The method I am about to share is totally mechanical. It’s a very simple method and only requires Bollinger Band of default setting and to watch closely the bar that penetrates either Upper or Lower band of the Bollinger.
Stop loss is only set at 20 pips with take profit aimed for 40 pips. The stop loss will be reduced to 10 pips once the price has moved 10 pips from entry price and further reduced to break-even once price moved 20 pips from entry price.
Entry: Simply count 30 pips from the highest or lowest point of the bar that penetrate either the Upper or Lower band of the Bollinger.
This method is not a set and forget system. You must monitor the market movement (price movement) as it happens in order to reduce the stop loss level (risk).
I usually trade at 8:00 pm Brunei (7am EST) onwards. The method best works with EURUSD due to its low spread, but can also work with other major currency pairs as well as USDCAD. But I love to trade the EURUSD and oppportunity to trade on daily basis with this method are available almost daily, and sometimes occur twice in a day making it possible to cash cow 80 pips with EURUSD or more.
Here is a sample of the recent trade I made last Friday. The method simply to count the lowest bar that penerate the lower Bollinger Band by 30 pips.
The lowest price is 1.2785, so just add 30 pips = 1.2815
The entry is 1.2815. Hence, I immediately place stop loss 20 pips below this entry price and place my target 40 pips above the entry price (i.e. 1.2815 + 40 pips = 1.2855)
Once the price move 10 pips I reduce my stop loss to 1.2775 then move to break-even once price has move 20 pips. This will directly reducing my trading account risk to zero.
the set-up is actually quite a neat little risk play.
it’s been around for a long time in one format or another. I first came across it approx 8 or 9 years ago. One of our clients sons was trading it on EURUSD, in line with the medium term trend at or near the Frankfurt opening prints.
I spoke to the client early last year & his boy was still using it, so I guess it’s continuing to return decent odds.
as with any simple set-up, it’ll return more favorable risk odds if you try pitch it in tandem with the dominant flows/trend play.
if you’re seeking a little added confirmation, all you reallt need is one of the price aid visuals.
the RSI 14 is utilized in this example.
if you pitch it off a clear cut support-resistance level, you can get in real tight to the Bollinger Band extreme, entering on the 2nd bar after the bar which closes outside the BB.
this one set up nicely this morning as Frankfurt came online, offering a short in line with the current mid-term flows.
just do a quick back-test to see how the opportunities might be used alongside prev days highs/lows, prev weekly high-lows etc.
you should have a ball with it as long as you’re careful with your entries & management.
Thanks for posting your method. It looks interesting so I was taking a look at an H1 and want to make sure I got this right…I am going to describe a short position, please let me know if I am correct.
Candle hits top of BOL.
Wait for candle to close and find the high. Minus 30 pips from the candles high.
Candle High - 30 equals your Short entry
T/P is 40 pips lower than entry (70 lower than Candle high)
S/L is 20 pips higher than your entry (10 pips less than Candle high)
Now here is what I noticed. Assuming the bounce (off the upper) happens the candles usually ride the lower for a while. Do you normal wait until you a candle cross the middle again for the next entry sign?
One more thing, If you see the next candles riding up the bol that was just broken, whats a good entrance strategy. Waiting for a candle that does not breach the BOL (starts returning to center) and use the previous candle?
the chart example used in my post was the 5 minute.
the most effective use of this type of technical play will be wholly determined by your specific style of execution…including risk, your available time to devote to trading & aims etc.
personally, I’ve seen it used on both 60min & 5min timeframes only.
but as with anything out there, if you can adapt or modify a particular set-up to suit your preferences, then so be it.
I wouldn’t bother hanging around kicking your heels waiting for others to confirm something for you. Roll your sleeves up, get out there & test/research things for yourself
you’ve got a couple options already on here about how to go about configuring this simple little set-up.
as long as you trigger it in-line with the dominant trend & wait patiently until a set-up offers you a Grade A entry, you’ll reduce your risk & increase your odds of a positive outcome.
I’ve only flipped back on this weeks Euro activity to haul up these couple examples, but I’m sure if you scroll back on a few more pairs you’ll uncover more simple, top tier opportunities.
here’s one from Monday on the 5 minute Euro chart, rejecting last weeks high.
Remember, if you’re playing extra safe then only consider executing trades in step with the dominant trend/price flows, yeah?
Ignore any counter trend signals until the price flows say otherwise.
this move was worth over 70 pips if you allowed it to run onto end of day.
couple more examples on the 5 minute chart from Wednesdays action. 1st trade was a break-even unless you closed it out as it washed around going nowhere into late european/early U.S trade.
but the 2nd opp was good to go as it spiked & rejected the big figure (1.30). that sweety was worth well over 150pips into the satchel during late U.S trade.
and that’s just a couple opportunities on one instrument this week!
if you manually backtest the set-up on your 60min chart, obeying similar analysis/research planning etc, you’ll see the risk to cost potential of this type of common sense, simple price action based trigger.
simple is (always) best where price action structure is concerned
you got to be choosy how & where you apply these types of triggers, especially if you’re triggering them via a short(er) timeframe chart.
like I say, as long as you obey the obvious price flow bias & execute when the liquidity/volumes are in high demand you shouldn’t get yourself into too much trouble.
it’s a pretty effective concept (on a 5min chart) to be honest, which simply echo’s the directional bias of the price flow.
discipline & patience will reward you handsomely when executing this particular game plan!
