In order to survive and thrive in the tough Forex market, you need to have an effective investment strategy to make a profit. It’s something that lots of new traders just can’t find. Therefore, they always lose money in their investment process. If you are looking for short-term trading strategies in Fixed Time Trade, then you can try Diving – a VIP strategy for professional investors.
Diving is based on Rate of Change – ROC and SMA20 indicators. If you are a reader of this blog, the MA is a very close thing in trading. Therefore, the Rate of Change indicator will be mentioned in more detail in this article. This aims to help you understand to apply the strategy more smoothly.
What is the Rate of Change indicator?
The Rate of Change (ROC) indicator is an oscillation indicator. It helps you determine the direction and intensity of the trend in order to find the reversal of the price. You can work with this indicator in any time frame. It is suitable for both short and long-term trading.
How to use the Rate of Change indicator most effectively?
ROC is used in a number of different ways. This depends on the situation and individual trading style.
The indicator can be used as a measure of trend strength, as most traders will. In other words, traders will use this indicator to see if there is a possibility for the price to continue its up/down momentum.
Diving is the perfect trading strategy that combines Rate of Change with Moving Average
This strategy consists of 2 indicators (SMA20 and Rate of Change) formed with 2 different cycles. SMA20 is used to determine the direction of a trend. To trade, we rely on the position of ROC (7.9) as a range chart and ROC (14.9) fine-tuned to the histogram.
Diving is a strategy for traders who like breakout positions. It is very precise and effective when conditions filter out risks from false breakouts of the market.
We can open an order when the price has fulfilled the following conditions:
Open an UP order when the price from below the SMA20 is pointing up. At the same time, the ROC (7.9) and ROC (14.9) indicators are heading up from below 0.
Open a DOWN order when the price from above the SMA20 is pointing down. At the same time, the ROC (7.9) and ROC (14.9) indicators are heading down from above 0.
Capital management methods
The Diving trading strategy is highly accurate with powerful market breakouts. So, the Snowball capital management method (compound interest) will help your account grow fast. In this way, you can confidently use the profit of the previous order to increase the amount invested in the next one.
For example, You invest $50 in the first order with a profit of $40 (payout 80%). Then, for the 2nd order, you can invest capital ($50) + profit ($40) = $90. If you continue to win, you will get $72 from the 2nd order. And for the 3rd order, you will enter the market with the amount of $90 + $72 = $162. If you win, you will receive a total capital and profit of $291.6 after 3 winning orders which is 6 times the initial amount of $50.
Things to keep in mind when using the Diving trading strategy
Better to trade in the time frame of strong market volatility (European and American sessions are the best).
Choose a currency pair with a payout rate of over 80%.
Avoid trading 30 minutes before and after important economic news comes out.
Only execute orders in 2-3 minutes.
I have already covered how to use the Diving trading strategy. The rest will be your testing process before putting it into use in Olymp Trade.