You don’t have to use physical chart stop losses… Below is an example of using the CCI indicator as a stop loss. Smoothed with a value of 50 on yesterday’s EURUSD 5min Chart as opposed to the normal 14 periods. Feel free to alter (smooth) the CCI periods to backtest patterns.
This example SHOULD only be traded if you intend monitoring your trade or scalping small TF’s.
If you scan back through any pair with either the CCI indicator (or RSI) displayed. You will start to see patterns. Find a pattern that you see repeats itself, one that you can identify easily. Will they work all the time… No… so you are constantly searching for patterns that you can trade with some degree of repeatability.
In this example we will use the following… When the CCI value breaks above (from below) the -100 you enter a Buy position and set an exit (Trailing Stop) condition when the CCI breaks back below the 0 value.
Your hard stop loss (Not placed on the Chart) will be if the CCI breaks back below -100 /-120. If your software allows set an alarm for when the CCI crosses below the CCI -100 and crosses above the CCI 0…
If the CCI has crossed the 0, you can add a physical stop inside your entry point, just enough to generate a profit if the price should spike.
As you can see the price retraced twice (hard) during this trend but not with real strength, as the CCI indicated, It didn’t break below your stop conditions until you had snatched 30 pips…in a 7 hour trade. And if you look at the Chart you will see a repeat of the pattern just 10 mins after closing your original trade…
This style of trading gives more opportunity to let your trade run and garnish more pips than a normal TP / SL governed trade allows.
Now this is easy on a dead Chart, the idea I’m trying to get across to new traders is think outside the square…trade differently … And the Broker will never see your stop…
Update: 10 Hours (Chart) after the original post and you start to see the strategy above has merit.