This clip popped up on my Youtube page last week, its from Christopher Lewis, TheTraderGuy and FXEmpire.com.
Use the daily chart and add a short-term MA. If the MA slopes upwards, set a buy at the day’s high, set the SL at the day’s low: if the buy is triggered the next day, either take profits before the US close or run the position longer by trailing the stop-loss. Reverse this for shorting in a downtrend.
I’ve been having fun running this for 6 days, made over 5% profit on the account. I’m finding about a third of the orders I set each evening will trigger by or just after the London open. None of these has so far hit the 2% stop-loss, and I’m manually closing any that get halfway back to the stop. I’m closing winners when they have a decent £ return, haven’t let any reach an r:r of 1:1. Once I’ve got a decent daily profit in the bank, I am cancelling the outstanding orders, and in any case cancelling all outstanding orders by mid-afternoon (London time). Win rate about 50% so far.
Yes, I like it as I didn’t otherwise have a short-term strategy. This complements the longer-term trend-following trades I normally do. Anyway, it makes money with little risk…
Initial review of TA of trades taken and not taken with this set-up suggest its of marginal benefit only to try to introduce additional rules to refine the choice of trades. Best results come from taking all trades that fit the original simple set-up, not trying to sift further using each chart. Maybe its just so simple it can’t be refined into a more advanced tool. Maybe its like an axe - you can’t develop an axe into a saw…
Worst possible outcome for this strategy occurs when entry signal triggers and then price reverses all the way back through the stop. As this distance is the prior day’s high-low range, if this is very narrow, it makes it more likely that price will hit both range extremes. Therefore, it could be wise to avoid using this strategy following a narrow range day.
A very wide range day might also be expected to be followed by a less wide range day, possibly even a retracement, so these might be best avoided also.
As 24/12 sessions were very low volume and in many locations the trading sessions were shortened for Christmas, yesterday’s day’s ranges are narrower than usual. This increases the risk that 26/12 ranges could print as outside days, with ranges that exceed both the highs and lows of 24/12. Therefore, for break-out trades tomorrow, I will be combining the ranges of the last 2 trading sessions, 21/12 and 24/12 where necessary. Same for 31/12.
That’s a good strategy and seems to be part of the reason momentum has impact on sending prices further faster. Closing orders manually to take profits can be a great benefactor to a simple trading strategy.