RAPID-FIRE STRATEGY Time Frame Indicators Currency Pairs
STRATEGY 1: RAPID-FIRE STRATEGY The rapid-fire strategy was designed with two criteria in mind: 1. The most liquid currency pair in the world 2. The lowest time frame available
This criterion led to the development of the strategy on the minute chart (M1) for the EUR/USD currency pair. The M1 time frame is fast-paced and exhilarating. If you are not careful, the adrenaline rush you experience can cloud your trading decisions. This problem is compounded by the high frequency of trading opportunities that the strategy presents. On average, there are about 30 to 40 trading opportunities for the rapid-fire strategy every day. This is the reason why the rapid-fire strategy employs two indicators to assist you in spotting objective trades throughout the day. You can then fire off the trade rapidly once you decide to take it.
Time Frame The rapid-fire strategy works with the 1-minute (M1) time frame. Each candlestick on the chart represents 1 minute of price movement.
Indicators We use these indicators for the rapid-fire strategy: 1. Parabolic SAR with default setting: a. Step 0.02 b. Maximum 0.2 2. Simple moving average (SMA), period 60, and apply to close.
Currency Pairs The strategy is designed specifically for the EUR/USD, the most traded cur rency pair in the world.
Strategy Concept The strategy concept is a trend-scalping strategy, which means it works best in a trend. The strategy combines two trend indicators, SMA 60 and Parabolic SAR with default setting (step 0.02). The SMA 60 is used to identify the direction of the momentum. This means that we look to long EUR/USD when the price is above the SMA 60. Similarly, we look to short EUR/USD when the price is below the SMA 60. The Parabolic SAR is used to give the exact entry signal for both long and short positions. When the price for EUR/USD goes above the Parabolic SAR, we fire off a long trade. When the price for EUR/USD goes below the Parabolic SAR, we fire off a short trade.
Long Trade Setup Here are the steps to execute a long trade using the rapid-fire strategy: 1. Look for the market price to go above the SMA 60. 2. Wait for the Parabolic SAR to move above the market price. 3. Once the market price goes above the Parabolic SAR, the Parabolic
SAR will appear below the market price. This is the signal to enter for long. (See Figure 6.1.) 4. The stop loss is set at 15 pips below the entry price. 5. The profit target is set at 10 pips above the entry price.
(See
Figure 6.2.)
FIGURE 6.1
Parabolic SAR Appears Below Market Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.2
Set Profit Target 10 Pips Above Entry Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
From the long example in Figure 6.3: Entry price = 1.2934 Stop loss = 1.2919 Profit target = 1.2944 The risk for this trade is 15 pips, and the reward is 10 pips. The risk to reward ratio is 1.5:1, which yields a 2% return if we take a 3% risk.
FIGURE 6.3
Trade Hits Profit Target
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
Short Trade Setup Here are the steps to execute a short trade using the rapid-fire strategy: 1. Look for the market price to go below the SMA 60. 2. Wait for the Parabolic SAR to move below the market price. 3. Once the market price goes below the Parabolic SAR, the Parabolic
SAR will appear above the market price. This is the signal to enter for short. (See Figure 6.4.) 4. Set the stop loss at 15 pips above the entry price. 5. Set the profit target at 10 pips below the entry price. (See Figure 6.5.)
From the short example in Figure 6.6: Entry price = 1.2937 Stop loss = 1.2952 Profit target = 1.2927 The risk for this trade is 15 pips, and the reward is 10 pips. The risk to reward ratio is 1.5:1, which yields a 2% return if we take a 3% risk.
FIGURE 6.4
Parabolic SAR Appears Above the Market Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.5
Set Profit Target 10 Pips Below Entry Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.6
Trade Hits Profit Target
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
Strategy Roundup The rapid-fire strategy could give you another trade signal even before the current trade exits. It is not uncommon to encounter consecutive trading signals one after the other, simply because of the low time frame used.
This criterion led to the development of the strategy on the minute chart (M1) for the EUR/USD currency pair. The M1 time frame is fast-paced and exhilarating. If you are not careful, the adrenaline rush you experience can cloud your trading decisions. This problem is compounded by the high frequency of trading opportunities that the strategy presents. On average, there are about 30 to 40 trading opportunities for the rapid-fire strategy every day. This is the reason why the rapid-fire strategy employs two indicators to assist you in spotting objective trades throughout the day. You can then fire off the trade rapidly once you decide to take it.
Time Frame The rapid-fire strategy works with the 1-minute (M1) time frame. Each candlestick on the chart represents 1 minute of price movement.
Indicators We use these indicators for the rapid-fire strategy: 1. Parabolic SAR with default setting: a. Step 0.02 b. Maximum 0.2 2. Simple moving average (SMA), period 60, and apply to close.
Currency Pairs The strategy is designed specifically for the EUR/USD, the most traded cur rency pair in the world.
Strategy Concept The strategy concept is a trend-scalping strategy, which means it works best in a trend. The strategy combines two trend indicators, SMA 60 and Parabolic SAR with default setting (step 0.02). The SMA 60 is used to identify the direction of the momentum. This means that we look to long EUR/USD when the price is above the SMA 60. Similarly, we look to short EUR/USD when the price is below the SMA 60. The Parabolic SAR is used to give the exact entry signal for both long and short positions. When the price for EUR/USD goes above the Parabolic SAR, we fire off a long trade. When the price for EUR/USD goes below the Parabolic SAR, we fire off a short trade.
Long Trade Setup Here are the steps to execute a long trade using the rapid-fire strategy: 1. Look for the market price to go above the SMA 60. 2. Wait for the Parabolic SAR to move above the market price. 3. Once the market price goes above the Parabolic SAR, the Parabolic
SAR will appear below the market price. This is the signal to enter for long. (See Figure 6.1.) 4. The stop loss is set at 15 pips below the entry price. 5. The profit target is set at 10 pips above the entry price.
(See
Figure 6.2.)
FIGURE 6.1
Parabolic SAR Appears Below Market Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.2
Set Profit Target 10 Pips Above Entry Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
From the long example in Figure 6.3: Entry price = 1.2934 Stop loss = 1.2919 Profit target = 1.2944 The risk for this trade is 15 pips, and the reward is 10 pips. The risk to reward ratio is 1.5:1, which yields a 2% return if we take a 3% risk.
FIGURE 6.3
Trade Hits Profit Target
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
Short Trade Setup Here are the steps to execute a short trade using the rapid-fire strategy: 1. Look for the market price to go below the SMA 60. 2. Wait for the Parabolic SAR to move below the market price. 3. Once the market price goes below the Parabolic SAR, the Parabolic
SAR will appear above the market price. This is the signal to enter for short. (See Figure 6.4.) 4. Set the stop loss at 15 pips above the entry price. 5. Set the profit target at 10 pips below the entry price. (See Figure 6.5.)
From the short example in Figure 6.6: Entry price = 1.2937 Stop loss = 1.2952 Profit target = 1.2927 The risk for this trade is 15 pips, and the reward is 10 pips. The risk to reward ratio is 1.5:1, which yields a 2% return if we take a 3% risk.
FIGURE 6.4
Parabolic SAR Appears Above the Market Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.5
Set Profit Target 10 Pips Below Entry Price
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
FIGURE 6.6
Trade Hits Profit Target
Source: Created with FX Primus Ltd, a PRIME Mantle Corporation PLC company. All rights reserved.
Strategy Roundup The rapid-fire strategy could give you another trade signal even before the current trade exits. It is not uncommon to encounter consecutive trading signals one after the other, simply because of the low time frame used.
