Rubber Band Trade

Trading Systems Free Forex Trading Systems
547

USD/CAD showing a potential short. SMA is flat/down and we’ve broken out of the price channel, so a retest of the upper trendline area (which coincides with the 50 SMA) may be in order.

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That is a textbook indecision doji, so the market could go either way. It is too early for all but the most aggressive traders to take an entry. I am conservative, so I will wait for the next candle. If tomorrow closes nice and bearish for a 3-bar reversal I’ll be taking an entry.

548

Just booked .5 my USDCAD long @ this level. Good analysis- I agree for the most part.
I’m sitting on the sidelines for now until NFP hits.

USDCAD analysis if you’re interested: 230P Booked on $USDCAD Long 7/31/2014 #FOREX - FOREX-unlimited.com

549

I have seen something like this before, cant remember where it was a long time ago. If memory serves me correct he had way better probabilities when countertrend trading. Not saying you should follow suit just maybe if you log your trades keep a separate log for with trend, no trend (like here 50 is flat) and if you counter trend trade then keep that in its own log. If you use excel you can keep 1 overall log to track all trades and it will separate the trades for you and give you your overall success ratio on each while still having “the big picture”.

Just food for thought. Overall it does not look like a bad trade setup

550

The way I decided to go woth it is that if the MA has in the near past a nice slope to the wanted direction and just flattened now that we have the setup I take it. Maybe it could suit you too

551

Has anyone thought applying this method to 200 EMA ?

552

GBP?CHF with an excellent setup!

553

Is this what you are seeing? Should’nt we wait another day or 2 to ensure it’s agood trade? Nice Resistence points making me think that within a day or 2 this will be a profitable trade. Let me have your view…

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554

Yup. Its a potentially good set up.
I’ve taken up a small long position. Will add to it, depending on the market movement.s

Also, there is a good set up on GBP/JPY, almost similar to this.

555

And long on NZD/USD is also looking good

556

So did you take that trade?

and one more trade opportunity on USD/CAD

557

:frowning: —> Looked like such a good setup.

558

where is everyone ? have you stopped trading this method?

559

Haha, I asked the same question at some stage. Rubberbands dont occcur everyday. I use this strategy to compliment my other trading strategies.

I will scour through my available pairs and see if I find something.

560

Nothing… :-p

561

yea, USD/CAD hurt a little last week

but i just closed a profitable trade that I saw in AUD/ CAD 8/21/14. I had a poor entry as the action was sideways and went up to form a beautiful double top (that would have been ideal entry) but nonetheless it closed profitable 59 pips last night (despite negative Roll)

562

I tried the weekly chart on AUD/USD worked like a charm got 700pips :smiley:

563

According to the first post (which contains the theory of the rubber band strategy) the correct way of trading is by using the Daily timeframe. Some months you would have 5 or 8 chances. But I want to increase the amount of chances and this is what I am going to backtest the following 7 days: I’m going to use this rubber band strategy on the daily (those 5 to 8 chances), and ALSO on the hourly chart and with EVERY currency pair. This would mean that I may have 10 to 20 chances a day. I think (maybe too high of expectations) if I set SL and TP at 1/1 (50 pips, 50 pips) then I would win 75% and lose 25%.

Guys, what are your experiences? Did you use and mix a bit of your own strategy with this rubber band strategy? I’m very curious how you mixed it. Please let me know.

564

Am I understanding this strategy right? The rubber band strategy is:

  • trade in the direction of main trend
  • when selling Price Action must be ABOVE sma50
  • timeframe: daily (or higher)
  • sma50 line should be flat or bearish (when Selling)
  • sell at r/s level

Rubber band with my own strategy:
I backtested some currencies with the rubber band strategy with a time span from now til 2 years ago. The win ratio is definitely above 80% if you set your SL higher (about 150 to 300 pips) and TP at 20 to 50 pips. Of course forex trading is always trading probability. To increase probability I have thought of some key elements we could mix with the rubber band strategy:

  • When trading on the DAILY timeframe, start your first trade at exactly 0:00AM GMT. Because now a new (daily) candle has just emerged and that’s how you could check the previous candle patron and immediately sell if previous candle is a doji (harami or engulving pattern)
  • Waiting til 0:00AM has another advantage especially in the monthly chart: we can all backtest and see that in the monthly chart the candle from OPEN (of the candle) goes either 27 pips up AND 27 pips down (both up and down will be hit/passed) meaning: if you already have this guarentee you could dive into it and make as many micro-trades with highest lot in the direction of either 1 of the sites (up or down)(that has yet to gain 27 pips from the open of the candle)
  • regarding the backtest that I did, it would appear that if you start your first trade at 0.01 lot size, when Price Action, PA, is ON the sma50, you could still make profit. If this is the case, then it’s only natural to set another trade (your second trade) approximatelly (depending on where the closest s/r level is) 10 pips above the first trade at double lot position size. So: 0.02 lot size. Third trade would be 10 pips above it, at 0.04 lot size and so on. In the end even if all your trades are losses, then you last trade is a winner because you just created 4 chances for yourself (you actually four-doubled your probability and even if you lose the first 3 trades (0.01 + 0.02 + 0.04 = 0.07) and you win your last trade (0.08) then you would still have made profit. When trading this correctly you wouldn’t need SL cause you would only double your lot and in the end you would make that money back at the least. You either make little money (when you only make money with only the last trade) OR (which has a higher probability) you make a lot of money. And if your free margin runs out (maybe you now have 5 or 10 euro free margin left), you would trade the other way around so that you wouldn’t run out of ‘free margin’ and even GAIN free margin starting your first buy trade at 0.01 lot. If you trade correctly your chances of success increase and eventually after some practice your probability would be 50-50% which in this case means (if you made 4 trades) 50 times 4 = 200% win probability vs 50% failure probability, would be 4:1 win-lose ratio. You get 4 free throws at the children fair at the ball-throw stand, and it’s free. What else could you want? Even if you’d get the plushy teddy bear for free without having to throw any ball it wouldn’t be a fun game, now, how fun is forex? I’d say it makes my life worthwile.
565

nice to see someone on this thread. yes according to the rules it is applied on the daily timeframe but I also check the weekly charts only I have about 20pairs opened up and what I have observed is that when the price is below the 50sma and the sma is pointing upwards rather flat than it has more probablity of going up but when it’s flat it also works… and right now I have got an open trade on gpb/usd on the weekly chart and I am 900pips + :smiley: right now and still going strong and one more thing you are talking about putting a sl of 50pips and TF of 50 which are quite less for the daily TF as you sl will easily be hit try setting your sl for about 200-400pips and you tp should be the same. I am also trying to apply two Moving average crossover system that is 5ema and 10ema that if the line is flat and the MAS cross in my 50sma direction then take the trade but it’s still practice. Good luck :slight_smile:

566

I am wondering. Does AUD/CHF, daily chart, at this moment meet the conditions of the rubber band strategy?

There are so many up and down swings, I cannot recognize one single direction of the main trend. What do you think? And also, would you buy here (while Action Price is below SMA50? (aud/chf, daily chart)

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