This system has worked for me fairly well. I tested it for month before using it but I have trouble setting profit tagets and stops as I am new to Forex trading. As a rule I try not to risk more than 5 to 10 percent on any trade. I have a small account so I risk a bit more.
Here are the basics of the system:
It is based on a 4 hr chart.
It uses the Bollinger Bands and the stochastic (slow) indicator. Set the stochastic to (9, 3, 3) in combination with a candlestick chart.
The bands act as support and resistance levels as the currency drifts up and down between the bands.
When the stochastic is above 80 and the candlesticks are touching the resistance portion of the bands you short the market.
When stochastic is below 20 and the bands are acting as support of the candlesticks you go long.
Before making your order you must make sure that a reversal pattern has been indicated by the candlesticks. (HERE IS WHERE I MAKE A CHANGE)
Instead of looking for the candlestick pattern to reverse I look for Fibonacci patterns. Bearish Gartley, Butterfly, ABCD patterns, etc.
In addition I set a support and resistance range for the stochastic indicator. I pick the highest high and the lowest high points as resistance and the lowest low and highest points as support. In order to set the range I went back to November 16 2008. I added this because all the pairs do not reach prescribed levels.
When the stochastic has crossed into the support/resistance range I prepare to place my trade as soon as the lines intersect.
This system works but it requires me constantly checking the market to see if those lines have intersected and so on.
My high so far is 112 pips. On average I get about 20-30 pips but, I it may take a day or so and sometimes I lose out on chunks of profit.
I am using MT4 as my platform. If anyone has some ideas on how to tweak this system.
Please be my guest.