This intraday strategy uses information from three timespans: “small”, “medium” and “long”. According to its author Alexander Elder, each subsequent timespan should be at least 5 times longer. This is effective on the stock market trading and in the volatile Forex market. For the short-term options, it is better to choose the combination M1-M5-M15.
The principle of work is not difficult: open the trade on M1 when the trend on all three timeframes is identical. On the figure, there is an example of FALL-option. The downtrend is obvious. Use the «Trends» indicator, to not switch between the tabs. This indicator will show the strength together with its direction.
- RISE-option. The uptrend for all timespans (M1-M5-M15). Stochastic is in the overbought sphere or above zero levels.
- FALL-option. The downtrend for all timespans (M1-M5-M15). Stochastic goes to the oversold sphere.
Start to analyze the chart from the higher timespan (M15) then move to M5. If they coincide, it is possible to open the option with an expiration time of 5-10 minutes.
To remove the false signals apply the Stochastic indicator. This oscillator shows the balance of power between bulls and bears. If it is above level 80, that means the end of the uptrend. If Stochastic is below 20, that shows the end of the downtrend.
Open the option on the next candle after the signal. Choose the expiration time of 7-10 minutes even for the small timespans.
During the publication of market news, don’t open the trade 30 minutes before 30 minutes after. To follow the market situation, use the economic calendar.