In Today’s video I am going to show you a very effective and easy way to trade EUR/USD. But you can apply this principle to any market you want to trade and I’m going to show you how. It’s a trading strategy or technique I learnt from Larry Williams so this one I owe much credit to him.Although this example has my spin on things as Larry doesn’t trade Forex.
By the time you’ve watched the video you will understand this powerful technique used not only to trade EUR/USD but to go and test on other markets you want to trade and profit from. I have managed to develop strategies on multiple markets using just this one technique.
The strategy I am about to show you is called TDOM or Trading Day Of the Month. I’ve tested many markets in the years I’ve been trading including Forex, Indices, and Futures and have discovered that they all have their own behaviour patterns or biases. One of these patterns we can profit from is TDOM.
So how does it work? It’s very simple.We look of a testing period, let’s say 10 years.Then for each trading day (this doesn’t include weekends, holidays) we can see how many points the market gained or lost within it’s session. It’s easy to plot that data into a graph like a bar graph where we can see visually how each trading day performed.
Once we have identified the strong and weak days of the month we can then build a trading strategy around them. The simple strategy I am going to show you Buys EUR/USD at the start of the session on trading day 8 and exits at the end of the session. At the same time we actually Short the market at the start of the session on trading day 9 and exit that short at the end of the session.
It just so happened 2 strong Long and Short biased days were consecutive. But that’s not always the case.
You can take this a step further too. If you don’t want to be in and out of the market in the same session then you can often find groups of “up” days and groups of “down” days. I have strategies built around groups of up to 5 days which are biased to either the long or short side of the market. These groups are easily identifiable from that bar graph plotted earlier.
I hope you can see the potential in this technique I have learnt and further developed from Larry Williams. I encourage you to do some testing for yourself on your market of choice. Something I will note is that I haven’t tested on individual equities like most of my mechanical strategies.
If you like or have any questions about this strategy then please ask. You can comment or email me jarrod@thetransparenttrader.com
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Jarrod.