The GBP.IDX also known as the UK100 is an index that tracks the best 100 performing stocks from the London Stock Exchange. The GBR.IDX is one of the ways a person can trade UK stocks without buying a single at once. The GBP.IDX is my most preferred trading index because it forms a trend that lasts more than 6 days, with a nice trading strategy you can make more than 90% of the trades.In this article i will describe a method i have found profitable over my 6months of trading the index.

The Strategy
This Strategy is aimed for day traders and scalpers. It takes note of the overbought and oversold regions to give you an early warning of the trend. The strategy involves four parts.

1.Spotting the Trend
Open the GBP.IDX 30minutes chart and identify the high highs and lower lows

CHART 1: GBP.IDX 30 MIN chart showing lower lows and lower highs in a downtrend

2. Filter the trend
  • Switch to a five minute frame
  • Go to the indicators and add the 200 EMA
  • In a downtrend the price is below the 200 EMA

3. Finding trading Opportunities
  • Switch to a five minute frame
  • Add the Stochastic indicator- this allows you to find pullbacks against the trend allowing you to sell or buy at a preferred price
  • When the Stochastic is under 20 it represents the oversold condition thus you should look to buy,if its above 80 it represent over bought, low to sell.

4. Trade Execution
If the price meets the above conditions then execute the trade

In Summary

For Sell trade
  • The trend is forming lower lows and lower highs
  • The trend is below the 200 EMA
  • The stochastic is above 80


For Buy Trades
  • The trend is forming higher lows and higher highs on a 30MIN chart
  • The trend is above the 200 EMA
  • The stochastic is below 20


Final Remarks
To trade the GBR.IDX profitable its recommended to first the strategy on the demo account. Furthermore its leverage is usually lower than that for other forex pairs. Its 1:100 for Dukascopy with a spread of about 400.
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