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This is a trading system that I use primarily on the Swiss Franc (USD/CHF) in the Spot Foreign Exchange market. I will outline the system as I apply it to the Swiss Franc, hereafter known just as USD/CHF (I believe this stands for Confederation Helvetica Franc).

WHAT YOU NEED
1. Five-minute and 1-hour charts for the forex currencies. The 1-hour chart helps define the intraday trend and the five-minute is used for entry and exit. I use MG Forex’s charting package because their charts represent broker prices and closely reflect the prices of all retail brokerages (i.e., MG Forex, FX Solutions, FXCM, GFT Forex, Gain Capital, etc.).

I used to use premium charting packages such as WebTrader, Comstock and so on, but I
found that the charts reflected prices that no retail FX broker in the world was quoting. Therefore, when watching support and resistance points (pivots), I would see the price shoot way beyond the support or resistance, and it would look like the point had been broken, when in reality it was just a price quote that was out of line with the filtered quotes that brokerages use. When using charts that reflect brokerage prices, you have a better idea of where you are.

MG Forex's charting package costs US$44 a month. They also provide the DDE link for
a forex feed to those who use professional charts like Tradestation. FX Solutions is
revamping their trading software and charting package, and the news will come out early in October. The changes will set FX Solutions above and apart from much of the
competition in the industry. The charts they have now are functional. Regarding their
trading platform, FX Solutions has NO slippage at all on entry limit or entry stop orders.

They do re-quote you if the price has changed while you are entering a market order, but this is standard market practice. Their competition is one of the worst at that.
www.mgforex.com is the site for MG Forex, but they have another site that features their news, charts and analysis packages: www.forexnews.com. This is where you can
subscribe to the charts; they allow you a 30-day demo of the charts for free.
When MG Forex's price on the chart monitor changes, it is reflective of all the brokers.

When the price changes on charts that have a so-called "premium" feed like Comstock or WebTrader, it is constantly moving and is not filtered like the brokerage prices are. It jumps all over the place, and sometimes it looks like support has broken, when it's just one of those renegade prices, out of line with the filtered quotes.
The FX Solutions charts are free and work fine. The new charts will probably be free to all FX Solutions clients. I will probably change to the FX Solutions charts; I can always still calculate the pivot numbers by using an hourly chart from 3 pm EST to 3 pm EST.

The FX Solutions charts have the capability to switch back and forth between a 5-minute and 1-hour chart. They also have the necessary indicators. They work quite well for that purpose. The only thing I don't like about those charts is that, on the 5-minute chart, I use candlesticks, and the candle updates every 2 1/2 minutes, rather than tick-by-tick.

There is a refresh button if you want to update it before the 2 1/2 minutes, but I like the constantly updating candlesticks. The new charts will be real-time updating charts, and that will definitely change my feelings about them. Regarding the bar or candlestick charts, they both update every 2 1/2 minutes rather than
tick-by-tick. Some people prefer this, because it keeps them from making decisions until they actually have a close of a bar or candlestick.

As far as I know, they are both the same, updating every couple minutes, unless you hit the refresh button. Lately, I have been calculating the pivot numbers at 3 pm EST, and then again at 12 am EST just to note the difference. Most of the time the numbers are pretty close, and in the same area. I go with the 12 am EST if there has been any significant movement since 3 pm EST, or if for some reason the numbers don't seem to be matching up with the price action.

2. Indicators: The 9 and 18 Exponential Moving Averages on both the 5-minute and 1-
hour charts. The MACD on both the 5-minute and 1-hour charts.

3. Pivots calculator or pivots calculation which provides not only the Pivot, R1, R2, S1, S2, but also the M1, M2, M3, M4 points as well. It is common to find many
commodities futures traders calculate only the Pivot, R1, R2, S1, S2 points. Often, in the forex market, these minor points of support and resistance are very significant, and most of the time there seems to be no difference in their significance.

There is some difference in which 24-hour time frame to use to compute the daily open, high, low, close numbers. MG Forex begins their 24-hour day at 3 pm EST, and
concludes the next day at 3 pm EST. FX Solutions’ 24-hour day is 12 am EST until 12
am the next day. WebTrader daily charts are calculated upon 2400 GMT to 2400 GMT.
Of all the times that I have reviewed to calculate the daily numbers, 3 pm EST to 3 pm EST seems to have the best consistency for the forex market. I believe the reason is because this coincides with the opening of the Australian, New Zealand markets, which technically represent the first markets of the day to open, followed by the Asian, then the European, and finally the U.S. market.

There is one exception to my usage of this time frame. At 3 pm EST, I will calculate the new Pivots based on the completed 24-hour period, and if the prices move up or down significantly during the Australian and Asian sessions so that they come close to exceeding the R2 or S2 numbers before the start of the European session, I will
recalculate them at 2400 GMT (8 pm EST), or even later at 12am EST. This way I have
a fresh set of pivot numbers for the European and U.S. market sessions, which I trade.

The latest numbers for daily volume in the Global Foreign Exchange market say that
between 2 trillion and 7 trillion dollars a day change hands! This is up from the normally quoted numbers of 1.5 trillion and 2 trillion. Because of this, even time frames such as the late U.S. market hours and early Australian and Asian time frames are producing significant market movement. A year or so ago these time frames produced very little market movement, and were not usually the best times to trade, but that is changing. I trade from the Frankfurt opening (11 pm PST) or the London opening (12 am PST) to 9 am PST, the mid-point of the US market time frame. This normally produces profitable market movement.

At 11 pm PST, I see where the prices are located. Generally, they have not moved too much since 3 pm EST, and I await a fresh break of one of the pivot numbers. The times on the charts that I use for illustration purposes are Eastern Standard Time. Therefore, 2 am on the charts is the beginning of the time frame I use.
(Dr. Strouse’s)