You’ve probably heard of Renko bars but maybe haven’t heard of Median Renko.   Before I comment about them, I’m going to save myself a thousand words.

So this is a 10 pip Median Renko chart, what’s curious is that the colored part of the candles is actually 15 pips. If you look at the first candle to the left of the 1.4240 label, you’ll see that the green candle’s bottom is at 1.4240, it’s top is at 1.4255 and the open of the new bar is at 1.4250. If an up-candle first goes down 7 pips before closing as an up-candle, then you will see a 7 pip wick coming out the bottom.

This helps to make the bars very smooth and eliminates some of the problem with regular renko bars. On regular renko (example 10 pip renko bars), the price can has to go 20 pips down before you see a new bar to the downside. I have been experimenting with renko for a long time now and the problem I have found is that the risk to reward ratio becomes “unpleasant” having to account for the pips to the opposite direction.

I prefer to trade using a combination of time bars and range bars (see next pic), however I’m testing the median renko bars for an ea that I’m working on.

PS. I came across the Median Renko script for Ninjatrader at Big Mike’s Forum (my favorite FX forum).

I thought I’d post this video that I found about the various plugins used by MT4 brokers to scam you out of your money:

The vast majority of metatrader brokers will scam you. They might not do it right away, months can go by with good service but then one day they get you. I’m sure you have heard about this in all types of online forums. ForexPeaceArmy does a nice job of reporting bad brokers and also filing complaints on behalf of users.

Personally I use Oanda for FX and am very satisfied with their service. I don’t utilize their charting, mainly I use NinjaTrader and for some purposes MT4. Another broker I use for trading indexes is Capital Spreads and I’m happy with them so far. Nice tight 1 pip spreads on the 5 markets that I trade: Euro, Aussie, Yen, FTSE, DAX.

PS. I’m not promoting the plugin that he’s offering, I haven’t checked it out as I don’t use MT4 for my trading. Those types can be useful if you do use MT4 but if you’re computer crashes or you lose internet connection you could be in the market without a stop…

It’s been a long journey these last 3 years exploring countless ways of looking at the charts and spending literally months backtesting various systems and setups. I’ve spent a lot of time evaluating Renko bars and even designed some ea’s as you can see on this blog. Unfortunately the designs were not good enough to weather all of the market conditions.

This year I’ve been relatively quiet on the blog but I’ve been busy in the laboratory. I’ve developed a “kinship” with Range Bars. I must say that I’m a huge fan. If you’re not familiar with Range bars, they were invented by a Brazilian trader in 1995 who was frustrated with the increased volatility of the stock markets there and wanted to filter out the noise.

Each Range bar represents an equal amount of movement from the low to the high. So if you setup your Range bars for 10 pips, then each bar (or brick as we like to call them) will be 10 pips. After the new bar opens, if it’s a 10 pip bar it will close 10 pips away from the open in either direction.

I remember when I first saw Range bars and compared them to Renko, I couldn’t see anything good about them. I remember thinking that I’d rather trade time bars over Range bars. It wasn’t until I became totally disenchanted with Renko bars that I gave them a closer look, and I’m glad I did.

So, why was I fed up with Renko bars? I wasn’t happy with how each brick could go against you by twice the amount of pips as the brick without showing in the charts. I found this very challenging for creating systems with a tight risk to reward ratio.

Learning Range Bars is like learning a different language, it’s difficult at first but the more you study them and practice the easier it gets. I recommend watching this video by Pro Trader Ed on Range Bars.

I’ve discovered that they do cut down on a lot of the noise and I discovered a very profitable way to trade them. A lot of professional traders use Range bars and now I see why.

Hey folks. this looks like a beautiful head and shoulders reversal to me (at a key reversal area from the Nov 4 high). I’m in short right below where I see the right shoulder, planning to take half at the neckline and the other half around 1.34 if this works out.

Disclaimer: This trade may or may not work out, if you decide to take any action based on this it is solely YOUR responsibility.

Here’s a couple more reasons why I’m feeling good about this trade:

Euro 50 Range Chart
Dollar Index 50 Range Chart

Both look like they have completed their Spike and Channel patterns.

