Do not forget to visit the chat room. 
Here is the link…
Bollinger Band DNA - FOREX Trading using the Tymen Bollinger Band Strategy
[B]OK, one more post before I present my anti-retracement strategy…[/B]
I can feel a lot of strain on my right now - some of it is health related.
[B]I would appreciate it if whenever there is a question, that someone here answers that question.[/B] 
I have full trust in all of you - everyone here appears to be an expert on the DNA and MACRO methods by now.
This will take the strain off me and allow me to concentrate on improvement matters and whiteboard lessons that I should be doing [U]and not doing!! :eek: :eek:[/U]
I will only intervene in the answering of a question if the answer is completely wrong - which will be either non existent or rare at best. 
[B]Here is my strategy for dealing with powerful price action retracements.[/B]
We have found that hitting the stoploss with 2 contracts really causes a substancial loss and hence a great deal of pain.
Yet the full width of the entry to stoploss is required for the trade to be successful because many times, the price action goes against us for a while before reaching either TP1 or TP2.
We cannot, therefore, skimp on stoploss room, so what are we to do? 
[B]My proposal is to use either the parabolic sar or the starc bands[/B].
In doing so, however, we no longer shift the stoploss to break even.
This is not so bad, considering that TP1 is collected anyway, and we expect to close the trade when we see fit.
The [U]prima facia purpose[/U] of the stoploss is to protect us against a computer failure - then we cannot close the trade.
We call the stoploss a PCI stoploss - power, computer, internet.
A power failure can be addressed with a spare laptop or battery backup.
Computer failure - 2nd computer (laptop).
An internet failure is not so easy but is addressed with a quick hotline call to your broker to close the trade.
[B][U]A quick summary here before I reveal the strategy…[/U][/B]
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[U]No stoploss[/U] - PCI failure leads to margin call. :eek:
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[U]PCI stoploss present[/U] - PCI failure leads to hitting stoploss, not as bad as a margin call.
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[U]PCI stoploss + telephone hotline on standby [/U]- PCI failure leads to hotline telephone call closing trade immediately. Loss is much less than hitting PCI - therefore, little damage done.
With the above now in mind, lets look at the strategy >>>
Explanation
I have deliberately chosen a trade with a good deal of severe retracement.
The chart is an area of a squeeze. (magnified for clarity).
It is a long O-O trade with the BB in pink.
Added is a parabolic sar in line form in orange. (dots are difficult to see).
The extreme entry pair candles are on the left and connected with blue line. (candle A)
The entry is too high and cut in half.
The entry is made into candle B.
When candle B is finished, we see that it is even more extreme than A, so we set the stoploss on candle B.
So far so good. 
We load the parabolic sar.
Note that its lowest point is also the exteme point of candle B.
So what do we do? 
We keep the stoploss stationary until the parabolic starts to rise.
I have shown this with small red lines on the chart.
Note that we never get the chance to raise the stoploss as high as the entry/breakeven point.
Note also, that at TP2, the stoploss has not moved much.
However…
Assuming that there is no PCI breakdown, and you are in control of the computer mouse, you get to close the trade both at TP1 and at TP2.
So what does it matter where the stoploss is. 
I will now show exactly the same strategy but this time using the Starc bands >>>
Explanation
Same trade as before.
The starc band is added in black.
The lower starc band is used - I have made the mid + upper bands invisible.
Note that the starc band also goes down, but we never lower a stoploss in a long trade. (and never raise in a short).
So the stoploss stays at the low of the extreme candle while the starc band drops.
Like the parabolic sar, the stoploss is moved as the starc bands go up.
This is shown in the chart.
Again, no stoploss move to the entry/breakeven.
Of the 2 choices, I prefer to use the parabolic sar!!
In this chart I have entered a long trade in a NO TRADE AREA. (We have just finished the lower BB walk of a bubble) >>>
By using the parabolic sar to set our stoploss, we avoid that terrible grey candle retracement between TP1 (candle A) and TP2 (candle B).
Instead, the stoploss is kept where it starts until candle A, then goes up with the parabolic sar as the sar goes up.
In this case, the entry candle consists only of one candle, being a doji (look at the chart).
If you look carefully, you will see that the stoploss only gets near the entry line when you reach TP2.
The parabolic sar/starc bands stoploss strategy act as a kind of trailing stoploss.
The fact is that a trailing stoploss, if hit, will always give you the [U]worst [/U]possible exit for a profit.
To get the best exit for a profit, we need a specialised exit strategy.
So far in this thread I have shown you the [U]simple exit method[/U] for a BB walk.
This involves the exit on the first candle that disconnects from the BB in a BB walk.
However, a BB walk may be long (nice profit!!) and yet have several disconnected candles along the line.
A later exit is called for.
A stochastic is almost useless.
Exiting at the crossover of a parabolic sar may also give very premature exits.
[B]Finding the ideal exit method for a BB walk is an exploration that has pre-occupied me since the very beginning of this thread.[/B] 
I am none the wiser just now.
But with the thread coming to completion, I can now devote myself almost totally to this one task.
[B]Finding this “holy grail” will be a real winner for both the DNA and MACRO methods. [/B]
nice to have one more weapon added to our arsenal in dealing with those retracements, just out of curious, in your backtesting, have you come across situations where they do not work well?
Hello Tymen,
one month ago I read about Forex market and I felt, for some reason, in love. As a final year student in dentistry (I live in Barcelona) I will try to devote each and every free minute of my time to study about this complex world.
After completing Babypips forum I began reading Graviton’s Multi Time Frame Trading post and this one (I read about your previous Candlestick method too.
