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Trading Strategies For The Short

The document discusses trading strategies for short-term timeframes like H1 and H4 charts. It presents two strategies - one using exponential and linear moving averages on H1 charts to identify crossover signals, and another using MACD and CCI indicators on H4 charts, looking for CCI crosses of MACD and MACD/CCI levels. Examples are given of trades using each strategy, identifying entry and exit points to produce profits of over 100 pips in each case. Trading short-term requires attention due to increased emotional pressure but can provide more frequent profit opportunities.

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ChrisLaw123
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158 views

Trading Strategies For The Short

The document discusses trading strategies for short-term timeframes like H1 and H4 charts. It presents two strategies - one using exponential and linear moving averages on H1 charts to identify crossover signals, and another using MACD and CCI indicators on H4 charts, looking for CCI crosses of MACD and MACD/CCI levels. Examples are given of trades using each strategy, identifying entry and exit points to produce profits of over 100 pips in each case. Trading short-term requires attention due to increased emotional pressure but can provide more frequent profit opportunities.

Uploaded by

ChrisLaw123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Trading strategies for the short-term timeframes

Some traders prefer to trade on the longer-term timeframes. It helps them to check the
positions no more than once a day and have more time for making a final decision. However,
if you prefer to be a more aggressive trader and earn money within a day, you will probably
try trading on the H1 and H4 charts. In this article, we will explain the most popular strategies
for this kind of trading.
Advantages and disadvantages of trading on the smaller timeframes
There are pros and cons of trading on the smaller timeframes. Among the advantages, we can
mention lower pressure on the investor’s deposit and the possibility of earning more money
due to the increased number of opened positions.
At the same time, there are certain disadvantages in trading on H1 and H4. The first one is, of
course, the increased amount of time you need to spend in front of the trading platform. Also,
take into account that the emotional pressure is higher while trading on the smaller
timeframes. Thus, the strategies for intraday trading must be simple in their usage, but
effective at the same time.
Strategy for trading on the H1 chart
You need to apply several moving averages to the chart to implement the following trading
strategy.
1. Exponential moving averages of 38 and 48 periods (colored in brown).
2. Linear weighted moving average of 5 and 8 periods (colored in violet).
The rule is simple. When the linear weighted MAs cross the exponential MAs upside down, it
signals us to open a short position. Alternatively, when the linear weighted moving averages
cross the exponential ones from bottom to top, we may open a long position. Signal will be
stronger if the distance between two linear weighted moving averages is lower or they cross
each other. At the same time, the bar of the candlestick following the crossover should close
below the crossover (if it’s a signal for the short position) or above the crossover (if it’s a
signal for the long position).
You close your position when the exponential MAs cross each other.
Let’s consider the example.
On the H1 chart of AUD/USD linear weighted MAs crossed exponential MAs from bottom to
top on November 1. We waited for the candlestick to close above the moving averages and the
levels of the previous consolidation. After that, we waited for the next candlestick and opened
a long position at its closing price at 0.7131. Our stop loss is placed below the levels of
consolidation at 0.7047. We waited for the exponential MA to cross each other at 0.7242. We
earned 111 pips (0.7242-0.7131).

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Strategy for trading on the H4 chart
The strategy described below requires the usage of two indicators: MACD with settings
12,26,2 and Commodity channel index (CCI), which period equals 14.
You need to open a long position when:
 CCI crosses the upper border of MACD from bottom to top;
 When it happens, MACD should be placed higher than the 100 level.
We place our stop loss here below the levels of the previous consolidation. Our take profit
depends on price action. However, we must close our position if CCI falls below the 100 level.
Let’s look at the H4 chart for AUD/USD.
On January 11 we saw the CCI rising above the MACD. We waited for the next candlestick and
opened the position at 0.7381. Our stop loss is placed below the levels of the previous
consolidation at 0.7326. We closed the position when CCI tested the 100 level upside down at
0.7508. As a result, we earned 127 pips.

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When should you open a short position?
 CCI crosses the lower border of MACD from top to bottom.
 When it happens, MACD should be placed lower than the -100 level.
Finally, let’s consider the example of the short position on the same H4 chart for AUD/USD.
CCI crossed MACD upside down. We opened a short position at 0.7160. Our stop loss is placed
above the levels of the previous consolidation at 0.7205. We waited until CCI tested the -100
level and closed the position at 0.7069. We earned 91 pips.

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Conclusion
Trading on the smaller timeframes may provide you quicker profits. At the same time, it
requires a lot of attention that is why you need to be careful while trading on them.

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