5# Extreme Volatility Trading System
Submit by Joy22
In this strategy, we are going to look for good volatility. It
is a very simple strategy but you must follow the rules in
order to maximize your profits and minimize your losses.
When during a trading day, suddenly a big candle appears
it means that the volatility increased. So, there’s a good
chance that a good trend starts to develop or gains
strength. Usually, this trend will be in the same direction as
the candle where the volatility appeared.
In conjunction to this factor, if this candle is breaking the
high of the day or the low of the day then, the probability
of a strong trend is even higher. If we believe a good trend
is developing, that means we need to search for trades in
order to profit from our beliefs.
What you need to do in order to follow this strategy is to
begin to look at the size of the candles that are now
beating a new high or new low for the day.
When you see a candle that is big (much bigger than every
candles of the day until now) – but doesn’t have 100 pips
or more of length – and is now making a new high for the
day, you should enter a buy order 1 pip above the high of
the previous candle. You will also enter a stop loss order 1
pip below the low of the same candle.
When you see a big candle (much bigger than every candles of the day until now) – but doesn’t have 100 pips or more of length – and is now making a new low for the day, you should enter a short sell order 1 pip below the low of the previous candle. You will also enter a stop loss order 1 pip above the high of the same candle. Please note that the orders must be placed only once the big volatility candle is finished.
You must exit the trade if your stop loss is reached or if the Awesome indicator gives you an exit signal. As usual, don’t look just at prices; look at some indicator to confirm your trade. For this strategy, we will use the Awesome indicator. As you will see in the examples
presented below, you can use the Awesome indicator to confirm the direction of the trend and to refine your entry and exit points.
Let’s take a look at some examples:
Entry: Buy GBP/USD at 1.7942
Stop Loss: 1 pip below the high volatility candle
Profit: 68 pips
In this GBP/USD 15 minutes chart, you can see the big
candle that made a new high for the day. The horizontal
line at the top of that high volatility candle represents your
entry opportunity. You should enter a buy order 1 pip
above the high of this candle, at 1.7942. If you take a look
see that it is already above the centerline but it is still
rising; so, the uptrend is healthy. As soon as you enter the
trade, you should place a stop loss order 1 pip below the high volatility candle low. This will protect you against
When you enter the trade, you should closely monitor the
Awesome indicator. This indicator will help you decide when
it is time to get out of the trade. You should exit the
position at 1.8010, where the indicator turns red. This
means that bears are gaining strength and the price will
probably fall. As you don’t want to give your profits away,
exit the trade with 68 pips profit.
Entry: Short GBP/USD at 1.7692
Stop Loss: 1 pip above the high volatility candle
Profit: 78 pips
The horizontal line on the chart marks the new low of the
day reached by a high volatility candle. This candle had
almost 100 pips in volatility, near our limits. What is
particular interesting about this candle is that it has a big
upper shadow. This means that, at some point, the bulls
had more power than the bears, but suddenly, they lost
their power, and were smashed down by bears. This is one
of the best opportunities you can find in this strategy.
You should place a short sell order for GBP/USD at 1.7692,
just 1 pip below the new low of the day. If you notice, the
Awesome indicator is pointing in the same direction of your
trade. Don’t forget to place your stop loss order 1 pip above
the candle that just made the new low for the day.
When the Awesome indicator turns green, this means that
you should exit your position. This happens at 1.7614
leaving you with 78 pips profit.
Entry: Short GBP/USD at 1.7306
Stop Loss: 1 pip above the high volatility candle
Profit: 46 pips
As you can see on the GBP/USD 15 minutes chart, the
horizontal line indicates the new low of the day made by
the high volatility candle. As you already know, you should
enter your short sell order 1 pip below the new low of the
day, at 1.7306. If you look at the Awesome indicator, you
see that it is below its centerline but it’s red, meaning the
trend is down. This helps us to acknowledge that we are on
the right side of the trade.You should also insert a stop loss order 1 pip above the
high of the high volatility candle in order to protect your
At the moment you enter the trade, you must closely watch
the Awesome indicator. When it turns green, it is time to
exit the trade. This happened at 1.7260. Time to close the
trade with 46 pips profit.
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Forex Volatility Strategies