i've started studying the markets approximately in december, and started trading the HH's style something like 3 months ago, and i have to say that i did not have good results. I know for sure what the problem is: my experience is nothing compared to HH's and i need a loooot more time watching the charts to reach that level of basically naked chart trading if i'll ever reach it. So last month, i decided i would have given a shot at another good strategy always based on PA but somehow more simple. And so i found this http://www.binaryopt...verage-returns/ . The title already kept me, because i noticed (in this 6 months of studying and trading) that focus is the most important thing, especially while trading BO -> discipline and patience come along with focus i think.
So i gave a look at the strategy and when i loaded all the indicators, at first i was like "What the heck am i supposed to do with this Dalì?" To me it felt like i was in the red light district in amsterdam.. really..
But i needed just a couple of hours to understand that i was looking at a very complete and not so complex trading platfom. For people like me, that don't have so much charting time... it was good to see indicators that tracks S/R, RNs and the woodie indicator that i think it's not a must but at the start it can be useful. I have to say that if you are not lazy, you can do everything this platform does without any indicators.. just put an indicator for RNs and you are good to go, everything else it's useless if you are an experienced trader.
Next step was trying to look at PA converged with the indicators, and create a strategy with some rules.. and this is what i did.
What i'm going to show you it's not traded with real money yet (and not much with fake money too) but i'm backtesting this for a couple of weeks and it's giving very good results.
When I say very good results i mean more than 90% (truth is i still didn't find a loss... remember that BillyKay says he has 100% accuracy) IF you follow strictly the rules i have written while watching market behaviour.
If you read BillyKay's thread or tested this platform already, you will know that this indicators does not repaint EXPECT for the S/R indicator.. that will cancel the S/R areas the moment that these areas are broken, so while backtesting i always look for S/R areas that the indicator would have shown during live trading.
The changes I made to his platform are:
- i removed the Trendlines indicator
- i removed Nitro and Symbols indicators (optional)
- i added the Stratman Mini Chart indicator (optional)
I hope you know that BillyKay's strategy is not supposed to work in any market condition (like any other strategy): we have to avoid choppy markets, long wicks, too big candles and congestion periods (i think that is the word, btw i mean when there is no defined trend). I have to say that i tried to avoid reversal setups and take only trade with the trend and breakouts BUT if you take a look at the S/R indicator and you know something about PA and reversals it's very easy with this strategy to take these trades too.
I don't want to explain all his strategy again so i'll just write my rules and i'll show you some examples about which are the good trades and when to avoid a trade (and it never felt so easy, because the rules are child proof).
I advice you to read all his thread before looking at this one.
Pullback Rules (basically the setup that appears after a retracement in a defined trend):
- obviously a good trend (don't worry i'll post images with everything);
- a good retracement -> 3 to 5 candles on average (be aware because 2 candles retracement gave me a lot of losses during my backtesting); also the more price reaches 34EMA or 50EMA the better the retracement is, the important is that the retracement doesn't end in the first four EMAs of the Fan indicator (the orange ones in the images i'll show you later); never take a trade if the retracement doesn't make any sense (i'll show you, wait for it )
- a good pattern -> like the retracement starting to get weaker and an engulfing candle that gives the signal (i'm talking about the 4x4 indicator, the one that gives you Green and Red diamonds); the engulfing candle is not necessary.. the most important thing is having a good RETRACEMENT and that trades are taken only when a candle breaks out from the Fan indicator (wait for the images ); also AVOID big candles, just look at the previous 60 candles and see if this candle is above average.. if it's too big, probably price is in an overextended state and it's going to reverse.
- take pullback trades ONLY when the Woodie indicator is Green if you are gonna take a Call trade and Red if you are gonna take a Put trade; NEVER take a trade if Woodie is Yellow or in Counter-Trending colour
- never take a pullback trade right after that the price bounced from a VERIFIED S/R level or a RN (pay attention to what i mean for verified S/R levels -> when a new Higher High or LL is created, the S/R indicator will already show a S/R level there, BUT it's not confirmed till price touches that level and bounces back again). Wait for the market to get powerful again and try to reach that level again;
- sometimes it can happen that a 4x4 signal appears after a good retracement and on a good that that still didn't breakout from the fan: i strongly advice you to wait the next candle and if it doesn't make either the breakout i'll just wait for another setup.
Breakout Rules: this is something a BIT more complex but for every experienced trader it should be a walk in the park
So, imagine we are in an uptrend and a Fractal (the Yin-Yang signs on the graph) is confirmed by a Lower High: what does this means? That the price will stop there for a bit and maybe change direction, and it can be horizontally or become a downtrend. Now we have to do something manual (heeeek!!!). What i do is very simple: i draw a trendline connecting the fractal and the Lower High and i wait for these things to happen:
- Trend will break the trendline and continue to push higher
- Trend will break the 50EMA and stabilize there or start a downtrend
Let's analize what to do in both situations:
- If price breaks my trendline i'll simply take a Call on the candle after the one that breaks out (you don't need the Woodie indicator to be green with this type of setup)
- If Woodie turns RED (not yellow) and then price breaks the 50EMA with a good downward momentum (see Woodie indicator for that) I take a Sell;
- If price breaks the 50EMA without Woodie turning to Red i'll just wait for the next trend to define
Everything i wrote for this Uptrend example is the inverse when you are in a Downtrend obviously.
Uh i forgot: you don't need the 4x4 signals with the Breakout setups.
- all trades are taken on the M1 TF with a 5min expiry time EXPECT if price is moving toward a S/R level or a RN, I go for 3 min expiry time in this situation; do not take trades if price is too near one of these levels;
- NEVER take trades during Top of Hour or Bottom of Hour (ex. ToH = 11.00; BoH = 11.30)
- NEVER take trades near high impact news FOR ANY CURRENCY (this is subjective but i found out that it's better to stop on each asset during high impact news releases) and near medium impact news atleast 15-25 min before and 15-25 min after (depending on the impact and how many news are getting released)
- as you can see i've never mentioned CCI crosses on the Woodie, because I found out that if you wait the CCI cross you will lose a lot of potential trades.
And that's should be it, I think i wrote everything, now give me some minutes and i'll prepare the images with detailed explanation.
If you can please don't reply to this post till i've posted the images or you will create confusion. Thanks in advance
Also a HUGE Thanks to BillyKay for this amazing platform for newbies like me and lazy guys like you and to Hubba Hubba for giving me motivation to continue studying trading and Price Action.
Edited by baryster, 02 June 2017 - 07:24 PM.