A simple EURUSD trading strategy - the Parabolic SAR and MACD

In my pervious post was a simple trading system on the EURUSD evaluated; in this post is another trading system evaluated.

Trading system

The trading system is the use of the Parabolic SAR indicator as primary indicator and the MACD as a secondary indicator.

The MACD is in the post “TradingForex using the trading strategy 123 trading signals” described and the Parabolic SAR indicator is in the post “Parabolic SAR Stop and Reverse Technical Indicator” described.

Time frame

The evaluation focuses on the charts 15 minutes, 30 minutes and 1 hour.

Note

Please note that this post is only illustrative and the purpose is to give insight into how to trade. 

Evaluation 1

The evaluation is on the EURUSD.

The charts show that the system is working well in connection with this evaluation; the charts also illustrate that the market is in a trend-following market condition which is the market condition the parabolic SAR works best in.

The time frame; the trend direction the parabolic SAR indicates;  is longer in the 1 hour chart than in the 15 and 30 minute charts which does that the 15 and 30 minute charts are better to use than the 1 hour chart in connection to the time frame in a trade.

The time frame in a trade on the 30 minute chart is days; in the 15 minute chart is the time frame in a trade a day or hours.

The charts

The charts; 15 minutes, 30 minutes and 1 hour; are illustrated in the following; trades are illustrated as long and short trades; first is the Parabolic SAR trend evaluated and second the MACD; is the lines crossing each other and indicating that the trend direction is changing.

Evaluation 2

The evaluation is on the NZDUSD.

The charts show that the system is working well in connection with this evaluation; the charts also illustrate that the market is both sideways and trend-following; the Parabolic SAR is difficult to use in a sideways market where the currency rate is sideways.

The time frame; the trend direction the parabolic SAR indicates;  is longer in the 1 hour chart than in the 15 and 30 minute charts which does that the 15 and 30 minute charts are better to use than the 1 hour chart in connection to the time frame in a trade.

The time frame in a trade on the 30 minute chart is days; in the 15 minute chart is the time frame in a trade a day or hours.

Conclusion

In connection to this evaluation is the trading strategy Parabolic SAR and MACD working best in a trend-following market.

The 15 minute and 30 minute charts are the best charts to get an indicator of the trend direction as the trade is shorter than on 1 hour chart.

Note this evaluation is only illustrative and only inspiration to traders’ thoughts. 

A Simple EURUSD Trading Strategy

On my blog are different trading strategies described; most of them are indicator trading.

In this post

In this post is a simple strategy evaluated. The strategy is in a video I found on YouTube; the video is on http://youtu.be/CDhgjsQEbBM.

Please note that this post is only illustrative and the purpose is to give insight into how to trade.

Strategy

The video illustrates a strategy that starts each trading day at 9:00 o’clock GMT.

The strategy is;

·       Find the trend direction on the EURUSD

·       Place a trade at 9:00 o’clcok GMT;

·       The profit target is 50 pips

·       Stop loss is 40 pips.

Evaluation

9:00 o’clock GMT in my time zone is 7:00 o’clock.

I evaluated the strategy at 7:00 o’clock in my time zone; the four days I evaluated were the price volatility in one direction; the trades would have been profitable if a trade was placed but not 50 pips if the take profit target was 50 pips.  

CFD Trading: Coffee

Coffee is a commodity and is under the section commodity on the trading platforms.

Coffee is produced in developing countries as Brazil and Africa.

Weather and coffee

The weather has effect on the outcome of the coffee production; in Brazil is the weather dry and hot.

January 2014

Brazil is hit by a drought and is on its way into the dry season; which has an effect the coffee production and the price of coffee.

In February 2014 has the price of coffee raised from 140 to 174 dollars per contract. The 20 of February is the price decreased from 174 to 163.

Price of coffee

The prices of coffee raised from 108 to 287 from 2009 to May 2011; the price has since decreased from 287 to 163.

Please note

This post is only an illustration of how the weather has an effect on the coffee prices. Please note also my disclaimer.

CFD Trading: Corn

Corn is a commodity; the US and China are countries that produce most corn. The production of corn starts in April to June where the corn is planted; Harvest is from August to late October.

CFD trading

Corn is in the section commodity on the trading platform; with the latter C or ZC.

The corn price often follows the trend; it is either moving up or down. Some of the best times to trade are around the Corp reports.    

The later the corn is planted the higher the price might get as it is an indicator of a low outcome of the season.

Price of Corn

The price of corn is almost on the same level as it was in 2009; since 2009 the price have increased from 410 dollars to 817 dollars in July 2012; the price is in February 2014 442 dollars.

The price chart illustrates the corn market as a trend following market.

An Online Trading Platform

Are you considering trading on another CFD trading platform or just want to try an alternative trading platform? Plus500 might be a good alternative.

Money in segregated accounts

One advantage using Plus500 is how they hold your deposited money and the money you gain on your CFD trading; they place the money in segregated accounts which mean your money cannot be used by Plus500 for any purpose.

More information is at Plus500’s website about how they hold your money is at “abou us” and at “your funds is safe with us”. 

