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Indicators: FXArcanum_entry.ex4, FXArcanum_dynamic_levelsH1.ex4, FXArcanum_dynamic_levelsM1.ex4, FXArcanum_dynamic_levelsM5M15.ex4 (Unlocked), Templates: FXAMdaytrading.tpl, FXAMscalp.tpl, FXAMswingtrading.tpl, UserGuide: Forex Arcanum – System Manual.pdf.
The system consists of two key components: investors’ levels of interest and an algorithm that predicts potential price movements based on past behavior.
Part 1: Investors’ Levels of Interest
The system uses horizontal lines to represent investors’ interest levels:
Thick Line (1): Represents long-term interest, showing areas where investors have focused attention over the past several days or hours (depending on the timeframe selected).
Thin Line (2): Represents short-term interest, reflecting the price zones where activity has been concentrated over the past few minutes or hours.
How to Use It Practically
The arrangement of these lines provides a quick overview of market sentiment:
Thin Line under Thick Line: Indicates a bearish market. When this occurs, you should consider selling.
Thin Line above Thick Line: Indicates a bullish market. This signals a potential buying opportunity.
Part 2: Algorithm for Predicting Future Price Movement
The system analyzes the historical behavior of price to calculate potential future price movements. It takes into account key support/resistance zones and market conditions.
Trade Management
Stop-Loss (SL): Place the stop-loss at the last swing high (for sell trades) or at the nearest resistance level if it is closer. This ensures that the stop-loss is placed where price action suggests there is a likely reversal point.
Take-Profit (TP): Determine your take-profit by observing the momentum of the trade. If the price is moving dynamically, set your target based on a favorable Risk-Reward (R:R) ratio. If the price is moving slowly or in a range, your take-profit may need adjustment.
Break-Even (BE): When the trade is in profit by 1R (or more), you can move your stop-loss to break-even to secure your position. However, be cautious, as setting a BE order too early can sometimes cause you to miss out on profits if the price briefly reverses before continuing in your favor.