17 Proven Currency Trading Strategies: How to Profit in the Forex Market, + Website

Chapter 10

Strategies for Mechanical Traders

As a mechanical trader, your main focus in trading the markets is not time driven but system driven. Your trades are based on a fixed routine, regardless of time frame and regardless of market activity.

This style of trading is especially suited to newbies because strategy execution is based purely on a set of fixed steps or rules. Due to its non-dependence on specific time frames, the three strategies discussed here employ time frames that span three different categories: scalping, day trading, and position trading.

The first strategy, the guppy burst, is based on the 5-minute (M5) chart. The second strategy, English breakfast tea, is based on the 15-minute (M15) chart. The third strategy, good morning Asia, is based on the daily (D1) chart.

Many newbies love the fixed routine by which mechanical trades are set up. It is also the reason why many go on to develop automated trading systems by coding the trading rules into software.

Let’s have a look at all three strategies.

STRATEGY 15: GUPPY BURST

The first step in developing a mechanical trading system is to understand and describe market behavior. The next step is to figure out the rules for entries and exits. The guppy burst seeks to exploit trading profits when the market is quiet.

There is a window of around three hours between the close of the U.S. market and the opening of the Asian market. The forex market is relatively quiet during this time and tends to move in a gentle yet ...