be used in the same way that we used the previous indicators:

1. Insert

2. Indicators

3. Oscillators

4. Left-click Williams’s R.

We’ll keep the default MT4 settings in place when the pop-up window displays, but we’ll tweak

Orange is the colour, while nine is the period. Therefore, Williams%R = 9

Image 11

The indicator will seem as follows after it has been shown on your chart:

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Williams.jpgImage 12

Basic Principle of the System

On your chart, the system would appear as follows:

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Cash Bands Chart.jpgImage 13

In the part following that follows, we will go through the rules.

The basic premise of this strategy is to watch for price to cross the outer Bollinger Band. When that happens, you search for a chance to trade back into the band.

The central band is the first target, while the other outside band is the second.

Watch for the next MACD Histogram line to turn in the opposite direction when the price crosses the outer band. The Williams %R should also be ticking in the opposite direction at the same time.

Once these two indications have given you a confirmation, you may enter a trade that is going back inside the band.

If the breakout is continuing and the histogram is moving in the same direction, or if the %R indicator is  In a similar manner, refrain from trading.

Rules

Long Trade Rules

1. Watch for a price break of the bottom outer Bollinger Band before looking for a way to trade back into it.

2. Once the price has crossed the Bollinger Band, watch for a reversal in the direction of the MACD histogram line.

3. At the same time, check to see whether the Williams %R is also ticking in the other way.

4. After receiving confirmation in accordance with rules 1, 2, and 3, conduct a long trade (headed back into the Band).

5. Set the Middle Band as your Target.

6. You might open a second Target to be the outer band that is furthest to the contrary (In this case you can trade 2 lots if you wish and exit one of them at the middle band whilst letting the other one ride to the second target).

7. If the candle that violated the BB was the one that protruded from the band the greatest, your first stop loss should be 10 pip below the candle’s low.

8. If the breakout or the%R is continuing to move in the same direction as the histogram

Don’t trade if the indicator is ticking consistently.

Earn sure your initial objective (the middle band) is far enough away when you conduct a trade so that you can still make a respectable profit after paying your spread.

The chart below provides a visual depiction of the guidelines. D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Cash Bands Buy rules.jpg

Image 14

Short Trade Rules

1. Watch for a price break of the Upper Bollinger Band before looking for a chance to trade back within the band.

2. Once the price has crossed the Bollinger Band, watch for a reversal in the direction of the MACD histogram line.

3. At the same time, check to see whether the Williams %R is also ticking in the other way.

4. After receiving confirmation in accordance with rules 1, 2, and 3, execute a short trade by heading back into the band.

5. Set the Middle Band as your Target.

6. You might open a second Target to be the outer band that is furthest to the contrary (in this case You can trade 2 lots if you wish and exit one of them at the middle band whilst letting the other one ride to the second target).

7. If the candle that violated the BB was the one that protruded from the band the greatest, your first stop loss should be 10 pip above the candle’s high.

8. Avoid trading if the %R indicator or the histogram is still moving in the same direction as the breakthrough.

Earn sure your initial objective (the middle band) is far enough away when you conduct a trade so that you can still make a respectable profit after paying your spread.

View a visual depiction of the rules in the chart below.

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Cash Bands Sell rules.jpg

Image 15

Example Trades

Long example 1

I’ll go through this long trade example with you. The price had to first break through the lower outer Bollinger Band, so I waited for it to happen (1). After that, I began observing MACD and waited for its histogram to begin rising (2). I needed to check that Williams%R was also rising in order to become more convincing (3). I started the deal at candle close when the prerequisites were satisfied (4). The centre Bollinger Band (number 5) is where I put my first take profit level, and the outer, higher Bollinger Band is where I set my second take profit level (6). My stop loss was placed 10 pip below the candle’s bottom, which is where the Bollinger Bands were violated (7).

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Cash Buy Example.jpgImage 16

Short example 1

Now let’s examine the Sell Trade example. The price had to first break through the higher outer Bollinger Band, so I waited for it to happen (1). I then began watching MACD and waited for its histogram to begin drifting lower after that (2). I had to establish that Williams%R was also declining in order to get more convincing (3). I started the deal at candle close when the prerequisites were satisfied (4). The centre Bollinger Band (5) serves as my first take profit level, while the outer, lower Bollinger Band serves as my second take profit level (6). My stop loss was placed 10 pip above the candle’s peak, which is where the Bollinger Bands were violated (7).

D:\Old Tree Publishing\New Funnel Tradeology\Cash Bands\Cash Sell Example.jpgImage 17

Financial Management

There are two options available to you. You have the option of trading to lose your home or trading to acquire one. Trading without a money management strategy puts you at risk of losing your home and maybe a lot more. You’ll be looking at homes before you realize it if money management comes first. Wealth accumulation takes time. Consider where you want to be in five years, then start constructing your account to get there.

Important money management guidelines to remember include the following:

• Each transaction only involves a 2-5% risk.

Use a stop loss at all times (as indicated in our rules).

• Pick your stop BEFORE you enter the transaction. We utilize a smaller stop if we can obtain one, which is why we call it a “maximum” stop. The better, the lower the danger.

• The lot size we use should always be in line with the size of our account and the level of risk we are ready to take. For instance:

If we simply want to risk 2% of every transaction and have a $10,000 account. We are putting a $200 stake in the game. ($10,000 – 2% = $200), The lot size is $8 or 0.8 lots when the amount at risk is divided by the stop loss. ($200/25 pips maximum stop loss = $8 or a maximum of 0.8 lots on the MT4 terminal), We would use the same procedure to determine our risk if we had a $600 account and wanted to risk 2% on each transaction.

$600 – 2% = $12

$12/25 pips (maximum stop loss) is $0.48, or a 0.04 lot size (40 cents) However, 5% risk each transaction would result in the following:

$600 – 5% = $30

$30 divided by 25 pip maximum stop loss is $1.20, or 0.12 lot size.

Conclusion

There will be a lot of successful trading days, a few unsuccessful trading days, amazing trading days, and dull trading days. Does it not sound a lot like real life?

From the first step to the last, abide by the regulations. Make certain you don’t forget to check any steps. Make a list of your specialities. If you can, take screen images of your good and poor transactions and separate them so you can later review them and determine what you did correctly and wrong.

We wish you success using our system, and always remember to have fun!

 

 

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