Jerome's Journal

[Jerome32]

Hello Braxov

The Stalky strategy above is the simplest strategy
I know of.

Find a trend on the higher time frames, like
in screenshot below.

Then look for a candle which has almost no
body ( like the one pointed to by red arrow )

in a downtrend, this small body candle must
be lower than the candle before it - it must
have a lower low than the previous candle,
and the high of the small body candle must
also be lower than the high of the previous
candle.

The next one or two candles will nearly always
continue in that direction

place stop loss just above small body candle.

Hope that helps

’

[Jerome32]

The STR reversal strategy is by far the best
version I have come up with over the last year
but it won’t be for everyone

genuine set ups are rare - you must have
a straight decisive STR way beyond zero

that rarely happens in real time

sure it happens a lot after repainting
but that hardly helps us after the move.

Occasionally it genuinely alerts us in advance

• these are the trades worth taking note of.

I only found one today - audchf - not saying it
will win but at least a bone fide set up.

[Jerome32]

I’ve come up with a new reversal strategy
that in backtests never loses (yeah right!)

The first sample is the worst I could find
and made +830 pips on H4 timeframe.

The minus 200 pips was not a loss, it was
the drawdown you would experience
along the way

However, if you note the pin bar, followed
by a little consolidation, I would have opened
a second position at cross of MACD for an
extra 420 pips. it seems you can’t go far
wrong if you strictly trade in direction
of the slope of bands.

regarding drawdown, In backtesting it’s never
a problem providing the bands are in a definite
slope.

In real time it may be a massive,
cardiac arresting problem,

This is, after all, a game of psychology

so basically the red lines are trendline breaks
which we take if

1. There is an arrow printed
2. Bands have started a definite new slope
3. For safety, confirmation from MACD, and
   CCI 30 must have crossed, and be moving away
   from RSI 50

In this example blue lines represent the two trades.

You simple move from arrow to arrow but only
while bands are sloping.

I have included another seven examples. You will
have to figure out which lines represent the
trendline which we enter when broken, and
which white lines represent the individual
trades between arrows. Hopefully it
will be self explanatory.

Is this the mother of all Holy Grails, or am I
going to end up with even more egg on my face,

It looks like the former but things may not be what
they seem. The arrows do repaint a little on higher
time frames but in this system that shouldn’t pose
a problem worst scenario is that it may result
in a little less profit.

the biggest bugbear is that there can be drawdowns
but they are never fatal if bands are sloping

which I think begs the all important question

Do the bands repaint?

If they do you will likely blow your account.

If they don’t, then theoretically this really is the
proverbial licence to print money

I will start testing in real time from tomorrow
on demo.

[Jerome32]

All that glistens is rarely gold

There is a big discrepancy between the angle
of the bands looking back and in real time

In hindsight you can break trendline with
a good angle to bands

in realtime, on strategy tester at least
the bands will still likely be flat,
lagging if you will

not surprising, how else would bands know
what direction to slope ahead of time?

but the strategy may still work, you just
need to wait for first retracement and for
bands to form definite slope

In the first screenshot, you can see A
where we break trend and have a nice slope

In the strategy tester you can see we didn’t have
the slope

so after an impulsive move, we got a flag
consolidation and a break above that as our
entry at 0.6665

All in all we made 110pips to date. not sure arrows
can be trusted but a break under consolidation
trendline might be a good place to close, or
there may be more to come - until bands start to
slope down.

Sorry video is a bit dark, but you should be able to
see the angle of the green band,

Basically, once we’re in a steep real time trend,
there is money to be made

if price diverges, it will resume the direction
of slope, and usually hit the opposing band

I used strategy tester on H1 but H4 and above
will give far more reliable results, especially
with arrows

Hope this makes sense

[Jerome32]

I’ve done the same thing on H4. Much more definite slope
but only 77 pips to date.

The other thing is, when price diverges away from
bands it always springs back like a rubber band principle

That might even be a more profitable strategy, we;ll have
to see about that

Here are the screenshots

we see an inverted head and shoulder pattern
at a level of prior support looking left

We enter at break of new trendline but only
after slope becomes definite

[Jerome32]

I think my plan will be to close the trade and look
for a shorting opportunity, as price will spring back to the
yellow band before resuming it’s upward trend

[Jerome32]

this springing back to the bands is about
the most definite pattern I’ve ever seen
in Forex trading. It is completely non subjective,
either price has diverged considerably from
the bands or it hasn;t.

and price always reverts

invariably to the opposing band

but the further the distance, the greater the
‘elastic is stretched’ and will price usually
overshoot the opposing band.

