Trendline Strategy

I’ve been trading on and off for a couple of years. Recently I have decided to try to do forex trading for a living.

I have tried different strategies - S&R ,EMA 200, Candlestick etc and come to the conclusion that forex is a percentages game and there is no holy grail.

Anyway,after trying all the strategies under the sun I have found the best day trading strategy to use is the Trendline breakout using Parabolic Sar on a 5 minute chart on currencies EUR/USD, GBP/USD and USD/DKK.

The strategy does not work very well on small ranges. It works roughly 80 precents of the time with a good money management ratio.

[B]Summary strategy is as follows.[/B]

  1. Wait for a Parabolic Sar, green or red dot. Then draw a trend line.
  2. When it breaks the trendline then enter.
  3. Take 10 pips(40 pips on usd/dkk) and out.
  4. The strategy can be used on every pivot point.

Backtesting has resulted on average 300 pips a day and that includes losses using the three currencies. I must stress that this strategy requires loads of discipline.

Anyway, I would be interesting to know if anyone uses this strategy and feedback.



Can you give some more detail about the trend line you are making? Thanks

Drawing the trendline is not an exact science but parabolic sar helps.

Please see attached.

Thanks for the picture. I see what you are doing now. I will check this out.

How do you determine your stops?

I think your strategy means that as soon as you see a green Psar then draw a trendline for the preceding red psar (downtrend) and when the up candle breaks that trendline, buy. Correct? Because as I see in your chart and following your posted strategy a trendline from the last red candle (by your point #1) to the 1st green doesn’t give much of a line or I just don’t understand. A little clarification pls. Thanks for posting, d.

What I am seeing is this. when the psar flips and the first candle with the new color psar closes draw a line based on the the low (for long trend line) of the last 2 candles. The trade happens when price crosses this line. So when a line slopes up trade short when price crosses below the line.

2 consecutive candles is not much to base a trend line on in the conventional sense but I see how in this case it would show a momentum change. This is scalping for 10 pips not trying to ride a trend I can see how this could work.

The aim of this strategy is not to get loads of pips but to get roughly 10 pips on every turn.

The tortose always beats the hare!!!.

There are about roughly 8 turns per day. That’s 80 pips per currency(eur/usd and gbp/usd).

My stops are at every pivot point.

You will lose in this strategy but by the end of the day you will win.

Thanks Shr1k - My 1st impression was like yours, it was the short TL that really bothered me so i thought perhaps it was as I asked in my above post. I am going to follow this as I have tried to find a simple +10 pip (but of course not guaranteed) strategy so I could trade bigger lots & get out quickly after hitting ten. I’m not good at 1M TF scalping trying for 2-3 pips. Thanks, d.

So guys…do you think this strategy has potential?

There is a lot more to this strategy but I am finding it difficult to explain in words. The strategy also has the ability to ride trends.

I have set up the Psar & 5M TF on Oanda. Their tight London & NY spreads are great for smaller pip strategies. I will be trading “live” with a 1% risk. What are your Psar settings? As I look at the opening Asian E/$ 10 pips might be a stretch but in the morning a better test will be the NY session. thanks, d.

With trendlines against the overall trend then try to 2-10 pips. With the trend, then there is potential to take more then 10pips.

Again, this does not work too well with small ranges.

My Psar settings are. 0.02,0.02,0.2

Thanks Trendline.

I am more then happy to bounce my idea over the phone is anyone is interested?

Again, this does not work too well with small ranges

This is true of most strats that use psar. it flips back and forth and gives alot of bad entries in a tight range. I have not had a chance to look at this on a live chart but I will I like the idea.

Thanks for sharing your strategy. Could this be traded in any time frames? from your testing what time frame have you been using and what have you found is the most productive? thanks.:smiley:

Yes, this can be done on any timeframe but works best on a 15min or 5min timeframe. The higher the timeframe the more pips you can get.