Synthvol Strategy - Rules for Opening PositionsFriday, 8 December 2017 00:00
Synthvol is a trading strategy for the Forex market, based on technical tools, as well as VSA signals. The author of such a method is a trader with many years of experience, who created this system primarily not for earnings, but for finding certain market regularities.
Synthvol Strategy Features
This method is based on the calculation of the volume of ticks. It can be used on different currency pairs with high volatility. Experienced market participants suggest not using this system on exotic currencies, since in this case the volume of ticks may be quite different from the actual volume of transactions.
This method is suitable for any time intervals, but it shows the best results on the M15 and M30 timeframes. The author of the methodology recommends trading during the work of the London session.
To understand the application of this strategy in practice, you need to consider the technical tools used in detail. Synthvol uses the following indicators:
- SonicR PVA Vol is the main tool. It was taken as a basis for this system. The indicator displays the dotted lines, which are plotted on the Money Flow Index histogram. In general, these levels are used to estimate the parameters of the change in trading volumes. However, we will discuss them in more detail below.
- xADR 0.2renko is one of the versions of the ADR indicator. Using it, you can determine the successful points for setting the Stop Loss and Take Profit orders.
- News Forex Factory - this tool displays vertical lines on the chart of the asset price, suggesting the time of the key economic news release. This tool can be useful for any trader, applied within a variety of techniques.
- Also Synthvol uses the indicator that displays the remaining time before the current candlestick closes.
Synthvol Application in Practice
First, you need to build a resistance and support lines on the price chart. You can do it with the help of SonicR PVA Vol. Levels must be drawn through the price values that correspond to the peak positions of the columns of the Money Flow Index chart crossing the level of 75. The figure below shows an example of the support and resistance levels construction according to the following scheme:
Don’t add too many constructions to the chart. It will be enough to have four lines, built on the basis of the most relevant data. Once the levels are built, you can wait for the signal to enter the market. Trading on this method, you can open the positions both at the moment of the range breakdown, or when the price rolls back from the borders.
If the level has been broken, you shall expect the further movement in the same direction. Remember that it’s important to determine whether the breakdown is true, in time. Only the breakdown, after which the candlesticks close outside the range, can be considered true signal.
Open positions with the help of pending limit orders. At the same time, they are set near the support/resistance levels, looking for the further correction of price. Don’t open the pending orders directly on the lines. Place them at a distance of several pips.
- If a support line breaks, there must be set a limit order for sale;
- In case of breakdown of the resistance level, a limit buy order is opened.
Opening positions on the rollback is a little more difficult. The point is that in this case, you don’t know exactly whether a rollback will take a place, or the price will continue moving in the previous direction, and the level will be broken. Positions are opened with anticipation, when the real sequence of events is still impossible to predict. Such a way of trading is more risky.
To learn how to predict the trend reversals with a high probability, we recommend you study the basics of a candlestick analysis, as well as the principles of demand and supply formation on the exchange.
To avoid opening the unprofitable trades, you should filter the signals. The following tips will help you:
- If you see that trading volumes are increasing (SonicR PVA Vol reflects volume growth as new highs), this means that the probability of the levels breakdown also increases.
- The inverse relationship is also correct: if the tick volumes begin to decrease, or don’t change for a long time, this increases the probability of a price turn approaching the support/resistance levels.
Setting the Stop Loss and Take Profit orders, pay your attention to the ADR indications of the ten-day period. We recommend setting the Stop Loss at 30% of the indicator, with a Take Profit equal to 50%, or near the border of the range.
Advantages and Disadvantages of the Strategy
The main advantage of this system is its simplicity. Even the beginners of the financial market are able to trade with this method. At the same time, it’s worth noting the importance of a timely response to the news. At these moments, the price can make the unforeseen jumps.
It’s also worth noting that the mechanisms of Money Flow Index and SonicR PVA Vol are not related. This means that the tool can redraw its readings, which often leads to losses.
To master this method perfectly, try it on a demo account first.