In the example given, price is moving away from
the bands, so I have opened a second limit
order, because sooner or later it will spring back,

yes the bands may move up a little while we’re waiting
but not that much.

Its hard to see how you can lose, although it must
be possible, and viewing the forex market as some kind
of charitable institution probably insn’t wise

[Jerome32]

My first 100 pip win on the rubber band strategy
which I strongly suspect isn’t original

[Jerome32]

the paradox is that the further away from the bands
the price is, the more definite the result, in other words
there seems to be far more impetus when price is
stretched out.

so in filtering what setups to take, it seems not about
currency or time frame, but more about divergence

I currently have about 14 open positions, some as far away
as 350 pips from the opposing band, with this amount of
divergence it will spring back and invariably overshoot
the opposing band.

I’m happy to place TP just before opposing band as it
is virtually always hit. there’s no need to get greedy

• a bird in the hand etc

further filters could be MACD divergence and missed
weekly pivots, so if price does inexplicably go against you,
you can still recoup losses and make a profit on the next
divergence as explained earlier in this thread,

I’m also trading the news which is actually fun. I get
an sms alerting me to when news is due out, and
Ive dug my old trade manager out,

I seem to win most but only seek 10 pip TP.

Usually there is more available but I want to
keep the high winning ratio

[Jerome32]

This seems too good to be true, probably my
most audacious - 400 pips TP

not my choice, thats where the opposing band is

this is a very mechanical system

Will I hit the opposing band?

yes, it is always hit, but it may end up
less than 400 pips - depending how
much the bands slope up

basically time is not on our side

if this trade drags on for weeks
I might win very little, but if I get
a big impulsive move I could get the
full 400 pips

I think on average it should be between
300 - 370 - but thats just a guess

[Jerome32]

First two winners today, 77 pips - and 167 pips pictured below

Since yesterday I have drastically reduced TPs. I want to master
the strategy first, then gradually set more attainable TPs
as confidence grows.

I am looking at SupDem indicator in conjunction with
entries and exits

the overriding criteria is that price must deviate considerably
from bands. I’m wondering how well news spikes might work.

eg if price has deviated considerably from bands and hits
the SupDem indicator, that might be the cue to enter as
price should be overdue to start springing back to bands.

With the confidence that price will hit bands, and very likely
overshoot bands, you can look to nearest Supdem zone
past Distal band ( opposing band that is )

If you really want the odds stacked in your favour (yes I’m British),

• You want to see a sharp divergence from Bands

• Factor in that price moves between SupDem zones

• Divergence with MACD etc for extra confluence

• Missed weekly pivots for extra confluence

• Harmonic Pattern for extra confluence (Grey DB Arrow)

[Jerome32]

Nine winning trades today yielding 636 pips, a total
for this month so far of 25 winning trades yielding 1,382
pips and no losers, although I had to pay a small charge
on one break even trade. that was on demo - see screenshot

Of more interest though was my Live account, taking almost
the same trades

Seven trades, two closed for Break even.
Five winning trades yielding 219 pips
Also no losers

Actually a very good result but I made
three times more pips on my demo account!

That is no accident - I was taking no chances with
real money!

wise!

No, pitiful! I’m only trading micro cents!

But at least it identifies my weakness. I can
trade profitably but fear is holding me back.

Today, I also uncovered a major issue with the
strategy. its not a problem but its not for the feint
hearted (like me)

Sometimes price doesn’t want to return to the
Bands straight away. So you can put a limit order
at a further away SupDem zone. Then watch your
trade go further and further into the red!

If you back test you will see price always returns to
Bands, and only occasionally needing a second attempt,
but it always returns - possible exception the 2015 SNB
fiasco.

I’ve arrowed what I mean below

If the first position proves weak and doesn’t move very
far in your favour before reversing, we should be glad,
because the next position will be much further from
bands and invariably plough right through them
to SupDem zone over yonder bands

but not for the fearful!

