Basic but Effective Trade Setup

These set ups require a Metatrader platform and any momentum indicator like MACD or Stochastic indicator. I have chosen to use a derivative of Robert Miners Dynamic Trading indicator, the DT Oscillator (dtosc) which youll find included. We will always be working with two timeframes that should normally have a factor 4 difference, meaning if youre used to trading off of 1 hour charts you will have a second chart opened which would then be a 15 minute chart. For 4 hour charts you open a 1 hour chart next to it etc. etc. If you are not able to use a factor 4 smaller time frame because your trading platform wont let you, simple choose a time frame that is closest to factor 4, For example when you use daily charts for your trading of, you would now use a 4 hour chart next to it. Okay time to move on. I will now show you an example with a 4 hour chart and a 1 hour chart where I have loaded the dtosc with settings 8,5,3,3 on the 4 hour chart and two dtosc indicators on the 1 hour chart with settings 13,8,5,5 and the second dtosc will have settings 8,5,3,3. See picture.

The little aqua and maroon coloured arrows are formed by the ASC Trend indicator which I have also included for your convenience. Now, for a great trade set up its required that you first determine the trend on the four hour time frame. Since there are tons of ways to do so I will not go into much detail on this subject. We will only trade in the direction of the trend (now where did I hear THAT before?). As you can see in this example were in a down trend so we will only take sell orders. We now need to have a situation where the dtosc shows an overbought condition, meaning both lines should be above the 75 level. We will now go to our smaller time frame chart, in this case the 1 hour time frame. Ideally both dtosc indicators should be in the overbought zone (again, above the 75 level), but for now the dtosc with the smaller lookback period (settings 8,5,3,3) will suffice. We will take a short position as the dtosc lines cross down with a stop just above the most recent pivot high (I personally never use stops larger than 20 pips, but adjust yours to your own risk tolerance level). We will ride out this trade until the dtosc on the 4 hour chart is either in the oversold zone (below the 25 level) or when both lines cross back up.

Happy Profiting Peter Noppen