Simple trading platform

In connection to trading CFD is the trading platform simple and easy to use, which means you fast can learn the features of the trading platform.

More information about the trading platform is at Plus500’s website in the demonstration video “Watch how it works”.

Registration

There are different ways to start trading on the platform.

The easiest way is to download the trading platform and write your email address and a password in the login box; the registration gives access to the demo account.   

More information about the advantages trading on the demo account is at Plus500’s website  at “help” and “trading with demo funds”.

Another way to start trading on the platform is to registers as a user and receives the welcome bonus and first deposit bonus if a deposit is made.

More information about the welcome bonus and first deposit bonus is at Plus500’s website.

CFD trading is a leveraged product

Please notice that your capita may be at risk trading CFD.

CFD Trading: Cocoa

Cocoa is a commodity; the most production is from Africa but new market as China and India are up-coming markets.

Cocoa is used in chocolate and related products.

In recent years are the interest on chocolate and health increasing.

Pricing

The price on the global market is volatility; in the African nations is the price fixed to protect the farmers and to improve the quality of the cocoa production.

The Fixed price is called fair-trade; a fair-trade price is a fixed price plus a premium; is the global price lower than the fair-trade price are the farmers paid the fair-trade price; is the global price higher than the fair-trade price are the farmers paid the global price plus the premium.

The price volatility between 2011 and 2014

The price of cocoa has between 2011 and 2014 been among 2575 and 2925 dollars.

CFD trading and cocoa

Cocoa is in the section commodity on the online trading platforms; in the last year has the price been among 2700 and 2900 dollars. Is means that each contract is worth as an example 2900 dollars if the price is 2900 dollars.

CFD is a leveraged product which means that an investment in a cocoa contract only cost 29 dollars if the price is 2900 dollars on each contract. 

CFD Trading: Cotton

Cotton is a commodity and is used in the fashion industry to produce close etc.

How is the price set in the cotton market?

The price is set by demand and supply; but there are restrictions in the market price.

Government policies

One restriction is government policies; in China is the cotton brought by the government at a fixed price and sold at a lower price.

The price of cotton produced in China is higher than the world price.

The world price is set by local prices; the local prices differ from one country to another country.

The price on cotton and competitive products

Another restriction is the price and competitive products; if the price for cotton is high the farmers will produce cotton; as the price is set by demand and supply; the price will start to fall cause to the higher rate of farmers producing cotton; the lower price of cotton makes another product more profitable to produce and the production of cotton will fall and the price of cotton will start to increase.

Analyzing the price chart for cotton

The price for cotton has been falling since February 2011; the reason is the production of cotton has been high. At the present is the market not short on cotton.

CFD Trading and Cotton

Cotton is in the section commodity on the online trading platform; the price range has the last year been among 95 and 86 dollars.

Charts: Tools to Analyzing the Currency Curve

I was on the eToro blog and read about their new chart service.

Some of the services a lot of traders are interested in are to draw a line from one point to another or set the Fibonacci levels in the chart; these two examples are services eToro offer.

On the eToro blog in the post “Have you seen our new Charts?” is a video illustrating the new service.

CFD: Bitcoin

Bitcoin is a digital coin; the coin is also a CFD instrument on the trading platforms.  

On my website about the social investment network is a link to eToro about the Bitcoin; they explain the coin and how to invest in Bitcoins at the social investment trading platform.

On my website is the link in the list “Latest Updates”; the 13 of January (the Bitcoin has arrived!).

CFD Trading: Natural Gas

Natural gas

Natural gas is an energy source; it is used; amongst others for electricity and fuel.

Measured in

Natural gas is measured in cubic meters.

Pricing

The price for natural gas is given by demand and supply.

The price is affected by the weather as the demand for natural gas is rising in the coldest months of the year; around December and February.

The price is also affected by the economy; in the short run; the demand for natural gas will rise when the economy blooms; in the short run the demand will fall when the economy is in a recession.

The price is also affected by competitions from other energy sources; if the price for natural gas is getting too high the consumer of natural gas may switch to other energy sources.

CFD Trading and natural gas  

On the CFD trading platforms is natural gas in the section commodities.

The price fall from 13,527 in June 2008 to 2,75 in August 2009; From 2009 to 2014 has the price been between 5,8 and 1,927; Monday the 13 2014 is the price 4,12.

The most common trading method; trading CFD; is probably the use of both indicators and fundamental analyses.

CFD Trading: Sugar

Sugar is a commodity; the largest producer in the world is Brazil.  

Sugar production

Sugar is produced as sugar cane or sugar beet; sugar cane is produced in countries where the weather is hot and the sugar beet is produced in countries where the weather is colder.  

Sugar and Price

The percentage of sugar from the sugar cane and beet is depending on the weather which makes the weather a factor in the price development.

The price tent to rise from July/August to the sugar beet harvested; harvested is from late September to November). The reason is the supply on the market is short

In the last couple of years has the price decreased; it is appropriately half of what is was in 2011.

Sugar and CFD trading

Sugar is a commodity on the trading platforms; at one of the platforms is sugar the 9 January 2014 bought at 15,52 and sold at 15;48; the difference between buy and sell is small; only 4 pips.