A short trading tutorial by Alan Solarsh (uploaded Jan 5, 2019) teaching a set of practical "doji rules" for forex/currency trading. Core rules: when a doji appears at the top of a trend, take profit and consider shorting once confirmed; when a doji appears at the bottom, wait for the next candle to open above the 8-period exponential moving average (8 EMA) before entering long. The presenter uses the 8 EMA (red/white dotted line) plus the stochastic oscillator (80 line as overbought/oversold cue) to confirm signals, demonstrates examples (including false positives), shows a measured trend of ~114 pips, and recommends setting stop losses to the lowest point about three candles back.
Questions this video answers
January 5, 2019
8-period exponential moving average (8 EMA)
The 80 line (used to indicate overbought/oversold extremes).
Approximately 114 pips.
At the lowest point of about three candles back.
Chapters
Alan Solar here, the passive income guru in this video tutorial explains to you what to do with a doji.
So when you see a doji at the top, the rule is to take profit. When you see a doji at the bottom of a trend, the rule is to wait for your next candle to show up. If it's a green candle then, and it's going in the northward direction, then you should get in. Now, I don't only use the the doji, I like to use another indicator for me to confirm whether the trip the doji is accurate. So I like to use a what is called the 8 exponential moving average. So if we look at the chart, the 8 exponential moving average is the red and white dotted line which we've created when you set up your charts. Now, according to the rule, the rule is that when you see a doji at the top of a trend, you wait for the candle to close above the 8 exponential moving average. You can also wait for your stochastic to be in an oversold position. Then you would know that you are, you're about to go into a short position and you can actually place your short order if you'd like to. So let's have a look at the, at the chart, okay? And let's see if we can find a can a doji at the top of a trend. So here we've got the, the hanging man type doji, okay? It seems to have been a false indicator. Now if you see a false indicator and, and you did get out of the trend and the price went up a little bit, you can get back into the trend. You can get a few, a little bit more profit, okay? But as you can see, it wasn't really a false indicator because a couple of candlesticks later it dropped below that doji, okay? Then there was another doji and then the price went up again. So in actual fact, we're in a bit of a sideways market there. So, so let's look for another doji at the top of a trend.
There we go. So there is a doji at the top of a trend. And as you can see, it's right at the top of the Trend and above the 8 exponential moving average. Okay? Now.
If you look at the.
Stock stochastic at the bottom of your screen, you can see that you're almost in an oversold position where it's above the 80, the 80 line, which tells you that the currency is about to go into the opposite direction and it's going to go into a bearish a Bear market or a short. So when you see the doji at the top of the 8 exponential moving average, get out of the trade immediately. You can go short or you can wait for the next candle to open below the 8 exponential moving average. So not when the candle goes. Let's do that again. Not when you see the candle.
Open above the 8 exponential moving average. You must see the candle open below the 8 exponential moving average. Then you know for certain, okay, that the, that the trend has changed into a short and you can sell and you can start making profit all the way down. Now, the reason I'm teaching you the, the doji and the candlesticks and the together with the 8 exponential moving average is because what people are doing is what novices usually do is, is that they, they usually let their losses run wild and they cut their profits short. My methodology is actually going to teach you how to take advantage of the full trend, okay. And make as many pips as you can. So if we actually measure this trend, let's, let's get an indicator. Let's get a diagonal line here and I'll show you how many puts this is that you would have made. So in the top left hand corner you can see some numbers where it says trend line 29, 1165. That means that that trend was 114 pips, which is a huge amount of profit that you would have generated from this trade. Whereas a lot of people, they see a little bit of profit, they get out of the trade because they don't know the direction of the currency. Now, my methodology is going to help you to take advantage of the full trend and make as much profit as you can. And the only way you can do that is by following the doji rule above the 8 exponential moving average, which is going to tell you that the trend has changed and it's time to go short. That is what happens.
At the top of a trend. So when you see a doji at the top of the trend above the 8 exponential moving average, you can get out of the trade, take your profit, okay? And wait for the next candle to see what the next candle is going to do. Or you can immediately jump into a short position, okay, and go short. Because the doji at the top of a of a trend usually is accurate. Okay. I don't like to.
Get into a trade unless a short position, unless I actually see that the currency that I candle has opened below the 8 exponential moving average. And I suggest as a novice trader that you do exactly that. So when you see the Currency open below the red and white 8 exponential moving average. That's when you know to go short to sell and stay in the trend until the candle goes above the 8 exponential moving average. Okay? So as long as, as long as the currency, the price, is above the 8 exponential moving average in a long position, you stay in the trend. Okay? When the cut. When the candlestick is below the 8 exponential moving average, you stay in the trend in a short position. Very, very simple. Now, how do you know when to change direction from a short position to a long position? Very, very simple. You wait for the candle to close out above the 8 exponential moving average, okay? And that is when you. You take profit. So let's have a look and see.
Here we go. So we wait for the next candle. So when you see a doji at the bottom of a trend, so there's the dojis. So let's have a look. Here's the doji at the bottom of the trend. Okay? We know that the sentiment has changed from a. From going short, the sentiment has changed. As you can see, we're in oversold position in the, on the stochastic. And then we wait for the candle to open above the 8 exponential moving average, which is actually over here. This is the first time that the candle opens above the 8 exponential moving average. And there you see a doji, which is a false positive. Now, if you took this trade, this trade, and you got out of the trade because you saw the doji and the price went up again, just get back into the, into the trade and carry on with the, with, with the trend, you would have lost. If you got out of the trend because you saw that there was a doji, maybe you would have lost a couple of pips and you waited for the, for the next candle to open above the exponential moving average. Get back into the trend and carry on going long, okay, until you see the next doji. Now, as you can see, the candle.
Traded below the.
The 8 exponential moving average. So when you set your stop loss up, you should set your stop loss up to the lowest point of about three candles back. That way you won't get stopped out of your trades, okay? You must trade with a stop loss. Okay? But usually use the, the, the.
You can either use this wick over here or this week or the third week, okay? The point is to try and stay in the trade and as long as possible and get the full benefit of that trend. So let's rehearse. Let's go over there again. Let's rehash that so for a long position, you wait for the candle, okay. To form a doji at the top of the trend above the 8 exponential moving average. When you see a doji at the top of the Trend and above the 8 exponential moving average, get out of the trade immediately, keep your profit and wait for the for the next candle to form below the 8 exponential moving average. If the next candle opens above the 8 exponential moving average after a doji, you can get back into the trend. Okay. And carry on with the trend that was a false positive. If the candle opens below the next candle opens below the 8 exponential moving average after the doji, you know that you are in a short position and you can go short and stay in the trend. And now that you're in the short position, you wait for the candle. If you see a doji at the bottom of the trend, you wait for the next candle to form above the 8 exponential moving average. Once you see a candle open above the 8 exponential moving average, then you know that the direction has changed and you can start going long and take and stay in that trend and still until you see the doji and the top of the trend. Very, very simple to understand. Fabulous strategy that that works about 80 to 90% of the time and you will get the full benefit of the trend and you will make massive profits using this strategy. This strategy works on all time frames, on all currencies, on all indices, shares, futures and options. Anything to do with trading. This strategy will work. Before you go, if you'd like to earn a little bit of bitcoin, I give away 0.005 of a Bitcoin every single Friday to a random subscriber. If you'd like to earn that, there's a couple of things that you need to do. You need to subscribe to my YouTube channel. And how you do that is you just mouse over the video that you're watching. And in the bottom right hand corner of the video is a YouTube icon. Click that icon now. So please pause the video, go and do that step. Now click. Once done, you can come back to this video and resume the video. Now, if you're not already logged into your Gmail account, then you'd need to log into your Gmail account. Now, below the video that you're watching on YouTube there is a subscribe button. So what you do is you click on that subscribe button and then next to the subscribe button is a bell icon. You can click on the bell icon. So please pause the video, go and do those steps. Now Once done you can come back to this video and resume the video. The next thing that you do is you need to give a thumbs up and then in the comments section which is over here you can leave a positive comment with together with your bitcoin wallet address. Now you have to follow the steps exactly to be able to get that prize. So you need to subscribe, you need to hit the bell icon, you need to give a thumbs up and you need to leave a positive comment with your bitcoin wallet address. Only then are you entered into the competition and are legible to win a prize if chosen. So if you want to win 0.005 of a bitcoin I highly recommend that you follow those steps and then you'll be eligible to win that prize. So good luck and I hope you win that prize and if you do remember to invest it in a passive income stream and I'll see you on the next video. Video.
