Trading market extremes: The Guaranteed Pips

Trading Systems Free Forex Trading Systems
1

Hello traders.

I know that there is no perfect set-up to make profit in this FX, often choppy and consolidating. It’s crazy!

But let us take some examples, how I made about 300 pips last week with only simple thinking about chart extremes. I have examples, I do not say I do magic. we will walkthrough this.

Please have your MT4 ready and open, we got to need 4HR daily or 1W. and add a default RSI 14 to your chart, with levels 20:80. yes 20, and 80 not 30 and 70. :slight_smile:

Now let us take example one by one.

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You know what? I do not really depend on MAs and trying to identify the market trend, and so over.

I just use RSI, one indicator to show me when the market is overbought and trending up, oversold and trending down. and when there is divergence… that’s all. Nothing too complicated.

1. GBPUSD Daily 18/7

GBPUSD really made a nice move and it’s appreciated, but notice how the RSI value is clearly touching or above 80 line. extremely overbought… I shouted “Short!!!”

RSI posted a value of 81.30 here, and I shorted it at 2.0535… waiting for a correction in the overbought area. and it did happen, GBPUSD dropped 70 pips to pave the way for another rally. I didn’t get the 70 pips, but I could short-get out-then short then get out as the price moves around 80 RSI value. once the 80 value is cleared I exit by market sense. say at 76, 75 reading…

It was really that easy!
I know what you want to ask me? What if it ignored the reading… I will answer simply, I start with small lot, if it goes up against me, I keep adding shorts, and I tell you “I am certain It will make a nice correction” and my shorts will profit together later :slight_smile:

So I call it safer trade, even if it comes not too often. Safer pips for me, and I feel confident about my trade.

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2. USDCAD

Just look at the following 1W chart for USDCAD, and see RSI value. 23!
It was 21 when USDCAD hit 1.0399 it was a nice buy. There is always a correction after reaching the extreme 20, or 80.

You could really benefit simple +50 pips with lowest effort last week on this. Also, you would not panic if usdcad even dropped 100 or 200 pips more. It’s not going anywhere below 18,19 in rsi calculation. even if it did, it is coming back sharply, believe me!

see next picture for USDCAD figure2 …december 2004… the USDCAD was dropping sharply RSI reaching 19.50 If you took a buy at 1.1750 for example, it made a 600 pips correction that you could really get, and we are having a similar situation with difference that I think USDCAD bottomed with this reading 23. we will see anyway.

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Now I will start showing real-time example step by step with you.

Let us start by this trade

Short AUDUSD next week, small lot
I will use 5000 units in Oanda. $.50 pip value on this trade.

See chart. RSI 81.
Going short with no take profit or stoploss.

Pay attention I do not use Stoploss anymore. I either leave it open, or scalp it …how? take 20 pips profit, then wait for another entry. ofcourse it might reverse and I do not get any more opportunities, but that’s it nothing is perfect. you need to time your exit with some market sense and rsi reading and overall trend can help you… and shout “Exit, the longer term trend is against you… take little profit” or “Stay in… it’s a reversal”

Short AUDUSD 0.8800 $0.50pip value
Please do not trade this in less than 5K account.

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This is all for now. Please add the RSI default to your chart…and examine, please examine, not just D1 or W1 timeframe… go further deep, and test more currencies but majors preferred…

You will find the answer, how the market reacts every time when its at 80RSI or at 20RSI. It repaints itself every time. You will also find how to scalp these moves during intraday, and how to add to your losses in your own favour. :slight_smile:

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Hi, Topchess, Have you been using that method long and also when you said you add to your position if the trade is still moving against you do you use a stoploss.

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Hello,

I’ve alwyas used this method to trade the market because I never found such consistency with any other method, with other methods remain good and this one is “rare” but I call it ‘safe-pips’… when you enter a trade and you are certain you wil make profit from it at the end. This is a good feeling.

It makes sense, when the market is overbought, we sell and vice versa.

If you just check the history of charts and how the price react everytime it reaches these levels, please examine

22,20,19,18,17. or 80,81,82,83… it won’t penetrate these areas, unless you play with a top volatile pair… EURCAD for example RSI reach 90 just recently but after then dropped 1600 pips!

:slight_smile:

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Hi again, I will keep reading this thread to learn more.bye for now.:slight_smile:

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keep in mind that you should always use SL, its part of the Forex gospel. If you don’t, you risk an unknown % of your account. You could do 3:1 leverage, go to sleep and find out in the morning that some news came out or something and the market moved against you 100-200 pips! Suddenly you are out 3-6% of your account! Draw down can be a *****.

