Using the Aroon Up and Down indicator on a daily chart. Deadly accurate if done right
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  1. #1
    Join Date
    May 2011
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    158

    Default Using the Aroon Up and Down indicator on a daily chart. Deadly accurate if done right

    For those that are looking to trade on longer time frames, and don't poo-poo indicators for the simple fact that they've been told to, this thread is for you!

    Now there's a correct way to do this. I've been doing it throughout 2012 on a separate account I set up just for this, and it's been nothing short of awesome. Here's what you do.

    1) Download the indicator for MT4 if you haven't already. You can find it in a lot of places. Here's where i got mine: Aroon Indicator | Forex Indicators Guide

    2) Keep it on a daily TF. It can work well on other time frames, but not nearly as good as a daily. If you go with lower TF, you'll probably get stopped out a few times, get frustrated and give up. Done right, this fails you very seldom.

    3) The right pair makes a big difference here. It works fine on E/U, but I like to avoid USD pairs when I do this, especially because I don't want news always getting in the way. You want pairs that trend very smoothly and give you as little chop as possible. G/U for example, not great. Here are the pairs I love to use with this (and keep in mind, if you have a good 4-5 pairs to use, trade opportunities come more frequently). In order:

    GBP/AUD
    GBP/NZD
    AUD/NZD
    EUR/GBP (Better to trade in the direction of the overall trend on this one)
    EUR/JPY


    4) Make the trade when the Aroon Up and Aroon Down cross each other. Manage the trade at your own discretion after that.

    5) Have a volatility indicator on hand. I've had very minor stop-outs during very low volume periods that I would just as assume not have. Decent to high volatility means this should really be a good trade to take.

    For those that have the patience, and/or may not like staying up to watch charts all night in the US, give this a try. A quick backtest, or just even a glance back will show you how well this works.

    If you come up with any discoveries of your own while doing this, let us know!

    As of right now, the EUR/GBP just crossed bullish at yesterday's close. It's more range-bound than counter-trend, so I'm going to go ahead and make a play, also because I also feel the GBP itself is going south this week. It has a tough resistance line to bust through right around .7950, but I'm tracking it closely.

    I have my own primary way of trading, but this has been nice to have on the back burner, especially since it's been so profitable. Give it a try!
    Last edited by ViciousP; 08-24-2012 at 04:03 AM.

  2. #2
    Join Date
    Apr 2009
    Posts
    1

    Default volatility indicator

    Quote Originally Posted by ViciousP View Post
    5) Have a volatility indicator on hand. I've had very minor stop-outs during very low volume periods that I would just as assume not have. Decent to high volatility means this should really be a good trade to take.
    Thanks for highlighting this indicator, it seems to give pretty good signals. You have mentioned a volatility indicator, can you explain what indicator you exactly use, and maybe to show an example how you filter the trade based on that?

  3. #3
    Join Date
    May 2011
    Posts
    158
    Quote Originally Posted by ygius View Post
    Thanks for highlighting this indicator, it seems to give pretty good signals. You have mentioned a volatility indicator, can you explain what indicator you exactly use, and maybe to show an example how you filter the trade based on that?
    There are lots of them that are already on your MT4. ADX is one I've used in the past. I use the TDI synergy indicator from Compassfx now, it's free but you have to go find it. When the blue bands on the indicator are pinched together, I either trade with caution or don't trade at all.

  4. #4
    Have you tried using the ATR indicator (Average True Range) for volatility? It seems to be effective in estimating stop losses as well.

    Also, for the Aroon indicator, do you leave it at the default time period setting of 14 or do you change it higher because we're using it on the Daily chart?
    Last edited by NewNine; 08-27-2012 at 06:33 AM.

  5. #5
    Join Date
    May 2011
    Posts
    158
    Quote Originally Posted by NewNine View Post

    Also, for the Aroon indicator, do you leave it at the default time period setting of 14 or do you change it higher because we're using it on the Daily chart?
    Good question. Yes, default settings, just keep it at 14. The number just refers to the number of time periods measured, so the TF doesn't matter. 14 works really well for me.

    Not a fan of ATR myself, but there are dozens out there, try some and find the best one for you.
    Last edited by ViciousP; 08-27-2012 at 03:09 PM.

  6. #6
    Join Date
    Aug 2012
    Posts
    1

    Thumbs up GooD Riddance

    Impressive BackTrack With This One.. Gonna try this For the Whole September... and i'll write again. with the result next time, thanks you.

  7. #7
    Join Date
    May 2011
    Posts
    158
    A quick note -- after backtesting, EUR/AUD and EUR/NZD have done better than EUR/JPY, but I was always in other trades when these were crossing, so I have no real-time experience with these. But feel free to add them to the mix.

  8. #8
    Join Date
    Aug 2012
    Location
    London
    Posts
    5

    Default How to display it in MT4

    Quote Originally Posted by ViciousP View Post
    5) Have a volatility indicator on hand. I've had very minor stop-outs during very low volume periods that I would just as assume not have. Decent to high volatility means this should really be a good trade to take.

    For those that have the patience, and/or may not like staying up to watch charts all night in the US, give this a try. A quick backtest, or just even a glance back will show you how well this works.

    If you come up with any discoveries of your own while doing this, let us know!

    As of right now, the EUR/GBP just crossed bullish at yesterday's close. It's more range-bound than counter-trend, so I'm going to go ahead and make a play, also because I also feel the GBP itself is going south this week. It has a tough resistance line to bust through right around .7950, but I'm tracking it closely.

    I have my own primary way of trading, but this has been nice to have on the back burner, especially since it's been so profitable. Give it a try!
    Could you please explain how I could display this indicator in my MT4 charts?
    Thanks in advance!

  9. #9
    Join Date
    Aug 2012
    Location
    London
    Posts
    5
    I found my answer here
    forex-indicators.net/aroon-oscillator

    "
    In your MT4 platform folder go to: Experts -> Indicators
    Copy the two indicators there:
    Aroon_Up_Down.mq4
    Aroon_Oscillator_v1.mq4

    Restart MetaTrader platform.
    Now you'll find both indicators in your platform menu:
    Insert -> Indicators ->Custom
    "
    Download both from here:

    forex-indicators.net/files/indicators/mt4custom/Aroon_Up_Down.mq4
    forex-indicators.net/files/indicators/mt4custom/Aroon_Oscillator_v1.mq4

    enjoy!

  10. #10
    Join Date
    Aug 2012
    Location
    London
    Posts
    5
    Go here for a video
    forex-indicators.net/how-to-install-mt4-indicators

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