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    C500 Strategy PDF

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    sa.tahiri1990

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    C500 Strategy PDF

    Uploaded by

    sa.tahiri1990
    4 views6 pages

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    C500_strategy_pdf

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    © © All Rights Reserved

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    Copyright:

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    4 views6 pages

    C500 Strategy PDF

    Uploaded by

    sa.tahiri1990

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    1

    THE C500 STRATEGY

    Make the Trend Your Friend!!!


    Firstly we will begin by a crash course in Trends and following the trend. If you are going to
    successfully and profitably trade c500, you need to make the trend your friend, and holding trades
    for long periods should not be a problem with you.

    HOW TO IDENTIFY AND TRADE WITH THE TREND IN FOREX

    Trend is a price behaviour, which involves overall price increase or decrease. A currency pair is
    trending when it is increasing or decreasing for a long time. There a bullish and bearish trends.

    BULLISH TREND

    When the price accounts for higher bottoms and higher tops on the charts, hence the trend-line
    should connect the price bottoms on the chart. The trend-line acts as a support. Following this
    tendency, in case of a new price interaction with a bullish trend-line, we typically expect the price to
    bounce in a bullish direction.

    BEARISH TREND

    Trend is bearish when the price action create lower tops and lower bottoms on the chart.
    In this case, the bearish trend-line should be drawn through the swing tops on the chart and the
    resulting trend-line acts as a resistance for the price. Following the bearish trend, in case of a new
    price interaction with the trend-line, we expect the price to typically bounce in a bearish direction.

    By Munyaradzi J Muzvidziwa (Griezmann17)


    2

    FOREX TRENDLINE

    There exists various trend indicators, however, one of the simplest and most effective ways to
    analyze is through the use of trendlines. A trendline is an on-chart diagonal line, which connects a
    number of tops and bottoms on the forex graph.
    I the trendline manages to connect a number of price peaks, then we expect the price action to
    conform to this trendline. Hence the basic function of the trendline is to act as a support or
    resistance for the price action.
    *When price action breaks support or resistance, its a signal for a potential reversal

    TREND FOLLOWING SYSTEMS

    TREND IMPULSE- is the price move which comes after the interaction with the trendline and after
    the price bounces in the direction of the trend. These are the types of moves that a trend trader
    pursues. The reason for this is that the trend impulses lead to bigger price moves for a relatively
    shorter period of time.

    TREND CORRECTIONS- Corrective moves during trends in forex come after the impulse and lead
    the price back to the trend. The correction moves on the chart are not as attractive for trading.
    *It is safe to stay out of a market when it is in a corrective phase.
    The reason being, corrections are relatively smaller, weaker and often don’t last longer than trend
    impulses. Hence it is a riskier initiative and it’s not worth it.
    Trend impulses lead to relatively bigger price moves in the direction of the trend, contrary to that
    the corrections are small.

    By Munyaradzi J Muzvidziwa (Griezmann17)


    3

    IDENTIFYING TRENDING FOREX PAIRS

    Before taking a trade, you should be able to recognize that a potential trend is underway, because
    profits from trends are bigger and less risky.

    SWING TOPS AND SWING BOTTOMS

    Price swings are the basic characteristic of every trend on a chart. If the tops and bottoms are
    decreasing, then we have a bearish trend. If they are increasing, then we have a bullish trend. In all
    other cases, we have a non-trending environment- a sideways market.

    THIRD INTERACTION WITH THE TRENDLINE(3rd IMPULSE)

    Every 2 points on the chart could be connected with a straight line. However if a 3rd point lies on the
    same line, then we have a tendency.
    In this manner, the trend confirmation usually comes after the price tests the trend at the 3rd touch
    and bounces from it
    When you see the bounce, you open a position attempting to catch a new trend leg.

    By Munyaradzi J Muzvidziwa (Griezmann17)


    4

    TRADING VOLUMES

    Volumes are helpful for identifying emerging trends. This is because in many cases, the Forex pair
    will start trending after the volumes have increased.
    In this manner the impulse trend moves appear during higher trading volumes. Corrections on the
    other hand appear during lower trading volumes.
    When volumes are high, there is a lot of action in the market.

    Done with the trends!! you should be able to identify trends by now. Let’s get to crash

    ANALYSING C500

    We switch the charts to H4 timeframe which clearly shows the trend that we are looking. Zoom out
    to see clearly.
    C500 is a very unstable index which should be traded with bigger accounts on smaller lot sizes
    (Unless if you are using a scalp strategy, then go all in)
    It is bullish in nature, i.e. it is always going up. It’s bearish patterns come from crashing spike,
    which are instant and unpredictable, hence we are looking to trade trends on small lot sizes, in order
    to survive crashes. Now let’s look at chart analysis:

    By Munyaradzi J Muzvidziwa (Griezmann17)


    5

    Support and resistance lines

    The first step is to establish support and resistance lines for analysis. C500 tends to obey support
    and resistance lines.
    *Therefore avoid buying c500 at support or resistance, rather buy when the candlesticks are in
    between the two lines.

    Trendlines

    The next step is to draw the trendlines (Assuming that you know how to draw trendlines). The trend
    is generally going down (bearish trend) therefore our main plan is to go short, but it’s not always the
    case.
    It is important to note the we can also trade retracements and corrections profitably
    *Remember that after establishing the trend, the support/resistance, switch to M5 to look for an
    entry point. Whichever direction you chose, holding is key. I usually hold my trades for 8 hours.
    Place your trade, close mt5 and go to work!! (Never fund a c500 account with more than what you
    are willing and able to lose)

    By Munyaradzi J Muzvidziwa (Griezmann17)


    6

    Trade with the trend and you won’t go wrong

    Resistance and Trendlines

    Working closely on H1 to find entry points. The market was ranging for some days before it
    continued with a downtrend. Take not of impulsive moves and corrective moves on the downtrend.
    Those corrections can kill you if not careful!
    Ranging markets are dangerous also
    One might think that the market is reversing, but truly it might continue going down. The best thing
    to do here is to wait for an H4 candle to form, or even 2. if they manage to break the trendline, then
    potentially it might be reversing, else it’s going down.
    *Always keep in mind that patience is key, hold!!

    By Munyaradzi J Muzvidziwa (Griezmann17)

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