Strategies on hourly charts

Strategies on hourly charts

Forex strategies on hourly charts can be called an intermediate stage between short-term trading – scalping and taking short market movements, and medium-term trading, for which H4 and higher TFs are already used. In this article, we will consider the main features of hourly Forex strategies.

Advantages and disadvantages

The advantages of such strategies include the following points:

  1. The hourly time frame eliminates constant price fluctuations with pullbacks. Fifteen-minute candles have more chaotic movements – therefore, trading is more difficult. Hourly strategies are already guided by the trend section of the market in a larger trend, that is, there are no such pronounced noises (chaotic fluctuations in both directions within a not very large range, which, according to many analysts, have a connection with automated trading systems, in other words, robots).
  2. Increased stop and take sizes, which allows you to better protect yourself from rapid price movements in the opposite direction, which can often be observed on the news background. Even if the data is worse than forecasted, the initial reaction is short-lived and then a return to previous levels quickly occurs and movement resumes within the framework of the main trend. The shorter the stops, the higher the probability of their triggering, all fans of short-term strategies know this. In Forex strategies on hourly charts, such risks are minimal.
  3. Similar strategies can be used on a large number of instruments at once. H1 does not require constant monitoring of the situation, it is usually enough to look at what is happening several times a day. Accordingly, this allows you to work in several pairs at the same time without losing concentration. At short periods, this is impossible – you have to either constantly flip through the charts, or install several monitors.
  4. Much higher potential profit per unit of time compared to medium-term strategies. It is clear that the retracement within the correction on the hourly hours will be much less both in price and in time compared to that on the four-hour clock. That is, hourly forex strategies significantly increase efficiency, while requiring less time and wasted nerves compared to short-term ones.

There are not so many disadvantages, but still some can also be noted:

  1. During different trading sessions, participants may have a different mood, which is expressed in multidirectional movement. There are many such days. For example, in Asia, the dollar grew to everyone, from the opening of Europe it fell, and with the start of trading in America it began to grow again. Such situations are common, and it is not always possible to determine which direction is currently a priority. Moving the stop further in such a situation will not give the desired effect, but will only worsen the indicators of the hourly strategies used.
  2. The statistics of working out patterns on hourly charts is much worse than on four-hour or, especially, daily. Therefore, it will not work to improve the selected forex strategies on hourly charts in this way. That is, it will not work to supplement the algorithm with any classical template filter. On the other hand, having tested any hourly strategies, you can simply follow the instructions, knowing that over a long period of time it will show a sufficient positive result.
  3. It takes patience to trade hourly forex strategies. That is, it is pointless to set normalizations for the day, since the movement may not take place, moreover, it may turn out that a range of 50 points will be traded throughout the week, which will not touch the stop, but will not reach the take. If it is difficult to adapt to this, then, given that hourly strategies do not require constant monitoring, you can use them to diversify your trading for different durations of transactions. Leave the watch to work as it is, while also trading on short-term strategies.

13 candles on an hourly chart

13 candles on an hourly chart

Simple and effective strategy. The trader doesn’t need to do any analysis at all. There is a certain order of actions that must be followed, acting strictly according to the plan. So, to work, we need an hourly chart of the main currency pair. The best results were obtained when testing the strategy for EUR / USD, so it is worth focusing on this particular currency pair, the rest may have “seasonal” improvements in their statistics, this should be studied separately. We will be interested in the time interval from the beginning of a new trading day and lasting 13 candles, that is, 13 hours.

This period was not chosen by chance – it turns out to be just over half a day, the end of the period falls at the very height of the European session, when, in theory, the market should have already determined the trend. For convenience, you can use the standard function of the trading terminal for dividing time intervals, for a metatrader it is “dividing periods” in the chart properties. After switching on, the schedule will be divided by not at all disturbing vertical dashed lines, the distance between which will be equal to exactly 24 hours. According to the rules of the strategy, one should calculate how many candles on this chart interval were closed with a downward direction, and which with an upward direction, that is, in other words, growing and falling.

For two days in a row, entries in one direction – down, while the nature of the movement is clearly trending and you can leave trades at breakeven

Further options in trading

Further, a deal is opened at the fourteenth candlestick. If among those 13 there were more falling ones, then open a short position, if there are more growing ones, then a long one. The logic here is quite simple – a half-day period will show the general direction just through such candles. Moreover, there is a connection with volumes, since fast movements at a distance twice exceeding neighboring bars usually occur at small volumes, but the range can be traded for quite a long time, while with high volumes and candles of a not very large range, but the same same orientation.

The corresponding extremum of the previous day is assumed as a reference point for placing a stop loss in this hourly forex strategy. That is, if we buy, then the stop is removed for the minimum of the previous day, if we sell, then for the maximum. In this case, the smallest allowable value is equal to 30 points, this works as a filter and the value itself is selected by experiment and runs on history. Take profit is equal to the stop, or you can move it back if there is a prospect of further development of the movement. But in this case, be sure to transfer the order to breakeven as soon as the price moves 20-25 points. However, in this case, you will have to search for a target on your own, the strategy in this case provides only a trailing stop, which requires constant connection and communication with the server.