This is a trading system used to identify entry and exit points into and out of the markets. It works by analysing the markets and identifying the dominant market pattern. As such, it is useful for trading trends in the market, which can be very profitable. To use this system, all you will need are a few indicators for installation to your Forex trading platforms and you’re good to go.
There are 4 main indicators which you should add to your Forex charts:
Symphonie trendline indicator
This is the line showed on the main trading window. Its colour changes from blue to red and vice versa depending on the overall trend in the markets. When there is an uptrend, it turns blue showing that you should be looking for buying opportunities. On the other hand, when it’s red, you should only be looking for selling opportunities.
Symphonie extreme indicator
I always keep this indicator at the top of the indicator window because it’s usually the first to react to market patterns. Basically, it’s the sensitive one.
Symphonie emotion indicator
Depending on the analysis of the emotions in the market, this indicator will tell you how people feel toward a certain asset.
Symphonie sentiment indicator
To determine the market sentiment, this indicator will check the dominant number of positions, either long or short.
When all 4 indicators are added together, the chart is going to look something like this:
All these indicators are available for download through the link at the bottom of this page.
It may look a bit messy, but you are going to need all those indicators for accurate spotting of trading opportunities. Besides, the use of only 2 colours makes reading the indicators easier.
When to enter trades
The indicators you download for use with this trading strategy will themselves make it easier to identify good entry points. For this system, you want to wait until all 4 indicators show the same colour to know that it is a good entry point. There’s going to be a temptation to enter a trade because you’ve seen what you think is a good opportunity, but it’s important to stick to one strategy. (Remember what we learned on How to choose a trading strategy?)
This system has been proven to work, and you can see how the actual market prices reflected the colours of the indicators in the chart below.
The sections marked off by the vertical lines show opportunities to enter trades where the colour of all 4 indicators was the same. Sure, there may not seem like a lot, but the strategy was accurate all the time, which is very difficult to find in any trading strategy.
You can see from the chart above that the 4 indicators recently all turned blue, which would indicate a good buying opportunity. If I had entered that long trade, I’d be thinking of when to exit.
When to exit a trade
A trading strategy is not complete until you can exit the position, preferably with a profit. With the symphonie system, exiting the trade again depends on the colour of the 4 indicators. However, there are different ways to exit, depending on your risk appetite:
To be on the safe side, you can close the position as soon as any of the 4 indicators changes colour. The extreme indicator is usually the first to change colour ahead of the rest, and a very cautious trader can exit the trade as soon as this indicator changes colour.
Sometimes, the extreme indicator can react too quickly to changing patterns and change colour, which would mean that a very cautious trader who had already closed their position will watch as the trend resumes. To be a bit safer, only close part of your position when the extreme indicator changes colour. For the remaining half, wait until 3 or 4 bars form, and if the colour doesn’t change back, then close the remaining position. In this way, you get all the profits from one half and confirm the end of the trend before closing the entire position.
There are some traders who like to milk the markets dry, and you can do this by playing chicken with the markets. It’s risky, but with high risk comes great reward. Such a trader would wait until all 4 indicators changed colour, essentially waiting until the trend reversed and the strategy showed a strong opposite trading opportunity.
This is why such a strategy is also referred to as signal to signal. It’s useful because a trader captures the entire trend and the most profit. The downside is that the trend can reverse and take away some of their profits.
In the example above, we see a strong buy signal at point A, after which the extreme indicator changes colour in multiple positions. For the outlaw, they would ignore all these signs and only close the position at point B, capturing the entire trend.
Like I said, it’s all about your risk appetite, and there’s no one good way to exit positions than the others.
Tips to remember when using this system
Like with all other trading strategies, there are a few things to keep in mind.
Do not be too trigger happy
With this particular system, the most important thing is to wait until all 4 indicators have the same colour. I know I’ve mentioned it before, but this is very important that I have to say it again. Most people who have not had success with this system probably did not because they were too impatient. So, just keep waiting until the moment is right.
It’s going to be a long ride
This is a strategy for trading trends, and to make full use of it, you have to be patient as the trend continues to build. Scalpers may not be most suited for this because they prefer to take their profits and exit a trade as soon as the trend ‘seems’ to reverse, but swing traders know to hold on to the trade. As long as the 4 symphonie indicators have not changed colour, do not exit the position.
For the swing traders, you should also be aware that you might not be able to catch the entire trend. The 4 indicators establish market patterns after analysing several consecutive indicators, which means it may only catch the trend after it has already started. This may be a bit disappointing, but this is also why the system has such a high success rate – because it’s conservative and only shows sure trading opportunities.
Better with pending orders
You can always place market orders when using this system, but pending orders work best especially when there is high volatility. It prevents any slippage and ensures you get your orders filled at the desired prices. You can learn where to place your pending orders from a previous article on pivot points strategy.