Well… I could have not start this journey on a better place and I feel real lucky. I must say thank you to both of you because it’s hard to find someone like you these days. Even in University I had to spend 5 years just to find a real good teacher at the last college course… it’s pathetic and embarrasing as they are getting paid for something undone. They only want you to pay after college for your post-degree and leave you ignorant in my opinion.
You instead spend countless hours here with starters, and try to exert all your abilities to awake our curiosity, provoke our mindsets and inflame our hearts. Not only you show a level of knowledge (not only about Forex) that seems vast but your constant hummillity and kindness are a great example to follow.
Internet allows us to connect with wonderful individuals no matter how far they are… this is truely marvellous revolution I’m happy I can live within.
I will spend whatever it takes to digest all the material posted here, and I’m commited to become a succesful trader some day. With this kind of community I have no fear I will reach my goal if I endure and work hard in it.
I will try to join BB DNA method chat so I don’t have to post asking for explanations here because that would slow the pace of this post. That is… when I find something clever to ask, as I have too much to learn before!
Just wanted to thank you and whole community as I felt it was unpolite to keep reading without expressing my gratitude.
I forgot to hope you can recover your health quickly… wherever you end finally!
Hey [B]Tymen[/B], thanks for this great tip - I’ll see if its possible for me to mesh it into my Trade Plan. With regard to an exit strategy for BB Walks and Sausages, perhaps we can plot the Parabolic SAR in dot form, and exit when the dots cross over the Price Action ie. if they were previously above the Price Action, we exit on the first one which closes below the Price Action. I have not looked at this extensively, as I had simply foregone trading BB Walks, but it may come in handy somewhere along the way.
Happy pipping to all!
Thank you, [B]xXTrizzleXx[/B].
I have already looked at this very extensively.
In fact, this is a major exit practice to be found in Philippe Cahen’s book, “Dynamic Technical Analysis”.
The 2 major problems are…
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Premature exits.
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Even good exits are well below the best exits obtainable.
Sorry, [B]ada ighy[/B], I know nothing about backtesting. :o :o :o
The people to consult about backtesting are [B]DodgeV83 [/B]and [B]IronHeart[/B].
Welcome here, [B]Aserat[/B]!!
Now you need to keep in contact and company with [B]o990l6mh /B, [B]Honorary FX Member.[/B]
He is a practising dentist and lives in Sweden.
Being an Honorary FX Member, he is an accomplished trader and is highly respected on this forum!!
He also posts on this thread on a regular basis.
thanks… had visit the chat room… will regularly be there after this…
here’s the trade taken today… EURUSD TF 4H… using 2 CBL method on H1 time frame… tp1 hit… still holding another position for tp2 with sl at breakeven…
is it correct or just a pure luck on my side… :o
it’s now doing the BB walk on H1 time frame… might exit at the end of BB walk if tp2 on H4 not reach… any advise??
EURJPY TF 1H… didn’t take this trade though… thought a bit risky… surprisingly tp1 n tp2 hit plus BB walk… :eek:
I took this same H4 EU trade and I’m still in it.
Major support is at 1.2261, Price bounced off it once but I expect price to have another run at support.
Next major support is at 1.2244, which is an old trendline. That’s also about TP2 on the H4.
Price can do anything, but you don’t want to give all your pips back. You can move your stop down with the H1 PSAR, move your stop down to be sure to capture some fraction of the profit between TP1 and TP2, or use a favorite method of mine.
I have dropped down one TF to to the H1 to clearly see the trend since I entered and drawn in a trendline across the tops of all the lower highs. By definition, as long as price is below the top of that down trend line it’s still trending down. I’m now trailing my stop down, just above that down trendline. At this moment the trendline is at 1.2286 and I’ve trailed my stop down to 1.2319, which is just above my 1H PSAR and about 2 lower highs above the trendline. If price doesn’t hit the PSAR or go above the trendline, I will ride it to the center of the earth. When it does (and we all know it will eventually, right?), I exit with nice pips
I took this EJ trade too. Usually, if you get a good move in EU, EJ will move also. I’m trading this one the same as EU with stop at about the 1H PSAR setting and a couple lower highs above the down trendline. Nice trades
You control risk in your trades by reducing position size and making good entries. That way you don’t need such large stops. If you entered this trade at the H1 CBL, you only needed about 20 pips stop loss. That’s really not much risk at all for a good H1 trade. But, if you are concerned about risk, reduce your position size. You will have to get used to taking risk on a good looking trade to make a profit in Forex, but you must understand and control that risk.
This trade had a valid CBL coming down out of an H1 squeeze as price bounced off the 100SMA. Mid band is flat and no other penetrations of the outer band before the extreme candle and the down CBL. H4, daily, weekly, and monthly trends are all strong down. I saw it as a very low risk trade. I suppose beauty is in the eye of the beholder
One quick note on the above trades, on PSAR I don’t use the MT4 default settings of 0.02 step and 0.2 maximum. I use 0.03 step and 0.2 maximum. That makes it move a little faster on the longer TF’s which I usually trade, but find something that works for you
Hello everyone!
I have noticed that summer seems to offer a lot of cheap stops, as Graviton pointed out, but i really need to stress this! It is a little offsetting finding London hours offering cheap stops, so it can be worth checking higher TF´s that you usually dont trade, the stops can be the same on as low as the 5m!
The EU 4H will illustrate nicely:p! No, i didnt take it, the 4H i just assumed was too costly straight off! Didnt even check it, then i passed on a kind of flyer for an even cheaper stop lol. Keep a lookout for cheap stops peeps! They are noot to good to be true!
And gl to all with your summer trading, its incredibly distracting but more profitable:eek::D!!!