A Basic outline of my TradeCharting (TC) Technical Analysis System
1. Outline of my Technical Analysis TC System:
My TradeCharting (TC) system is a technical analysis system that uses a range of indicators to generate trade entry signals. Indicators that are used include EMAs, pivots and the ADX to name a few. The most significant indicator in the TS system is the ADX. The ADX measures trend strength and, as such, contributes to the TS system being able to catch strong, market momentum moves. Information about the ADX can be found through this ADX link. In 2017 I had one part of my TC system coded to produce an indicator that I have called the TC Trigger. Please refer to this link for information about how I use this indicator.
A common criticism of technical analysis that uses indicators is that they are ‘lagging’. I am quite happy to catch just part of a strong market move once it is in place though. I am aware that I will miss the first and, probably, last section of a strong trend or move; but catching regular ‘slices’ out of the middle section of strong moves is just fine with me.
One major advantage of my technical analysis trading system is that it only requires the humble technology of a simple laptop! That is all I use in my trading. See that photo of me in the front page of this blog site? That’s how I operate. I do not need complex work stations with multiple screens or monitors. Thus, I can trade from anywhere and at any time. You simply need to manage your time to be able to access your charts on your candle update times.
My TradeCharting technical analysis system with Forex can be applied to any time frame chart, however, I use daily charts for assessing Stocks and Option trades.
I have found the best TradeCharting Forex results come with trading the most liquid of the currency pairs. For example; the AUD/USD, EUR/USD, GBP/USD, EUR/JPY, GBP/JPY, USD/JPY, NZD/USD and AUD/JPY. However, recently I am noticing good success on some of the more exotic pairs when viewed on shorter time frame charts during the US session; for example, the USD/MXN and USD/TRY.
TC technical analysis works well on commodities such as Gold, Silver, and Oil and on the stock indices such as the S&P500 and the Dow. It can also be applied to stocks and ETF too, in fact, it can be applied to any trading instrument that can be charted!
TradeCharting involves technical analysis and potential trades are evaluated by checking charts for the alignment of several indicators and, then, waiting for these to attain specific and optimum levels. When these levels have been reached on ALL of the indicators then a valid TradeCharting signal is determined to have been received. My TradeCharting system is, thus, very visual and takes only moments to assess on any trading instrument (Forex, Stocks, ETFs Futures etc) and, on any time frame.
The TradeCharting system is, therefore, quite mechanical. That is, it does not require a great deal of decision making. The charts are evaluated every 4 hrs for FX and daily for stocks/ETFs, or from whatever time frame you trade, and there will either be a TC signal or no signal. Mechanical systems like this offer an advantage in that they take out much of the anxiety and / or guess work about whether to place a trade or not. TC signals can be taken in isolation or with some reference to wider market parameters.
Do I trade every received TC signal blindly? No and I give three reasons why:
1) Trending markets: I prefer to trade my TC signals during trending markets. I tend to assess the indices of the USD dollar (USDX) and of the Euro dollar index (EURX) to gain information about the general and wider market trend. I assess the general trend on the indices and any technical patterns that may be developing on them. I also assess the indices against the Ichimoku charts. I then evaluate any TC signals with respect to this information. I report on my indices findings in the regular posts on this blog site.
I have written in more detail elsewhere in this blog about assessing market conditions and how I use the EURX and USDX indices in my trading.
2) Money Management: I always trade within my strict money management rules and only risk 2 % maximum of my account per trade. This will often mean that I have to be selective with the TC signals that I trade. I will only take one signal per currency at a time. For example, if TC signals were given on the AUD/USD and AUD/JPY then I would only take one of these because these pairs are often highly correlated and thus my risk, by taking both signals, would be double.
3) Confluence: Some charts will present, at times, with extra chart patterns confirming a particular trend direction. This may take the form of Support and or Resistance trend line levels or triangle patterns etc. This is referred to as Confluence when you have 2 or more factors that support a trend direction on a given pair. For example, a currency pair may generate a TC signal but, also, have just broken out of a triangle trading pattern or broken a significant trend line. So, I would always choose to trade the currency pair that has extra confluence over a pair that may only have the raw TS signal.
Support and Resistance: Dean Malone, from Compass FX, has released a great video explaining how to apply Support and Resistance levels to currencies. This can be viewed through this link. A second more recent video can be found through this link.
2. TradeCharting Examples:
Forex:The following chart shows how a TradeCharting trade earned 120 pips on a short on the USD/SGD and was confirmed with a trend line break as well:
3. TradeCharting Chart Templates
4. Applying my TradeCharting System:
Given that my TC system is a trend-trading technical analysis system it is important to know, and understand, what the current market trend is and, then, to trade with this predominant trend. I analyse and assess the FX indices, USDX and EURX, to determine my understanding of the market trend for currency and stock market trends. I will then look to take TC signals in line with this trend. I also look for other supporting evidence for a possible momentum move such as a break out from a significant trend line, triangle or channel pattern.
5. Summary of how I apply my TradeCharting system:
- Determine the overall market trend using the indices USDX and EURX.
- Check my Trading Calendar at the start of each week, and day, for significant items. (http://www.forexfactory.com/calendar.php)
- Look for valid TradeCharting trend signals in line with the overall market trend.
- Look for other supporting evidence such as: trend lines, triangle patterns or channel breaks.
- Trade with the trend and trade what I see, NOT, what I think.
- Check in throughout the day on market commentary at various news sites.
Please feel free to ask me questions. Send these to: firstname.lastname@example.org.
NB: Please, also, read the Disclaimer Information on this blog. Only ever trade with funds that are allocated as part of your ‘risk trading’ account. Do not start to trade with a Live Account until you have demonstrated consistent success in a simulated practice account.