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Mastering Volatility Index Trading: a mobile strategy

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Mastering Volatility Index Trading: a mobile strategy
Mastering Volatility Index Trading: a mobile strategy

Mastering Volatility Index Trading: A mobile strategy

Today, I’m going to teach you a strategy to scalp the volatility indices such as Vol 75, Vol 75s, Vol 10, and more. This strategy can also be applied to currency pairs. Let’s dive in!

Understanding the Strategy

Key Principles

If you are new to trading or this is your first time trading in general, always use this strategy to scalp. Scalping means not holding trades for too long unless you understand technical analysis, which involves knowing where prices will make reversals and where they will hit certain points. If you don’t understand these concepts, use this strategy only when the setup is clear.

When you make a small profit, close the trade and wait for another opportunity. Holding a trade for too long without a clear understanding could lead to significant losses.

Indicators and Setup

In today’s strategy, using metatrader 4 or metatrader 5 mobile app we’ll use a few indicators on the main chart and two different windows, namely Window 1 and Window 2.

  1. Main Chart Indicators:
    • Moving Average Exponential (MAE): Period 20, Apply to High
    • Moving Average Exponential (MAE): Period 20, Apply to Low
  2. Window 1 Indicators:
    • Relative Strength Index (RSI): Period 14, Apply to Close, Levels 70 and 30
    • Moving Average (MA): Period 10, Shift 0, Simple, Apply to Previous Indicator’s Data
  3. Window 2 Indicator:
    • MACD: Default settings

Adding Indicators

To add these indicators, follow these steps:

  1. Main Chart:
    • Click the F icon or the equivalent icon on your platform.
    • Add the Moving Average Exponential (MAE) with a period of 20, apply to high, and choose any color you prefer.
    • Add another Moving Average Exponential (MAE) with a period of 20, apply to low, and choose any color you prefer.
  2. Window 1:
    • Click the F+ icon on the main chart to add a new window.
    • Scroll down to Oscillators and select RSI. Set the period to 14, apply to close, and choose any color you prefer. Set the levels to 70 and 30.
    • Add a Moving Average (MA) with a period of 10, shift 0, apply to previous indicator’s data, and choose any color you prefer.
  3. Window 2:
    • Click the F+ icon again and scroll down to Oscillators. Select MACD and use the default settings.

Trading with the Strategy

Sell Setup

  1. RSI should touch the level 70 and start moving below it.
  2. On the main chart, a full candle should close below the red moving average (low).
  3. MACD should show a bearish formation, indicating downward movement.

Place your stop loss at the recent swing high to protect your account. If the swing high is too far and you have a small account, place your stop loss a few pips above the last green candle.

Buy Setup

  1. RSI should cross above level 30.
  2. On the main chart, a full candle should close above the green moving average (high).
  3. MACD should show a bullish formation, indicating upward movement.

Place your stop loss at the recent swing low. If you have a small account, place your stop loss a few pips below the last red candle.

Practical Examples

Let’s look at a practical example of a buy setup:

  1. RSI crosses above level 30.
  2. A full candle closes above the green moving average.
  3. MACD shows a bullish formation.

In this case, place your stop loss below the recent swing low and wait for the price to rise. If the setup conditions are met, you can expect the price to move in your favor.

Now, let’s look at a sell setup:

  1. RSI touches level 70 and moves below it.
  2. A full candle closes below the red moving average.
  3. MACD shows a bearish formation.

Place your stop loss above the recent swing high and wait for the price to fall. Ensure the setup conditions are met before entering the trade.

Tips for Success

  1. Do Not Overtrade: Stick to the strategy and don’t open too many positions.
  2. Practice: Backtest the strategy to build confidence and understand its behavior.
  3. Stay Disciplined: Follow the rules strictly to avoid unnecessary losses.

Applying the Strategy to Different Markets

Volatility Indices

This strategy works well on volatility indices like Vol 75 and Vol 10. Ensure that the setup conditions are met before entering a trade.

