May 21, 2011

Market Rhythm: Introduction To The Heart of 4 Hours MACD Strategy

Market Rhythm: Introduction To The Heart of 4 Hours MACD Strategy

Whatever instrument you trade, be it currencies, stocks, futures, or options, getting a feel for the market is vital to your success.

Buying or selling on impulse is not trading. Head to Vegas if you have money to throw away. -fxtradeblog-
Hip Rhythm - Original Artworks by Bernard Hoyes

If you want to learn more about the market Rhythm. Please follow the link provided at the end of this post.

The first time I found about Market Rhythm is when I studied the 4 Hour MACD Strategy in Forex Factory forum. 

At first I only watched over how to find 'easy' signal whether to buy or sell based only on the MACD Signal taught by Philip. And yes, it works. 

Then, when I decided to study deeper about the strategy. I found the notion that "Base your trading decision only on what MACD tell you will lead you to disaster!!!" Oups!

So, I study more about the strategy and amazed about how generous he is. He has provided us a vast amount of information on the strategy. We can download the pdf and mp3 about the strategy.

And, when he said that the heart of this powerful strategy is to understand the "Market Rhythm" I downloaded the material and read about it and practice it with my live account. My heart filled with joy and amazed by how the market move by a natural rhythm that can be learned if you will.

After I learned about the Rhythm:
  • Be more aware about the market direction
  • Understand about how the market trend change
  • Finding high probability setup using the MACD and the Market Rhythm
  • Eliminate the fear to let my profit run and the greed to cut my loss short!

So, what is the Market Rhythm? Please read:

Source: Philip Nel 4 Hour MACD Strategy

To analyze the market rhythm, you may need to set up the Moving Average technical indicator. Believe me, this is far better than the 'moving-average-crossover-trading-system'

The primary set up (Metatrader4 trading platform):

  • Exponential Moving Average
    • 8 EMA, Close
    • 21 EMA, Close
  • Simple Moving Average
    • 89 SMA, Close
    • 200 SMA, Close
    • 365 SMA Close
  • Time Frame : H4 - The strategy was designed for the 4 Hour time frame to generate only the high probability signals. Later, you can find how to use the philosophy of the strategy on the tighter time frames. 

This is the H4 chart of EURUSD today (May 21, 2011 - Before Rapture)

You can see the movement of the market from April Fool to Friday the 13th 
The market shows the strong up and down trend respectively.

Now, do you see the arrow?
Market Rhythm means the market moves in waves, filled with the beat of the universe, almost like a living creature. 

When the market is moving up trend, she will need to pullback before she continues. And the pullback is guarded by the 8 and 21 EMA. 

If the price fall below the 8 EMA, there is a great chance it will reached the 21 EMA - the common place to retrace.

But, if she broke the 21 EMA whether up or down. Then you need to see where are the 89 and 200 SMA. They are the next target if the 21 EMA successfully breached.

P.S: This is just an introduction post. You can follow me on twitter and rss to know the updates.
thanks for visiting my blog.

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About ArrowFX

Technically analyze the forex market mainly on USDJPY, EURUSD and GBPUSD by using market rhythm method started by Philip Nel on Forex Factory. The thread started on 2007 and still alive.
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