Majority of Forex strategies are designed for trading during the periods of the high market volatility. Traders make profit using the periods of high volatility during the American and European trading sessions, where traditionally movement in the market is very active.
However, there are also strategies designed for making profits in the periods of the quiet market. One of such strategies — is Sedona and we will speak about it in this article. Although this strategy was developed by an American trader, it is designed for trading during the calm Asian session with currency pairs, which do not have high volatility.
The choice of a currency in this strategy is very important, since it is necessary that the currency will not be affected even by the Asian news. The strategy is fairly simple and does not require thorough studying; however it has some specifics which a trader shall know for successful trading.
Strategy keynoteand settings of the indicators
It is known that during the Asian session, the price often moves in the channel formed by the American and European traders, especially if during the trading session there was no important news, which could affect trading decisions of the Asian traders.
First of all, we need to determine the high and the low levels of the price. A trader can do it him/her or with the assistance of Time II (VBO) indicator, which is perfectly suitable for this purpose. It also shows working hours of different exchanges and price movement for any period of time.
After installing this indicator, we will rewind the chart backwards, so that we will be able to see the European session and we will place two horizontal lines at the lows and highs, which will help us to determine the limits of the channel when we shift the chart to the right.
After defining the limits of the channel, it is necessary to determine whether the price has been in the overbought or oversold zones at the time of formation of the limits. For this purpose we will install RSI indicator on the chart with the settings 9, which will help the indicator quicker respond to the price changes.
The chart will show how long the price has been in the oversold zone, although the trend has changed from downward to upward at a certain moment. There have been two overbought zones, the first of which coincides with the overbought zone, which was formed by RSI at the moment.
This is the signal to open a sell position. However, in addition to two indicators, we will need a moving average with a period 62, which will shows the direction of the trend and also specifies the point where a trader can place the first take-profit order. It is recommended to place a stop-loss order at the upper limit of the channel formed during the European session. In our situation, it is quite far from the price, which means, that in accordance with the money management rules, it makes sense to reduce the size of the lot. In this case, it is better to place stop-loss order at the limit of the Asian channel and transfer it to the break-even zone as soon as possible.
Next signal is the moments when the price either breaks down or pulls back from the moving average. After the candlestick reaches the line, it is necessary to wait when the fifteen-minute candlestick closes on one of the sides from the moving average without touching it. In case of the breakdown, we will open a sell position with the target at the lower limit of the Asian channel. In case of the rebound, it is possible that the upper limit of the Asian corridor may change and the price will start to move to the red line, which are the highs of the European session.
According to Sedon strategy, trading is carried out in the overbought or oversold zones and the moving average is a strong resistance or support level. The targets are the limits of the channels first of the Asian and then European sessions.