How far should the price penetrate outside of the BB? Is any amount ok, or big spikes only?
You say it’s not set-and-forget, but is there any reason you couldn’t use a 10 pip trailing SL instead of manually moving the stop? Or is there some advantage to do it manually?
Anyway I’m going to try this and will post back with my results.
Hi guys - very interesting. But I have a question about it - i’ve enclosed a 5m chart from today. Looking back, I see several points(noted with circles) where price did punch through upper bol, making for a potential short, but subsequently price kept increasing for a time (in one case, quite some time). Without the benefit of foresight, it seems that one could get spooked and close or stop-out before the price reversals.
So, am I missing something? Different time frame perhaps? More patience? Steady nerves? Something else? Very open to comments…
the bols are one of the nicer trading tools around but they also lack much on the shorter timeframes, especially when recovering from a high and moving down or the other way around — its simply a matter of the timeframe being too fast for the “stock” values (20)which are designed for longer timeframes. (its a 20 moving average, after all and not a 4)
two things would have been of extreme value ---- using “barrys support and resistance” chart overlay would show you the first resistance had been hit and surpassed, and where the next was located.
Now this would be guessing or assumption if one then looked at the NEXT resistance area with NOTHING to back up your assumptions, but NOT if you were using the stochastics, accumulation/distribution indicator and most especially the CCI.
while i depend on the DSS (see my thread) for trend direction in each timeframe, crosses of the stoch or any of the others are invariably TRUE indicators of REMAINING strength in the move.
of course, any pause in movement would be created by the one minute movement, but obviously the one minute retrace was a small one, as the 5 minute continues UP.
PRICE ACTION would work, but one must wait for the formation of the next candle, and on a 5 minute chart that could easily be 10 pips which is a lot to give away for a scalp.
The CCI especially shows TRUE strength TO THE NEXT RESISTANCE POINT that is available while the STOCH shows TOTAL STRENGTH AVAILABLE.
what that means is as each candle moves up, it invariably hits “some” resistance from “somewhere” (where is not important with this system) which is “usually” induced by the one minute timeframe, which works within its own ranges, so the CCI is effectively measuring how much movement is left to this NEXT point, while the STOCH measures how much strength is left for the TOTAL move — knowing this, and with the resistance areas and bols in front of you, its fairly simple to project forward where you should exit.
what becomes even more special though, is by using your 15 minute chart, trading with the trend of that chart, you can ALSO pick off the tp points before a time based reversal in the market.
what sounds confusing is a rather simple play once you see it happen a few times and is pretty danged well guaranteed to put MORE pips in your pocket and more smiles on your bankers face.
and of course, if youre trading with the trend of the 15 minute, if you “miss” a long on the one or five you dont have to bail the trade — you then get a third chance at it on the 15 — and thats worth all the tea in china !
enjoy and trade well
mp
[I][B]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !
As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !!
[/B][/I]
one additional piece of information ---- i find the LRC (or its computer derived MT4 indicator, the SHI channel) to be one of the best things since sliced bread BECAUSE it takes into account ALL of what Tessa relates.
the top of the channel, on ANY timeframe, represents historical resistance FOR THAT TIMEFRAME, and as such goes along with Tess’s concepts of triggers — normally the price will BOUNCE back down once it hits the top (which is nothing more than MAJOR RESISTANCE) and its movements can pretty accurately be figured by the accompanying movements of the CCI, but in the event of a breakout, there are auto-fib and auto s+r indicators (theyre actually chart overlays since they dont have their own panel alongside the indicators proper !) that will simply SHOW YOU where the price is heading, based on the current momentum and trend — this momentum “can” and “will” die at some point, but the 15 minute chart will show you where to expect to end up and take profit.
While there is absolutely nothing wrong with what Tess teaches, computers have programs that pretty much handle ALL of that for you, so we simply USE THAT INFORMATION for its speed and accuracy in a moving market as no human can ACCURATELY keep up with the variations, but guess what the COMPUTER is designed to do (aside from showing movies, that is !)
when accompanied by readily available and extremely accurate intraday support and resistance chart overlays, having to MANUALLY look back and select resistance points becomes another one of those 1990’s ANCIENT technology things.
the technology is well in place to help a trader using Tess’s teachings, and has proven to be absolutely spot on every time — [B]if that technology is available for free, why go back to washing clothes by hand ?[/B]