Example: Vol 75

  1. RSI touches level 70 and moves below it.
  2. A full candle closes below the red moving average.
  3. MACD shows a bearish formation.

In this case, you would place your stop loss above the recent swing high and anticipate the price to fall.

Currency Pairs

The strategy can also be applied to currency pairs due to the similarities in market movement between currency pairs and volatility indices.

Example: EUR/USD

  1. RSI crosses above level 30.
  2. A full candle closes above the green moving average.
  3. MACD shows a bullish formation.

Place your stop loss below the recent swing low and wait for the price to rise.

Boom and Crash Indices

While this strategy can be used on Boom and Crash indices, it is advisable to use the default settings to avoid risks associated with spikes.

Example: Boom 500

  1. RSI crosses above level 30.
  2. A full candle closes above the green moving average.
  3. MACD shows a bullish formation.

Place your stop loss below the recent swing low and wait for the price to rise.

Key Takeaways

  • Do not overtrade. Stick to the strategy and avoid opening too many positions.
  • Practice on a demo account before trading live to build confidence and understand the strategy’s behavior.
  • Stay disciplined and follow the rules to avoid unnecessary losses.

Conclusion

This strategy offers a reliable way to trade volatility indices, currency pairs, and Boom and Crash indices. By following the setup conditions and practicing discipline, you can maximize your profits and minimize your losses. Remember to backtest the strategy and practice on a demo account before going live.

In the words of Warren Buffett, “The stock market is a device for transferring money from the impatient to the patient.” Stay patient, follow the strategy, and success will follow.

Tables for Reference

Indicator Settings

Indicator Period Apply To Color Choice
Moving Average Exponential 20 High Any
Moving Average Exponential 20 Low Any
Relative Strength Index (RSI) 14 Close Any
Moving Average 10 Previous Indicator’s Data Any
MACD Default Default Default

Trade Setup Conditions

Condition Sell Setup Buy Setup
RSI Touch level 70 and move below Cross above level 30
Main Chart Candle Close below red moving average Close above green moving average
MACD Bearish formation Bullish formation
Stop Loss Placement Above recent swing high Below recent swing low

Simeon Bala
Author: Simeon Bala

An Information technology (IT) professional who is passionate about technology and building Inspiring the company’s people to love development, innovations, and client support through technology. With expertise in Quality/Process improvement and management, Risk Management. An outstanding customer service and management skills in resolving technical issues and educating end-users. An excellent team player making significant contributions to the team, and individual success, and mentoring. Background also includes experience with Virtualization, Cyber security and vulnerability assessment, Business intelligence, Search Engine Optimization, brand promotion, copywriting, strategic digital and social media marketing, computer networking, and software testing. Also keen about the financial, stock, and crypto market. With knowledge of technical analysis, value investing, and keep improving myself in all finance market spaces. Pioneer of the following platforms were I research and write on relevant topics. 1. https://publicopinion.org.ng 2. https://getdeals.com.ng 3. https://tradea.com.ng 4. https://9jaoncloud.com.ng Simeon Bala is an excellent problem solver with strong communication and interpersonal skills.

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An Information technology (IT) professional who is passionate about technology and building Inspiring the company’s people to love development, innovations, and client support through technology. With expertise in Quality/Process improvement and management, Risk Management. An outstanding customer service and management skills in resolving technical issues and educating end-users. An excellent team player making significant contributions to the team, and individual success, and mentoring. Background also includes experience with Virtualization, Cyber security and vulnerability assessment, Business intelligence, Search Engine Optimization, brand promotion, copywriting, strategic digital and social media marketing, computer networking, and software testing. Also keen about the financial, stock, and crypto market. With knowledge of technical analysis, value investing, and keep improving myself in all finance market spaces. Pioneer of the following platforms were I research and write on relevant topics. 1. https://publicopinion.org.ng 2. https://getdeals.com.ng 3. https://tradea.com.ng 4. https://9jaoncloud.com.ng Simeon Bala is an excellent problem solver with strong communication and interpersonal skills.