I took the liberty to paraphrase this strategy so that I could follow it along more easily and clearly.
It is not my intention to offend the OP CaptGrumpy, and I hope he does not take it that way. Indeed I am truly very grateful that he has taken the trouble to freely give his time to place this beautiful strategy in our hands.
My only intention is to bring it to the thread in as clear a form as possible, without losing any of the original substance.
If CaptGrumpy finds I have strayed from his strategy, I would be very pleased if he could bring it back to a correct form. In the meantime, I am going to practice this as often as I can, until I have a degree of certainty that I do not currently have, to trade this strategy.
So - on with the paraphrasing. And please read my final observations at the end. Thank you.
Here are the features of the plan:
- First off everything here is based on the OANDA platform and 12H charts.
- Only 1 currency pair is traded as price moves across the chart.
- Entry point is at a Potential Trading Point (PTP) at the beginning of a HA Bar run.
- Exit point is at a PTP at the end of a HA Bar run.
- At EXIT, the chart has already reversed direction.
- Immediately ENTER in the new chart direction
ie and EXIT becomes an ENTRY in the opposite direction.
- The Key is in the way the chart is set up.
You can have 6 or 8 of the major currency pairs in your quote list.
Use this template on all pairs individually, to set up an identical format:
- Bring up a 12 hour chart. The GJ is a good starting chart.
- Choose the Heikin Ashi as the chart line,
- Give the up and down bars contrasting colours
- Add the WMA 5 (W5) and the WMA 14 (W14).
- Give them contrasting colours. Set the ‘style’ at THICK
- Add the RSI 4 (RSI 4). Set the ‘style’ at THICK.
- Save the setup as a Template for other charts.
- Zoom in on the chart and enlarge chart to full screen
Spotting The Potential Trade Points (PTP’s)
On the chart you see the Heiken Ashi bars dominating the screen with the W5 and W14 MA’s. When the HA Bars change colour it indicates a reversal.
Around the same time note W5 changes direction.
This I call a PTP.
Trades can be made here at whichever occurs first:
At the beginning of a rally a buy trade is opened.
Close the trade at the end of the rally.
When a trade is closed, direction has reversed so a sell trade is opened.
When a trade is opened follow the W5 until it hits the W14.
Now one of two things to do:
- If the W14 is going the same way as the W5, follow the W14 until a new PTP occurs and trade as above.
- If the W14 is going the opposite way to the W5, close the trade and immediately open a new trade in the direction of the W14. Follow the W14 to next PTP to make trades
Normal Trading Routine (No Take Profit or Stop Loss used at all)
For the INITIAL trade, find a PTP at the end or beginning of a HA Bar run.
Assume it is a PTP at the bottom of a correction, so open the first BUY trade.
Follow the chart lines up until the next PTP.
Close that BUY trade and immediately open a SELL trade.
Now follow the W5 until it hits the W14.
If the W14 is going the same way as the W5 continue to follow the W14 to the next PTP.
At the next PTP close the open trade.
Or if the W14 is going the opposite way to the W5 the open trade is closed at the crossing of the W5 and W14.
Close the open trade follow the W14 to the next TP1 close the open trade-- keep repeating the procedure
Look over all the charts making trades as shown.
Keep accurate records. Do practice trades - lots of them - until you are very good at spotting those elusive PTP’s.
Unless you have constructed the charts along the suggested lines, you will already be lost and saying “This is all too hard.” I know because it happened to me, until I had a correctly constructed chart in front of me to follow along.
There are important things to understand here:
A Trade is not closed unless a PTP occurs.
Go back up and read: “When the HA Bars change colour it indicates a reversal. Around the same time note W5 changes direction. This I call a PTP.”
Now, a PTP can occur at a change of colour of the HA Bar, and at this time the W5 will bend towards the W14. If they are both travelling in the same direction – up or down, then do nothing until they cross.
That crossing will ALWAYS involve a change in colour of the HA Bars.
But, that change of colour may PRECEDE a crossing of the W5 and W14.
What! Well don’t be alarmed or confused.
This is where practice comes in – practice, practice, practice!
Eventually you will “get it.”
I am not surprised this thread didn’t develop. And it is not the fault of the OP.
It’s the traders who read this and passed. How many actually bothered to construct the charts as instructed?
This is one of the best higher TF strategies that I have ever seen. The HA Bars smooth out volatility and the use of the 12H charts help reduce the whip-lash that so often chases traders out of their trades before they even get established.
One observation before I go:
Traders who are used to using HA Bars will know that an uptrend is strong when the bottoms of the green (rising) bars are flat, and only show weakening momentum when those lower shadows (tails) begin to appear.
The opposite is true in a downtrend:
The tops of the RED (falling) bars are flat in a strong downtrend, and only begin to display weakening momentum when upper shadows (tails) begin to appear.
In applying this knowledge to your trading, make observations of as many of your charts as you can with the HA Bars on display. THEN you will develop the confidence to trade this much more quickly. And as mentioned, practice cements this strategy in your trading mind.
It is a beauty, and I thank CaptGrumpy for taking the time to bring it to us.
Feel free to point out or make corrections to any errors, and do please give this a good trial yourself.