Finally we had some valid London Close setups today! There were trades on the Yen, Swiss and Cad. My Cad and Swissy trades have closed in the green (+16 each) and just waiting for my Yen trade to finish.

I also took a trade on the Pound but it wasn’t a valid London Close setup. Once you get experience with these trades you can start to see the opportunities. Yesterday I showed you a screenshot of my mt4 eagle eye on the Euro. Today you can see my quick action 2nd screen with Ninja.

Hey guys, today I’m going to show you one of the ways I trade. It’s been a bit slow this month with the London Close Trades, there haven’t been many valid setups.

In the 3 years that I’ve been trading forex and learning to trade, there’s been a lot of lessons – each with varying degrees of usefulness. One of the things that has really helped which I heard quite a few times before I implemented it, is to focus on trading just one pair at a time. As newer traders we’re wanting to trade our way to financial freedom and there’s this impulse to trade multiple pairs so that there are more opportunities. The challenge with this approach is that unless our trading system is truly a dynamite butt-kicker which works in all market conditions, the level of quality setups drops.

Click on this link to see my multi time frame and renko charts. This is all for the Euro, from the top left is the 3 minute, 15 minute, 1 hour, 10 pip renko, from the bottom left is 20 pip renko, 4 hour and daily. (I took this screenshot on my laptop so it’s cut off at the bottom).

This gives me a great overview of what’s happening with the Euro which I like to trade because the spreads are super low (0.9 with Oanda) which is great for scalping , it has a great daily range (lots of movement each day) and I can also watch the dollar index for additional info.

We are bombarded with so much information that it is overwhelming and it is confusing at first to do multi-time frame analysis because the signals seem contradictory.

As you focus and watch from this perspective more and more you will get used to the rhythms of the market. If you’ve been fortunate enough to gain some experience slugging it out and taking your losses, you’ll start to get a feel for the personality of the pair.

There’s a great saying “scared money never wins”, the markets kick our butts because of greed and fear.

Everyone wants to sell tops or buy bottoms and make tons of pips but remember picking bottoms makes for stinky fingers. So many traders were short on the Euro last week and it’s just kept going up and up and up. If you were watching all these charts at once and trading what you see, it’s pretty hard to get not see that the market is going up.

One of the things that hurt me the most before with trading is that I would make trades with big stop losses risking say 3 or 4% of my account, but then as the market moved I would move my stop thinking it couldn’t go up anymore and then it would just keep going up and up and I would take a big loss. I don’t imagine I’m the only guy out there who’s done that. Making sure that I never do that again has been very helpful in keeping my account from suffering any big losses.

There’s a cool free ebook by Rob Booker available on the net called Strategy 10, it’s about learning how to consistently bag 10 pips a day. That’s pretty easy to do and it can make you tons of money if you scale up properly. It’s a lot harder to bag 50 pips a day, somedays we do but other days we lose. I think that we can easily get 10 – 20 pips per day if we don’t get too greedy and quit when we’re ahead.

I’m expecting this year to be my break-through year in Forex, the year that I become a full-time trader and leave behind my dayjob forever.

It’s been 3 years now, finally I have a concise written plan complete with the know-how, experience, and discipline. Nothing can stop me in 2011!

My primary Forex Strategy this year is trading the London Close. This strategy is so good that I will risk 5% of my account per trade. I have 2 secondary trading strategies that I will also implement however the risks for these are only between 1 and 2%. I will  share some very advanced money management strategies over the next couple months.

I’m planning on having EA #3 finished by the end of May and after a successful 3 month live test it will ready to trade the rest of the year. Sometime around May or June I will start offering managed forex accounts to my friends and family, the non-automated trading will all be done through Oanda my favorite and most trusted broker, I will be using the Collective with mt4 for the automated trading.

If you haven’t been able to get consistently profitable yet, take some time to see the big picture and analyze what needs to change. One of the big things that is helping me is that I only trade the London Close during a 2 to 3 hour window per day. During this time I am completely focused on just this one strategy (taking trades on 6 pairs) and I have complete confidence in what I’m doing.

