📚Winning Strategy with Max Volatility for forex trading


Hello, this is Kei from Japan and thank you
for coming to watch my other video. Today I will introduce another important concept
in forex trading. It’s called “max volatility.” I got this concept when I was studying forex
from a Japanese fund manager in Japan, and I don’t think it’s really common outside
of Japan, like Tokyo Box Strategy, but it’s very powerful, so I decided to share it with
you today. You know everyday, the market is moving up
and down, but in general, the maximum size of volatility tends to be about the same within
a certain range depending on a currency pair and today, I will tell you the most simple
way to find it out from a chart, and how you can actually trade with that concept. But before we move on, make sure to subscribe
and hit a bell if you haven’t, so that you get notifications for my future forex videos. And if you are already excited to watch this
video, please press a good button, too! So, let’s begin! Ok, so what I mean by volatility is that I’m
talking about the volatility within a day. And as you know, on each currency pair, the
volatility is different, and on each day, it’s different too, like when there’s
a economic news or fundamentals, it moves big, but when there’s no significant news
in a market, the price tends to move within the same range of volatility. So, here I took H1 real moving chart of USDJPY and here on this chart, as you can see, the days are divided by these vertical
lines. And how I check the volatility is you take
a measurement tool that I think it’s installed in all the platforms, and I check the pips
of the highest and lowest of the candles within a day. Let me show you. I take the tool, and starting from the very
left, on the 20th of August, if you drag it from the top to the very bottom of the candle,
it shows 52 pips here. So on this day, the max volatility was 52
pips, alright? Moving on to the next day, the max volatility on this day
was like 42 pips. Then the next day 22nd, it was like 40 pips.
so you can see that the volatility limit was in between 52 to 40 pips between 20th and
22nd of August on this particular pair. Well, you can actually take the Daily chart
and measure each candles, but I prefer to do it on H1 because you can measure it more
precisely. This actually tells you a lot. For example, when you open a chart and measure
the max volatility of the past few days, and let’s say you find it like 50 pips. And let’s say the current price level is
just moved like 10 pips downwards since the day started. That means there’s a potential 40 pips to
keep on moving downwards, or potential 60 pips to move upwards so that you can expect
how far the price could extend within the day, and where the initial target can be on
that day. However, as you see on this chart, when there’s
a significant news in a market, it doesn’t work because it’s obvious that the volatility
is much bigger than any other days. So check the economic calendar and watch the
news, and whenever there is some significant events, don’t trade with this strategy. Ok, so moving on to the days after the news,
when you look at this day on 27th of August, the max volatility was 55 pips. Oh by the way, before and after the news,
the average volatility can be changed. Usually right before the important news, the
volatility tends to be shrinking down, and after the news, it tends to be big initially, and
gets smaller as time goes by. So on the 27th, it was like 55 pips, and next
day, it was like 56 or 57 pips almost. Alright, and let’s see how many pips it’s
moving today so far. Let’s see.. currently the price is at 52
pips above from the lowest price. So that means, statistically, the current
price level is near the max volatility in a day, so we can say that the price could
go further up like only 4 pips, then go backwards. So that determines this is a good selling
point. But this alone cannot be the confirmation
because you need to check the market along with other tools like the indicators and lines
and so on. So when I look at the chart, first of all,
to me, this is in a range between this recent highest and this recent lowest level, and
the price is right in between these lines. So until the price breaks on either direction,
I see it’s in a range consolidation, so the price could go either direction from this
price level. Then if you look at the Bollinger Bands, the
current price level is touching on the deviation 2, so that means the uptrend is quite strong,
but it might go backwards from here. Also, I see a horizontal line here, so this
is another reason the price could go backwards from the current price level. So with that being said, let me place sell
here,, hold on,, and this is like a test trade, you know, for you to see the exciting live
trading, so I just go for small lot sizing for you to be able to see the outcome, and
place the stop loss right above the recent highest level, alight. You know, like I said on my previous video,
when it comes to forex trading and technical analysis, I don’t like to explain things
from the past charts because you can say anything about it. You know, to me, it’s like giving you the
questions and answers, and asking you to take the test, then of course, you get 100 scores,
right? But in real trade, is different. it’s like a mile ahead is complete darkness,
and even if you have the answers from the past tests, in real trade, 1+1 can be sometimes
10 or sometimes 0. So I don’t say it’s meaningless to learn
from the past chart, you know, of course it’s important to know the form in martial arts,
but I’m just saying it’s different in a real fight and I know that because I am
an individual trader and I live by this trading only. So that’s why most of the videos I record
are based on live trades and I take positions while recording, so that you know how to judge
things that are unknown in the future. So anyways, I just placed sell here and see
how it’s gonna turn out. And while waiting, let’s check the max volatility
on other pairs. This is the EURUSD on H1 timeframe. So like I did earlier, let’s measure the max
volatility in a day. Alright, let’s start from the 19th of August,
and this is like 37 pips on this day, pretty small volatility on this day. How about on the next day on the 20th, it’s like 41 pips,
almost like 42 pips. And on the 21st, it’s like 27 pips, and
the next day on 22nd, it’s like 49 pips, I think this movement was something related
to a news. Alright, let’s just skip these two days,
and check on 27th, it’s like 30 pips, Then on the 28th, the max volatility is like
24 pips, pretty small volatility on this day. So how about today. Let’s see.. it’s just like 17 pips from
the top of the day, so that indicates, the price could go further down like for 10 or
12 pips, or if there’s some significant support here, and if the price is to be supported
by this level, it could move like 17 + 25=42 pips upwards from the current price level
but make sure if there’s no significant news related to this pair on this day. This is the M15 chart after 1 hour. I actually placed sell here and looks like
it’s not really moving much so I will see how it goes later. Right now, looks like it’s been resisted
here twice but if the price appears to be strong bullish and goes over this line, I
will just cut loss. So let me wrap it up what I said today. First, the volatility within a day is usually
limited in average so if you measure the max volatility on each day, you kind of know how
much further the price will extend or not, and you can use it as a target. However, secondly, don’t use this strategy
when there’s a major economic news related to that pair because it moves much more than
the usual volatility and it could risk your account. Third, this is something I didn’t mention
but before and after the economic news, the max volatility could be changed because the
positions and orders of the traders will change. So after the volatile day, don’t take the
max volatility before the news, but only take them afterwards so that you have more reliable
stats. Alright, thank you for watching the video. If you thought this video is helpful, please
press a good button. And make sure to subscribe and hit a bell
so that you get notifications every time I upload new forex videos. Stay Gold,
Matane bye

One thought on “📚Winning Strategy with Max Volatility for forex trading”

Leave a Reply

Your email address will not be published. Required fields are marked *