Hey FX280… that EU trade is doing well 
You should have as target last month low: 1.3145…
happy trading
This is a great topic. Im glad you ask. I will be making a post about it on the weekend
Ok, here is my post about TRAILING STOPS, TRAILING STOP, AND TARGET PROFIT.
First you need to understand that not all pairs have the same behavior, and that is because the volatility is different for each pair. In general the assumption that is used is: “Move the Stop loss (SL) to Breakeven (BE) as soon as the profit is the same as your Stop loss”. That assumption is ok to start with, but sooner you will discover that you will get stopped out of a lot of trades because you moved the stop loss to soon, and you will be frustrated. I´m pretty sure all of you have been in that situation, when you got stopped out at BE and then watch the market go in your way again. That is because you didn’t consider the volatility when you moved your SL.
In order to incorporate volatility to our trading system, I have divided the pairs in two groups:
First group: eur/usd, usd/chf, gbp/chf, cad/chf, aus/usd, nzd/usd, eur/aus, usd/cad, eur/gbp.
Second group: gbp/jpy, eur/jpy, usd/jpy and gbp/usd.
The first group is low volatility pairs, and the second group is high volatility pairs. Let´s discuss each group separately.
[B]FIRST GROUP: low volatility pairs[/B]
Move the SL to BE:
-When profit is the same as your SL.
-After a week in 4h trades.
-After a month on daily trades.
As soon as one of the tree options happens, then you move the SL to BE. Whatever comes first, you move the SL to BE. This are low volatility pairs, so if after a week or a month they haven´t move the same as the SL, there is a possible reversal coming, so you need to protect your trade.
This group is the easiest to trade, because moving the SL to BE is mechanical, and no emotional aspect is involved.
[B]SECOND GROUP: high volatility pairs.[/B]
Move the SL to BE:
-After a week on 4h trades
-After a month on daily trades.
I don’t care how much is your profit after one day since you opened the trade, this are high volatility pairs, so you need give room to the trade to develop. This pairs usually move in your way, then retrace a lot, and then go in your way again. That is why moving the SL to BE too soon will get you stopped out at BE. [B]REMEMBER TO [U]NEVER[/U] MOVE THE SL TO BE BEFORE A WEEK ON 4H TRADES, AND BEFORE A MONTH ON DAILY TRADES.[/B]
One week on 4h trades, and one month on daily trades is the optimum amount of time that the trade needs to develop. If after that, price hasn’t moved more than your SL, then you have to move the SL to BE because a possible reversal is coming. This method will allow you to avoid high volatility moves of the market.
This group is the more difficult to trade because you will deal with the emotional aspect of watching the price retracing a lot.
[B]TRAILING STOP[/B]
This is for me the most easy aspect of trading, because if you have already moved your SL to BE, then is a free trade (no more emotional aspect), and also you have avoided some volatility. [B]I use 2 things to trail my stops: middle Bollinger band and recent swings of price, whatever is more away from the price.[/B]
[B]TARGETS[/B]
I use support and resistance levels as targets. Usually I know exactly where are my targets when I place the trade. If I see an important level of support or resistance that is too close (less than 1 time my SL) then I don’t take the trade.
The three support and resistance levels I use:
[B]-100 and 200 SMA on daily chart
-Last month high and low.
-Weekly important support and resistance levels. You just switch to weekly chart and see where are those levels where price has bounced several times.
[/B]
Happy trading!
I see the list of pairs here is not all the same as in your first post. What are all the pairs that you will trade with this? Are there pairs you don’t trade?
Good info, Gas.
Question: How do you set your initial Stops? Outside of last extreme swing hi/lo? Do you add a little fudge factor? (i.e. last swing hi/lo +/- “X” pips)? DO you look at ATR?
Thanks for sharing!
RMS
I left some pairs out on the first group…my mistake. Im editing my last post now, thanks!
Be careful with eur/gbp is kind of choppy, so it has to be a very good set up for me to take it. I added Gbp/usd to the list because some people trade that pair, and I wanted to give them some advice so they dont get constantly stopped out. Gbp/usd in my opinion is the most difficult pair.
Hey gas! Thanks for sharing your thoughts on the trailing stops.
However a couple of qns if i may?
I understand your entries are all based on stop order, meaning you dont wait for the close of the candle above/below the mid BB?
Also, would it matter to you if price touches the outter BB before falling down to the mid BB? (For short setup)
And lastly, I’m assuming your initial stops would be at the swing high? (For short setup)
I’m currently backtesting your method and forward testing as well! It’s looking good!
Thank you!
Here is the example of EU entry, you can see also the importance of the trailing stop rules, in this trade you would have been stopped out at BE:
Hey RMS
I put my SL on the other side of the candle that touches or come close to the outer band. I post an example on my last post!
Happy trading!
Hi Gas,
Do you think GBPCHF is setting up a long on daily chart?
gbp/jpy H4 may be setting up?
thanks Gas! That explains very well!
I hope to share my results after some forward testing with you guys here.
Looks very much possible!
Yes. I have a sell order at 119.30 (a few pips below last week low), which allows me to have 2 filters: the entry is below middle band and below last week low. My SL is at 120.50, and target at 116.95 (last month low). When the last week high or low is not too far away from the middle band, I like to see a break of both. That allows me to filter some bad trades.
hey
What software are you using? Cause I dont see a set up yet. Price is 300 pips away from the lower band.
I use Oanda MT. This is the chart I was looking. Middle band pointing up and price crossing it up.
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I have this chart:
We were discussing the difference between metatrader software and Oanda a few posts ago. Maybe you should consider switching to Metatrader
Wouldn’t your entry beclose to the lower BB then?
Cus on my chart your entry point is at my lower BB.
Yes but is just a coincidence that the lower band is at the same point of last week low. The important aspects of the trade are:
- Daily trend is down, so we are trading the 4h timeframe in the same direction
- First filter: break of middle band.
-Second filter: break of last week low (we use this filter because last week low is not that far away, that way we increase our w/l ratio and we dont hurt our r/r ratio).
-Price is going into an important support: last month low.
Now we are in a retracement…so the set up for gjpy is losing power, you can see now that the chart is with the 4h middle band against. Lets see how price develop this week. Eur/usd looking good