[Jerome32]

I’ve opened a position on CHFPY. It seems an ideal
set up

Price is reversing from supdem zone and is far from the bands.
I’m not even targeting the bands but am content with 160 pips.
It may reverse back up to supdem zone before finally moving
down to bands and beyond

a very smart strategy, where applicable, is shown on the left -
Enter where price rebounds off supdem, then, if bands start to
slope simply stay in trade until price closes above proximal
band

This isn’t a completely original strategy, I was taught something
similar using Bollinger Bands. this is far better though

[Jerome32]

Only two trades today, and that’s good. CHFJPY and GBPJPY

I’ve scoured all H4 and D1 charts and there are absolutely
no other possibilities.

That’s great, it’s not the sort of deal where you can wish your
way into a set up that isn’t really there

Price must be rebounding off SupDem zone and be far from
bands

If it reverses, it’s ok, there is no stop, you just place a Limit
order near the next SupDem zone.

Isn’t that averaging - the fastest way to the poor house?

No, averaging is when you are sure you are right and the
market must agree with you eventually

So here I am not saying the market must respect Supdem
zones because it may ignore them and reverse hundreds of
pips against you.

but price must always revert to mean and hit Bands at some
point.

It is possible that the point where price hits bands may be
beyond your entry in which case you would lose, as the bands
do move all the time.

so there may be a danger in steeply sloping bands

Ideally price should be high above the bands whilst bands
are sloping down, and looking back there are many examples
of this

but that would not have been apparent at the time. the bands would
only start sloping after price has fallen considerably, in other
words, the bands do not have a predictive mind of their own, it is
basically a lagging indicator, albeit a very useful one.

As mentioned before, because of this situation, a 400 pip drop
to the bands that are rising, might end up 200, or 100 or even
50 pips. what’s wrong with a 50 pip win?

Sometimes you may close where you entered for break even,
but you’ve lost nothing.

Hopefully you wouldn’t normally lose very much

Again, price moving against you isn’t a bad thing unless
the bands also race up as well

but if price moves creating even greater divergence simply
place a limit order for even greater profits.

This strategy requires strong nerves and patience, the two
most essential ingredients of successful trading.

Without these two qualities you cannot succeed in trading,
and this strategy will soon expose your ineptitude.

[frandlost]

Mondays may not be a good day, or

maybe holiday season not conducive

but I feel completely happy to walk away

from the charts until something definite

turns up

That is a great attitude! I’m working on that. Just started reviewing your journal. Looking forward to following and learning more!

Thanks for posting Jerome,

KC

[Jerome32]

You’re welcome KC

An interesting conundrum on D1 and H1

They are both screaming out to be traded -
in opposite directions!

I guess the Daily must carry the most weight
but H1 may indicate a retracement first

[Jerome32]

I entered long on H1 and short on D1

I lost 29 pips on the hourly chart

note to self: being a greedy smart ass comes at a price

but I’ve wound up my demo account, with only one trade outstanding.

I’ve moved over to my live account but upped my lot sizing
to at least be of some significance

I now stick my maximum loss on the chart, just to remind me
that I won’t be facing bankruptcy whatever happens

This USD D1 trade is 1:5 RR

I’m only risking a tiny percentage of 1%

I will need to lose way over 1,000 consecutive trades to even
come close to blowing my account.

At the moment I’ve had one minor loser, two
almost breakevens and over 30 winners
so it would be hard to get 1,000 straight losers
even if I was trying to.

If I can win enough to buy a meal out each week
I will be well pleased at the moment

It can build from there

[Jerome32]

+1,500 pips for September exactly

Shame it’s only on demo, bears almost no relation to real life

[Jerome32]

Starting from October, I am trading live.

I have eight trades opened, with a few more pending orders

there are some excellent set ups today. If I was trading
demo, price would definitely return to the bands

There is absolutely no reason why I shouldn’t repeat last
month’s success with virtually no losers

Price does always revert to the mean, so if disaster
strikes it is likely to only be self sabotage

[frandlost]

@Jerome32, Congratulations and good luck! Seems like you have a great strategy! All systems go!

Looking forward to following the live session.

BTW, which band indicator are you using? When I use the standard bands on mt4 the price never goes outside on the daily; only on the monthly.