Hello everybody I’m parssa and wish you all good time in forex world!
I have a trend trading system and I have BIG problem i usually your some setup like ICI for trend trading that price has to break previous high to i enter the trade with MACD and ichimoku supporting but there is something that prevent me from trading i have a rule that if previous high has been on over bought/sold and the move i want to trade can’t pass through it i can’t trade it (my setup include breaking previous high in oscillator and in price action ) but this rule sometimes protect me and sometime make me loose a good opportunity what is your suggestion do i need to make a new condition ?
Price is often rated as over-bought by some indicators when it makes new highs. So it seems like you have two opposing rules - one that you must buy if price make s a new high and another which says avoid buying when price makes a new high.
You could demo trade this to find out the statistical probability of one or the other giving better long-term performance, start with the simpler set-up ignoring the indicators. Only add an indicator to answer a question which you cannot see answered by the price chart. Remember that even indicators cannot predict the future.
It is very tough to determine whether something is overbought or oversold. The indicators are lagging which means it is already in the past. You need to look at overall market structure and see if its making higher highs and lower highs. You need to have an overall picture of what price is doing before you enter. Have you backtested your parameters?
A breakout strategy like taking a trade after clearing a high or low is normally late so you would expect a pullback pretty soon after so your stop loss would have to be in line with that and your TP also to accomodate good risk to reward
Just take it slowly backtest and see where you would normally enter and then adjust small things and see how they go.
There’s also a school of thought which suggests that the entry signal or pattern is not important, just the consistency of the trend. Its easy to test this too on a demo account, just make your entry at a random time on the trend’s course and see what happens. The idea is that being on the right road is more important than which intersection you joined it at.
Just set up RSI (10) set up and only draw a 50 line. If the trade is above, the trend is bullish, and if lower, the trend is bearish. Forget overbought and oversold - which could last weeks.
And this should match with the MACD (3, 10, 16) set up. I also use PSAR (0.09: 0.50) set up. This is a confirming trend follower and ideal to place a S/L & T/P. on a connecting horizontal ball line.
BTW, I also use Ichimoku Daily trend, 15 minutes for alignment confirmation and 4hr for entry if all three chart ducks line up with the trend.
The rationale for viewing the 15 minute chart is to avoid entering a trade while a retracement to the main trend is happening.
Best of luck.
This is why indicators are hit and miss.
Maybe look into market structure, order blocks etc to help you determine those conditions.
YouTube is a good place to start.
I’m getting into this supply and demand style of trading too. I now only use indicators for additional confirmation