Of course what you say is also very exciting and an excellent system.

It may offer less trades, but I’d bet that you can get 75% winning trades this way.

Here is a helpfull suggestion.

Instead of not useing TP, try a manual trailing stop.

set SL at some level, such as 50 pips, which is 2:1 leverage at 1% account risk, or 4:1 leverage for 2% account risk.

Then check in occasionally, as often as you can, and if you see 20-29 pip profit, change SL to +5, 30-39 pip profit, +10, over 40 +50% profit.

The reason this is a good idea for your system is that an RSI over 80, or under 20 is great for swing entries, but what about exits?

You have no confirmation in your system. No way of saying, “Ok now its time to end it, and celebrate.” Without TP you could go to bed with a 200 pip paper profit and wake up to find out your up only 35 pips.

With a manual trailing stop loss you at least lock in profitable trades and keep them from becoming negative.

I will test your system on a 3 hr chart. Good thinking overall.

10

I see NZ/USD is now touching 80 on the weekly RSI chart.

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How are you going with your AUD/USD trade Topchess.My indicators are not at 80 yet but its getting there, aussie is well bid today.

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I am in total agreement with you, the TP thing is the problem. Trailing stop would solve it, but Oanda does not allow them. Cause yes, you are right. It never tells you “exit now… this is enough”.

rannoch

Which platform you use? My RSI is about 82.50 on AUDUSD are you getting the same?

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Because NZDUSD d1 and w1 far from RSI 80. and AUDUSD here is showing 82.x on daily

Anyway, I had previously entered 2,500 units at 0.8800 lets enter 2.500 againt at 0.8830

Avg price 0.8815 5,000 units = $0.50 pip

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I use CMC Market Maker Australia. NZD is 80 and AUD is 78 on the daily.

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I have a demo account with oanda Topchess and some indicators dont always match with each other.

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I think if NZ dont raise interest rates this week we coulld see some profit taking.

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Hey people, be careful with the Aussie. I live in Bris and the AUD/USD is the pair I follow most closely because of the sheer amount of news available to me. All the the cheif analysts from all of our major banks here don’t see the aussie tumbling for quite some time. You might see small retracements (maybe around 40-50 pips), but there looks to be a strong bullish trend that may see us gow well over the 90cent mark. Our fundamentals are just too strong. Econ is in a boom, US econ is blowing out, and Yen backed carry trades are preventing any large retracements from occuring. Also the govenor of our reserve bank stated that he doesn’t see any reason to contain the Aussie as it’s keeping our inflation rate down while not impacting too harshly on our trade balance.

I have noticed that strong trends are the achilles heel for this system. Basically, with only small retracements on offer, the price may move too high to recover before the retracement kicks in. But seeing as though strong trends are rare, I definately like this system. Maybe someone can implement the ADX to spot trends?

18

Good post Topchess. I agree with you on keeping it simple and i tried trading this briefly a little while ago. I failed simply because my demo only permitted me to buy full lots (my balance was 5k) so that when the price kept going more extreme i went into big drawdown. However like you say if you keep you trades small, say 1/10th of a lot on a 5k account this system would probably be quite profitable as long as you were not greedy on the profit taking.

My question is what about chart time periods? YOu seem to change to weekly, daily and 4hour. So you don’t just use one period? Do you use different time periods to back up your trade? I would have thought you would be receiving mixed signals by looking at the RSI on different time periods.

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Also i was wondering about making an EA for this. For example the parameters could be buy at 23 sell at 77 can tp would be 10 or 15 pip with a wide stopless.

That way one would not have to watch the charts all the time for a basic signal.

What do you guys think?

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Ok guys, for those who would have followed carefully our AUDUSD.

I had my trades at 30 pips increment.

0.8800
0.8830
0.8860
87
So what did It do next when it touch .8860 and extreme 85 reading on RSI

If you hold from 0.8860 you benefit 70+ pips as it dropped to 0.8787.
Another +40 pips from 0.8830 and finally +10 from 0.8800

SO if we took all pips … around 120 pips. but surely this does not happen, even if we took half of them 60pips, or quarter… 30pips… this is what we need,

and what I’ve been calling safe and guaranteed pips! It just needs small lots and little patience.

A correction has to play in place sometime in an extreme market.

So even if you sold at 0.8800 and sold again at my secnod entry 0.8830 you profit good when it dropped below .88 before reversing again. :slight_smile:

Now what?

It gave a sell opportunity again by moving towards 0.8870… but be careful when a pair corrects and consolidates it will likely make a new high and the rsi will be lower than previous. (Divergence) even better signal

:smiley: