This Aroon indicator trading strategy for Forex, Stocks and e-minis contradicts traditional teachings, and can get you better results.
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Welcome to this video on the Aroon Indicator Forex Strategy, Part Two.
Today, we’re gonna look at the Aroon indicator for trading Stocks, Futures, or Forex, and it really works for any market because it’s based on time and price. This is part two, but if you missed part one, you can find it here.
I’m going to show you a simple scan that you can do using the Aroon indicator. We’re looking for Aroon up, and down, to be below twenty.
I use the level 20, and you can go up to 30 if you want, but I like to be conservative. You would just create a criteria in whatever scanning software you’re going to use, and say Aroon up is below 20, and Aroon down is below 20. It’s not an and/or function, they both have to be under 20 concurrently.
The Aroon Indicator Forex Strategy
What we’re looking for is a consolidating market. As you can see In this video, we’ve had a consolidating market where the markets been going sideways. That’s what this will identify for us, and then we’re looking for a breakout. A nice impulse move, to the upside, or downside.
The nice thing about the Aroon Indicator Forex Strategy is that it’ll also indicate direction. That’s one of the big questions that comes up in consolidation patterns, and breakout patterns is, which way is it going to break? The Aroon indicator actually gives you that heads up. It’s a trend indicator, a directional indicator, so remember it’s lagging. We talked about that in the first video.
My green line Aroon up is here, but I’m really looking for it to hit 100. That’s the bounded range of the indicator zero to 100, so once it hits 100, that’s not enough. We also want Aroon down, to come down here, and hit zero. What I say in the previous video is, we want the green Aroon up to be above 70, and Aroon down to be below 30. We want both, so that’s what we’re looking for in our signal to trade this.
Aroon Indicator is a Lagging Indicator
If you’ve got something that is real-time, or fast, or leading, by the time the indication pops up, it’s too late to trade it. It’s already happened so, this is one area where lagging indicators can be helpful, because you look for it. You find the scan here, and it still gives you time to look for an entry. You’re kind of getting an early signal before the breakout, so you can put this on a watch list, or put all of them on your watch list.
To actually take the trade, we want to have Aroon up hit 100, but we’ve also got to have Aroon down get below 30. Aroon up to hit 100, angle back down, and then angle back up. That is a nice signal, as long as at the same time we get Aroon down going below 30. That all happens concurrently right in there, and that’s our signal. If we take that all the way up to the price bars, that’s pretty amazing timing.
The markets can break above, and below these channels all the time. The challenge is, is it going to continue, or is it going to be a false breakout? Having the Aroon up, being up to 100, and the Aroon down, being down below 30, gives us a higher probability that it’s not going to be a false breakout. That’s another huge benefit.
If you want something to give even more precise timing, you can get my cycle indicator absolutely free! A tutorial comes with that as well, so just send me an email at Barry@topdogtrading.com. I’ll be happy to get you all the info about that.
Now this is your typical breakout trade, and this is what the Aroon Indicator Forex Strategy will do. I actually prefer to get in early, and I like to get in before the breakout. That’s one of the keys to professional trading. This technique works nicely, but you will be trading with the rest of the breakout crowd. That’s not necessarily a bad thing, as long as it follows through, and then you still have some good money going on.
If you liked the video, please give a nice thumbs up and leave comments in the comment section below. In fact, I really cherish your comments. If you have any suggestions for future videos, I’d be very happy to take those into account. I actually make a list of all the suggestions that come in, and that helps me help you. One of the best things you can do is to pay it forward.
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It’s about a 26 minute video that I will give you absolutely free. Just go ahead and click on the link in the top right-hand corner of this video or the link in the description below. As soon as you do that, I will email to you the Rubberband Trade Strategy.
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