This is a strategy that takes advantage of retracements with a trending currency.
Strategy10/20 is not new. It is available on at least one Paid web site, but it also out there on the net.
I have found it gives me consistent returns of 10 to 20 pips on a five minute chart.
I have found the the 35/65% levels on the RSI give more trading opportunities without any additional loss.
I would be interested is sharing ideas and improving this strategy.
Set up
5 minute chart
RSI set at 5, 35, 65
SMA at 50
Donchian Channels set at 21
Rules
Long
Enter long when there is a upward movement of the currency. The price bars should be above the 50 sma.
Watch for a dip in the RSI to above 35%.
Watch for the price bar to fall below the center Donchian Channel.
Set an entry at the center Donchian Channel.
All three Donchian Channels must be moving up.
Short
Enter short when there is a downward movement of the currency. The price bars should be below the 50 sma.
Watch for a rise in the RSI to above 65%.
Watch for the price rise above the center Donchian Channel.
Set an entry at the center Donchian Channel.
All three Donchian Channels must be moving down.
Targets are usually 10 to 20 pips. I watch the channels and often use pivots to guide stops and targets.
This was a successful trade last week, fairly straight forward, DNC moving up, RSI dip below 35% and price bars above 50sma.
It would also been nice to have a second contract with a target of 20 pips and or moving the stop to BE.
This is trade #2. Gain of 11 pips on the trade. I could have gained much more if I had moved a second contract to B/E and let it run. I had to leave the computer so I set a conservative target. This method is not exciting but has a high level of success.
16 pip gain on trade number 3 this week. Sloow and steady but consisten. The swings got pretty wild on this trade. Just missed my target on first swing up and it hit later.
Another winner. 4 wins in a row. 3 out of 4 trades is more typical. 12 pips won on this trade, this makes 49 pip for the last 4 trades.
No replies on this 10/20 method, I guess it is pretty dull, but for me it is steady as long as I work to pick good trades.
Another winner. 5 wins in a row, 11 pips. This a total of 60 pips on these posted trades. Nice run with a fairly simple strategy.
I would invite positive comments and constructive suggestions from readers. I’m for ways to improve my trading.
Hi Greg. I’m always open to new systems that might work for me. Would like to try this one out but can’t seem to find a Donchian Channels with the center line. Can you tell me where to find one for Mt4? Thanks.
I generally use the lower donchian channels to look at the range of trading. I might go to 15 minute chart and look at the channels lines which are areas of support and resistance.
I have used Donchian Channels for a long time. I have also used Bolinger Bands, one is not better just different. For me I can see pullbacks best with DNC’s, seeing the price bars cross over the center DNC is something I watch for when seeing pullbacks within trends. In addition observing all three DNC lines moving up or down is helpful in reading a pullback within a trend.
Cocoon,
Here you go. Yes I make steady but not remarkable gains. This is a pretty basic trade. I thought the babpips readers had pretty much dismissed this strategy. You know I’m always with the trend. You do have to be pretty patient waiting for the set up. I don’t get obsessive about it, I just check the markets during active trading times and look for sets. The Donchian Channels help ID stop levels. This is a 5 minute chart, I’m usually pretty conservative in setting targets. I like 15 set ups too. I will scan different time charts to see what the larger trends are and sometime take a trade on a larger time frame if the set up is observed.
Thanks for your interest.
GJ
I saw this opportunity some minutes ago. How do you know when to aim for 10 or 20 pips? that move hitted +10 pips 3 candles after the breakout and went down another 10 pips after 2 more candles.
There is another short opportunity now forming on the eur/usd?
Thank you for sharing!
I think bolinger bands are fine, for me they serve a different purpose. I like the DNC becuase they act like levels or pivots. I see the Bolinger bands more for ranges and extremes in the price action. I also like the linear feel of DNC with the movement of the price bars. This method is not rocket science and it is purposefully simple. Too me it is mostly pullbacks within trends.
Don’t look for trades in ranging or flat markets. I like to see a nice angle on the 50 sma, the 20 sma works too and in combination with the 50 sma. But I like to keep it simple.
