The Rubber Band Trade is simple. You will need . . .
Daily Chart
50 SMA
SELL
When the price is above the 50 SMA on the daily chart and the 50 SMA is flat or angled down , you sell when the price is at what you believe to be resistance , or a candle pattern.
BUY
When the price is below the 50 SMA on the daily chart and the 50 SMA is flat or angled upward , you buy when the price is at what you believe to be support, or a candle pattern.
The chart I posted here is the USDJPY daily chart with a 50 SMA
Rubber band trade setups do not occur on a regular basis but when they do, they work. If you monitor several pairs and wait for the rubber band to happen, you can get maybe 2 or 3 a week. Patients is the key to trading the rubber band.
Do not assume the rubber band and get in a trade thinking the 50 SMA will flatten out or angle in the direction of your trade.
Wait for it !
Target the line and add a stop half that distance. If the 50 SMA is 100 pips away then put a 50 pip stop. Or whatever you think is best.
Remember , the pros know where every ones stops are and they take them out on a regular basis when they “stop hunt”
This trade works every time I have done it.
If the 50 SMA starts to curve against you , then get out of that trade.
It is always best to trade with the larger trend. Zoom out on the daily chart and check the trend.
Here is a flawless rubber band trade this week with the cadchf for 117 pips.
Big down trend and the price came up above the 50 SMA . The 50 line flattened out and it became a sell trade when the price hit resistance that was to the left in Feb. as you can see.
Here is a Rubber Band Trade I am watching. It is the AUDNZD daily chart. It has been in a down trend for about 1 year. the price is above the 50 SMA and the the 50 line is flat. The price is also at or near a resistance level.
its about 100 pips back to the 50 SMA.
Sell this pair on your demo account now and put a limit down at the 50 SMA
Nice simple strategy. Have you been trading this for long(minimum 100 trades)? If so what’s the win/loss ratio?
Also is your target always the 50sma? Or do you let them run with the general trend direction?
This is a completed rubber band trade , not a new one. this is one that I traded earlier this week. I took 61 pips. It did go lower, all the way to the 50 line. I got in at the close of that high green candle
I have known about this strategy for over 2 years, traded it a lot on a demo account. Then got caught up in trading other strategies and forgot about it until this week. I started trading on a very small real account April 2nd 2014 . I am 3 for 3.
I have a tendency to exit trades early , take the pips a run. As babypips says … “make pips, keep pips” So i did not exit at the 50 line.
But with myfxbook you can see exactly where I got in , the price, the day, and the time. and where I got out.
I try to trade with the trend when the trend is clear like the cadchf chart above . However, with this strategy you can trade a ranging market pretty easy as well.
Always trade to the line, never trade away from the line.
If you enter your email he will send you 5 free videos , 1 video each day. The last video is the rubber band trade. I have not paid for any of his services . He will send you emails from time to time.
Just opened a long position USDJPY . Price is below the 50 sma and the 50 sma is flat. Price is at a support area. So I bought it.
My account is up 44 % since April 2nd on 3 rubber band trades.
My limit on this trade is 80 pips , I put a stop at 50 pips .
The AUDNZD is still a sell trade as well. I can’t get into both positions at this time with this small balance.
Hey Brutus2 , I have been watching that pair since April 10th, I posted a chart up above. I sold it today at 1:30pm PST
in California. Its 120 pips to the 50 line from where I got in. It looks like a Rubber Band Trade to me !! I’m in .
It may go a bit higher before going lower. Maybe 20 or 30 pips.
Who knows. The market is going to do what it wants, when it wants.
Stay with it if you already sold it.
If that 50 line begins to curl up , then you have to decide to stay in or get out and find another rubber band
[QUOTE=“rjmah319;620931”]Yesterday I posted the USDJPY daily chart rubber band trade. I went long . The 50 line had a tiny curve up at the very end. It was a good trade, I took 43 pips . I got out early , it is still 40 pips away from the 50 line. That puts me at 4 for 4 on rubber band trades , no losses yet. Up 57% since April 2nd , when I started trading the rubber band. Here is my myfxbook page Rubber Band Trade System | Myfxbook Here is the current USDJPY chart <img src=“301 Moved Permanently”/>[/QUOTE]
I bagged 50 pips on that usd/jpy.
Nice fxbook stats. Hope you can keep it going.
I’m in on the aud/nzd short. Tp is 100, sl is 50. The stop worries me, but i’ll see how it goes.
That’s the way to do it. I do the same thing. Target the line, but hey take the pips. As my account grows I will open larger positions and close half the position and let the other half go to the line.
If the audznd goes up I dont see it going past 1.08740 yesterday’s high. But you never know.
I only use the daily chart. On the smaller time frames you will get more signals of course. But the line changes faster. I have had some good signals on the 4 hour. Just be careful.
Money management is always hard.
The way I have been trading this is . . . I target the 50 sma, then place my stop half of whatever that is. But I have been getting out early and taking my profit. Its been about 40 to 45 pips average.
(better for forward testing)