I did not understand , and the moving average ?
He did not say anything about a MA, it just happen to be there when he toke the picture.
in my opinion, you should use a 6 or 10 EMA if you want to confirm your way of trading, and try to trade with the trend.
Below the EMA is a put, above it is a call.
If i were to guess what his using i will say 50 to 75 EMA.
my 2 cent.
going back to the topic.
Actually I think we wait for 2nd rule.
Now lets assume we are waiting for the 2nd rule to happen.
I did 4 week testing for this.
- On the last day on the market, Friday after 9AM EST, the number of loses are soo high i do not recommend you anyone to use it.
Recovery: 7 <= geting a win after multiple loses
Max number of loses in a row: 5
- Also note, The sometime the Candle that can start Outside of BB 20.2 and close Inside 20,1. that one candle can meet all the conditions.
- After the 1st rule is meet, i noticed that if the anywhere after the 6th candle (closing between bb20.1) tend to lose. "A LOT" most of the time for trend change.
The Win/Lose on average per week is around 1.02 due to the fact it have a very high loses count in a row on the end of the week and the beginning of the week. with a high of 6 loses in a row, i do not think this is a good strategy for new people, it does not count for strong trend reversals as they are a 100% lose using this strategy.
- More then 6th candle tend to lose here as well when waiting for the 2nd rule.
- On Friday it does not really have a high number of loses
Win : 5
Recovery : 2
Lose : 2
- While waiting for the 2nd rule, 3 candles in a row that are on the same direction have the tendency to lose, as they are an indicator for trend reversal.
the Win/lose on average per week is around 1.7 with a max 3 loses in a row, on my 4 week test i did not encounter 4 loses, but i do recommend you to save for the 4th step.
from this i will say this is profitable on 5 min chart then it is for 1 min chart, why you ask?
on 1 min chart you have a 50/50 win/lose meaning, you have a 50% chance getting that 0.80 cent and a 50% losing a 1 dollar, which will result in a negative profit of -0.20 cent.
on 5 min chart you have a 65/35 win/lose meaning, you have about 2 time the chance to win that 0.80 cent and 1 chance of losing that 1 dollar, which will result in a positive profit of +0.60 cent.
Hope this helps
Disclaimer: these numbers are only based on last month test work, and changes may happen depending on that month.