Trading rules to open a new position
To apply this strategy it is necessary that the trader has access to the Dow Jones and Nasdaq 100 indexes data before the stock market opens in the United States. Basically, this strategy that uses a 30-minute time frame price chart consist in the following rules:
.-Open a long position if the indices are positive 30 minutes before the stock market opens in any of the following currency pairs:
-Open a short position if the indexes are negative 30 minutes before the stock market opens in any of the following currency pairs:
Trading Rules to Stay Out the Market
If the trader notes that 30 minutes before the stock market opening one of the indices is positive and the other is negative is better to stay out of the market and refrain from opening a long or short position. This trading strategy offers more opportunities for success when both indices are positive or negative.
Management of Open Positions
Once the trader open a long or short position is recommended to take profits at +30 pips with a stop loss of -30 pips. We can also apply a trailing stop of 15 pips if the price moves 30 pips in favor of the trade.
This strategy can be applied throughout the week from Monday to Friday at the same time always, 30 minutes before the US stock market opens considering that the effect of this market on the currency pairs lasts only 1 hour and 30 minutes but sometimes lasts throughout the trading day so the trader have to be vigilant.
The stock market in the United States opens at 9:30 am NY East Time. As with any trading strategy it is a good idea to practice with this system in a demo account to learn how to make adjustments before investing real money.