I still take other types of trades but these ones are classified as lower probability and therefore I use a smaller lot size.I’m going to attempt to make a weekly update to the blog here on Sundays and share how I did each week.

Last week was a slow start as I was only able to trade on 3 days and one day there was no trades, I had 2 wins and 1 loss for +20 pips.

Have a great week!

I’m really enjoying these London Close trades, just closed one on the pound for 20 pips.

It’s great to feel really confident about the strategy you’re trading, knowing that the probabilities are strongly on your side!

Yesterday I took one on the Cad which was successful. I see in the members area that Shirley took one on the Swiss and ignored the Aussie as it didn’t quite make the criteria.

I’ve got alerts set this morning still for the Cad and Euro, back to sleep I go.

Thursday morning I’m off to Mexico with my beloved! I just found out our hotel has wifi so I can get in a few more LCT’s before Christmas. I’ll try to update with a couple posts if you’re following along.

Today I have something very special to share with you…

Recently a friend recommended a Forex strategy to me: London Close Forex.  As always I was skeptical, but this was a friend that I have a lot of respect for. As it turns out, I am very very grateful for this opportunity, it’s the best forex strategy imo.

In a nutshell: A 60 year old trader Shirley Hudson developed this strategy over a 3 year period as she noticed a pattern unfolding at the end of the London close. You only trade it during a 3 hour window per day.

Shirley has been trading this for the last year and a half and has won 90% of her trades.

My first thought after hearing about the 90% win rate was “this must be BS“, but my friend assured me that it was real. As it turns out, he is a friend of Vic Noble from Forexmentor and Vic has been coaching Shirley for the last 4 years. He’s seen her go from a struggling trader like most of us to winning over 90% of her trades.

Basically the strategy works with the Average Daily Range, most currencies will hit their average daily range each day. The way it’s measured is from the day before. So let’s say that on Monday the average daily range for the euro is 150 pips. On Tuesday we see that the market is going down and that the daily high was 1.3300, this means that there is a strong likelihood that the market will hit it’s average daily range at 1.3150.

On most days after the market hits it’s average daily range, it will go back inside the range. Shirley has developed a very precise way of trading as the market goes back inside the range.

I am trading this now, one of the best parts is you only need to look for trades during 2-3 hours per day, between 7am and 10am P.S.T.  (10am -1pm E.S.T.)  Shirley looks for trades on about 10 pairs. In my opinion this is the best forex strategy that I have seen and I have investigated over 100 strategies in the last 3 years.

As always if you are going to trade this, take your time and start slow. Even though it may very well be the best forex strategy that you have ever seen, don’t go crazy and start risking 10% of your account on each trade. It can and will have losing streaks like everything else. Proper money management is crucial to your success.

To get the course: www.LondonCloseForex.com

I will be posting updates on my London Close trades and also sharing a very advanced money management strategy that is powerful and compliments this strategy beautifully.

To our success!

I’ve just taken a month off of trading, needed to clear my head and take a break.

As it turned out, my first 2 automated systems that were optimized for Renko did not match the backtesting results (which were phenomenal, lol). It’s a tough business this one – until you get your first working automated system that is, then it’s traveling tropical islands =).

There are so many variables due to the nature of the market’s crazy rythms and some automated trading systems that do awesome one year, end up doing poorly the next.

After a much needed break, I’ve received a brand new vision and am finishing some tweaks to the blueprint for my 3rd automated system which will get constructed during December (while I’m in Mexico : )

The big news is: This system is time based. I’m not giving up on creating a renko system that works, that will come – but for now time based is easier as I’m calling in the power of a mtf strategy. (multi time-frame). This automated trading game is about having an edge, to do this you need a strategy that wins more then it loses and an extremely consistent approach. It doesn’t need to be any more complicated then that.

I’ve been getting a lot of value (and profits) out of this free service and want to recommend it to you.

As always take your time and trade very lightly until you are consistently profitable, you may only get 1 or 2 trades a week – just take the easy ones ok!  Sive rocks! Look for a video each day before the European session showing key levels and Joe Dinapoli style trades…