By using multiple time frames, Bollinger Bands and candle stick formation we will uncover how to pick tops and bottoms while trading in the trend of the bigger time frame.
We begin by looking at the daily chart to ascertain what direction we looking to trade by using the common Bollinger Band indicators middle line. A pair trading above the 20SMA is in short term up trend. A pair trading below the 20SMA is in a short term down trend.
Once we find our direction we move to the smaller time, 4hour and 1hour, there we look for weekness in a uptrend (touch of bottom bands) and strength in a down trend (top of bands).
Have a look at the following example.
We start off by looking at the daily GBP/JPY, on the 5th Jan the pair failed to close below the 20SMA after trading above it for some time. Our short term trend is up, we move to the 4hour chart to find weekness (touch of bottom bands).
We found weekness when the pair touched the bottom bands on the 4hour chart, it then made an inside reverse bar, we enter 1pip above the high with and a stop of 5pips below the low. One must familiarize oneself with candle sticks, the use of inside bars, pin bars, gimme bars ect, can be used at extreme weekness or strength.
We can close out half our position at the same amount risk, in this case 90pips, then move stops to breakeven and close second lot at touch of top bands or double amount risk.
You don’t sound like a rookie to me. I have been thinking along the same lines but I haven’t been able to organize my thoughts as well as you. I will have to do some followup testing, but I think you have given me help.
The way I see it there are some strategies that work well in trending markets and others that work better in sideways conditions. It is good to have an objective way to determine this and to confirm one’s subjective judgment.
If you have anything more to post, I will check back.
By staying patient and cutting losses short. A few large wins make up for many small losses. Trend traders aren’t concerned about winning a lot of trades; their concern is to win a lot of money.
Since trends are defined by each individual trader, the statistics you mention (wherever you got them from) are rather meaningless.
Trend traders don’t anticipate anything. They react to price movement and use proper money management.
Have you senior members got nothing better to do than quote on the percentages of range bound to trend markets? I happened to read those percentages from professional traders quotes.
Thought I would come on hear trying to help new traders, instead getting this rediculous feed back about my first lines. Come on read the rest of the strategy then do your 2cent analizing.
So now I’m forced to defend my position. I found the opening statements inaccurate and it was stated as fact. At that point the remaining content became irrelevant to me as I could no longer trust the poster. Thus the very reason I initially commented so the poster could better clarify the statement.
My comment was not out of line nor does it give any representation of my successes and/or failures in the Forex markets. How silly of you to even suggest that.
MG and Pipso,
Just when somebody comes up with new interesting ideas, someone wants to get into a fight and ruin it for everybody else. There is a way to state your opinion without attacking or belittling the other person.
I have heard the same statistics about 80% trending. It was several years ago and I don’t remember who it was, but I remember the person was credible.
Show me where I have made any attempt to ruin or belittle the author of this thread. Furthermore, it is in the best interest of all that if they make claims, they as well provide references, regardless of how vague they might be.
Ok guys, lets forget the range bound % to trending markets. Maybe I should of just named this strategy picking tops and bottoms.
Here is an another example. Starting with the daily chart, I personally use the 20SMA as a guidence to base my short term trend direction.
The EUR/USD daily chart was above, I then looked to the hourly chart for weekness, I found what I personally call a reverse bar. When a candle closes positive after a touch of the bollinger bands. I must mention again, I use inside bars, reverse bars, pin bars, doji bars and even the 123 setup, im looking for weekness and any indication of a reversal.
EUR/JPY daily closed slighty below 20SMA, although SMA is still pointing up. Turning to 4hour chart, another inside bar reversal.
Please note, I call it the inside bar reversal, not from text books. Keep It Simple Stupid. lol
Just a recap, I personally like to close half positions when I reach the same amount I risked, close the other half when the price reaches either top or bottom bollinger bands.
