Daytrading strategy - 3270 pips profit last 6 months

[freeforexguides]

This is a method I have been working on for a while. I have paper traded and backtested it from january to june this year with a whopping 3270 pips profit.

I have posted this at other forum, but I would like to share it here aswell.

I call it the Bollinger barbeque...

You need:

GBP/CHF 1H chart
EMA250
Bollinger bands period 20 with deviations 2.0
Bollinger bands period 20 with deviations 2.5
Patience


What is the EMA for?
It is used as our trend indicator.
If price is below EMA, we are only interested in short entries.
If price is above EMA, we are only interested in long entries.

What are the Bollinger bands for?
The price likes to stay between the Bollinger bands almost all the time. But some times the price explodes in either direction, but soon stalls and reverse back to the BB.

We base all our trades according to where price is regarding to the BB bands.

There are two types of trades in this system.

* Based on the outer bands

* Based on the middle band

How to trade?
A picture says more than a thousands words:


In this session the price is above the EMA so we are ONLY looking for long entries. Our long entries are excecuted only on green candles at specific areas.

The criteria for long entries that HAS to be met are one of the following:

* Price has touched the lower bands and a green candle has closed inside the BB channel

* Price has been below the middle band and a green candle has closed above the middle band.

When we now know out criterias, look at the picture above and follow.

The price is above the EMA so we are only looking for long entries.

If you look at number 1. That is a trade based on the lower band. The price has been down touching the lower bands, but the trade is excecuted when the first green candle is closed inside the channel. The trade could even had been excecuted at any of the two little candles before.
But an important rule is: only enter long on green candles and short on red candles.

Number 2 is our take profit level. Normally when the trades are based on the outer bands, I take 50% of at the middle band and the rest 50% at the higher bands. But at this trade there was not room to take profit at the middle.

If you look at the candles right after number 2, they are all covering the area between the outer band and the middle. The area between the bands are also quite thin so we DO NOT trade there. That's usually and indication of a big move. As you can see we get a explosion downwards.

The price is still above the EMA so we are still ONLY looking for LONG entries. After a move like that with the angle of the BB we want to see two green candles, before we go long.

We get our two green candles at number 3, so we enter long with first 50% take profit at the middle band and the rest 50% at the opposit outer bands.

Our TP's are hit at 4 and 5. When the first TP are hit at number 4, SL is moved to atleast break even. If you do not want to risk your winnings it could be moved closer to the middle bands at round numbers or support/resistance.

At number 6 we see that price has been below the middle band and a little green candle is closed above the band. We enter long with 50% take profit at outer band. The rest 50% we are going to use a trailing stop.

After number 6 the price goes below the middle band but never actually touches the lower bands. (Thats why we have 60 pip SL) When the price breaks the middle band again from below, that often leads to a BIG move upwards. Our first TP is hit at number 7.

When the price decides to rise, we gently move our SL 10-15 pips below the low of the previous bar. That some times leads to massive +200 pips profits

How about short entries?

We are only looking for short entries when price is below EMA250. The criterias for short entries are:

* Price has touched the higher bands and a red candle has closed inside the BB channel

* Price has been above the middle band and a red candle has closed below the middle band.

Feel free to comment your thoughts and ideas.

[Hooya]

I like the idea alot it's quite a nice set up. Is it okay to share the idea with others with credit going to you.

[Hooya]

I guess it takes a bit of screen watching. Maybe worth getting some one to program an EA for you to auto trade it.

[freeforexguides]

Thanks for the replies. I'm glad you like it.

Feel free to share it.

Yes you have to watch your charts regulary, but it is a day trading system so I don't mind. I have considered making the EA myself, but I don't have so much time for the moment.

[Hooya]

I might be able to get someone to code it for free later in the Summer.

Out of interest regards to the 3270 pips-do you count each part of the trade ; i.e close 50% at 50pips and 50% at 100 pips do you count that as 150 pips? Do you count the same way on losses?

[Hooya]

I guess time is only an issue if you don't mind sitting at your screen 24hrs a day. IN that chart there are trades either opened or closed at all times of day so an EA would make sense

[freeforexguides]

Yes time is always an issue, and there are trades opened/closed anytime at the day...

An EA would have been great, that would make it possible to adjust it even better to other pairs.

For the profits I have calculated:

1 st TP at +50 pips= 0,5*50=25 pips
2 nd TP at +200 pips= 0.5*200=100 pips

Total 125 pips

Losses 100*60 = 60 pips

[Hooya]

if you say divide a stake in 2 and count the profits per individual stakes then losses have to be done the same. So often traders count it one way for profits and one for losses. Personally I would always do it the way you have done it. But the main thing is for traders to be consistant which ever way they count their pip totals.

[freeforexguides]

Yes I believe that's the correct way calculating profits.

A little trade I took last night. Went short at the little white candle piercing through the middle line. First TP already hit +40 pips, moved my SL above the big white candle.

[freeforexguides]

The remaining 50% got stopped out at +60 pips.