Can anyone recommend a strategy?

Hi,

This is only my second post, but I have been reading this board for over a year. During that time I have learnt about many different trading stategies and variations thereof.

What I would like to find is a strategy that suits my available time and risk style and would appreciate if anyone could recommend such a strategy.

Basically, I prefer working in short time frames - minutes to hours is good. Days are ok but weeks are getting too long. I can often spend 1 to 2 hours glued to my screen, but then may have to be away from it for the next few hours. So I need something that can fit into that window of opportunity.

I like the idea of mechanical systems, but I have yet to be convinced of systems that are 100% mechanical. I am open to all suggestions though.

I am quite comforatble with risk and my discipline (after 5 years of trading / share dealing) has finally matured (it's a long journey that I am convinced you cannot learn without exposure).

I prefer the forex markets, but I am not fixated on them.

Any suggestions or "direction pointing" greatly appreciated.

Many thanks.

Scalping true price. Forex.

johnzxr said:

Hi,

This is only my second post, but I have been reading this board for over a year. During that time I have learnt about many different trading stategies and variations thereof.

What I would like to find is a strategy that suits my available time and risk style and would appreciate if anyone could recommend such a strategy.

Basically, I prefer working in short time frames - minutes to hours is good. Days are ok but weeks are getting too long. I can often spend 1 to 2 hours glued to my screen, but then may have to be away from it for the next few hours. So I need something that can fit into that window of opportunity.

I like the idea of mechanical systems, but I have yet to be convinced of systems that are 100% mechanical. I am open to all suggestions though.

I am quite comforatble with risk and my discipline (after 5 years of trading / share dealing) has finally matured (it's a long journey that I am convinced you cannot learn without exposure).

I prefer the forex markets, but I am not fixated on them.

Any suggestions or "direction pointing" greatly appreciated.

Many thanks.

Click to expand...

johnzxr, If you only have a couple of hours a day, maybe you could try the following. This is a very simple scalping method that can be used on any time frame. It only requires Bollinger Bands set to standard, 20, with 2 deviations, AND standard BB set to 20 with 3 deviations. Other than that all you need then is a 5 period moving average set to linear, typical price.This is true price.
You will find that price will very rarely go more than 2 candles without returning to find the 5 MA. Whenever you see price approach or pass beyond the third deviation, you can take a trade and exit when it returns to the 5MA. You need to be quick on the smaller time frames, ( 5to15). The only thing you need to be careful with is when price is coming out of a Bollinger band squeeze,when this happens you might get three or more consecutive touches on the 3 rd deviation.
You will notice that a touch of the 3 rd Deviation, when the bands are relatively flat, often signals a reversal, and can be ridden all the way to the opposite Band, just follow the direction of the 5MA.
Hope that helps.

30XTCi,

Many thanks for that. It does sound interesting. I have used BBs before, usually in conjunction with other indicators, but not as you describe here.

Do you have any screen shots you could share to illustrate this method?

Thanks again.

Todays Euro.

johnzxr said:

30XTCi,

Many thanks for that. It does sound interesting. I have used BBs before, usually in conjunction with other indicators, but not as you describe here.

Do you have any screen shots you could share to illustrate this method?

Thanks again.

Click to expand...

Just follow the 5 MA .This went all the way

So in that graph the price touched the 3rd deviation but didnt close on it. Would you differentiate between those two scenarios?

I also notice looking at my charts that a touch on the thrid deviation often gives a good bounce back, just like you said, but that trying to trade the small movements either side of the 5sma you would often be lucky to even cover the spread - but then it is a scalping method so I suppose that's fair enough.

Be nimble

johnzxr said:

So in that graph the price touched the 3rd deviation but didnt close on it. Would you differentiate between those two scenarios?

I also notice looking at my charts that a touch on the thrid deviation often gives a good bounce back, just like you said, but that trying to trade the small movements either side of the 5sma you would often be lucky to even cover the spread - but then it is a scalping method so I suppose that's fair enough.

Click to expand...

$ Yen

johnzxr,
The idea is that with just a couple of hours, you could trade just about any candlestick where price has moved away from the 5MA, the further away the better, it will always return to it within 3 candles. You might only get out at breakeven, and then you might make much more. As you say, its tight sometimes. The 30m and above can produce 20-40 pips when the bands are flat. It's just another tool in the war chest.:cheesy:

Play with it,experiment.Have fun.

It certainly is a interesting system. Once last question, if the candlestick moves sharply away from the MA, then, because the MA is so quick its return is more like half a return and half the MA coming up (or down) to meet the candlestick, making the number of pips less.

Is this something that you have encountered?

Small sharp edges

johnzxr said:

It certainly is a interesting system. Once last question, if the candlestick moves sharply away from the MA, then, because the MA is so quick its return is more like half a return and half the MA coming up (or down) to meet the candlestick, making the number of pips less.

Is this something that you have encountered?

Click to expand...

johnzxr, I want you to know that this strategy only makes up one percent of how I trade. It's something that is running in the "background" so to speak.It always peaks my interest when I see price near the Bollinger Bands. The standard bollinger bands contain 95% of all price movement.The third deviation only gets touched one quarter of one percent of the time,and shows a rare extreme of the markets movement.
When I saw your first post I thought that this method might suit what you wanted to do.What I gave you was just the bare bones of this strategy, It can be refined in any number of ways.For instance, the best trades are always when price moves against the general slope of the bands, as was the case with the Euro trade that was in the first chart, the bands are moving up,and price moved against the general run of play. Secondly, I always look at the time frame above and below the one that I see the movement on to get some Idea of what is causing the extreme. It might not be obvious on the 30 m chart but the 15 might show price coming out of a squeeze. This is often the case.
Price always wants to know where it is all the time, and then acts accordingly. There are three main ways it does this.First is the 5MA, second is the BBands (all Three) and then the 50 MA.
The 50 MA (Lineal,typical) is like a mobile pivot point,put it on any time frame and watch as price tries to resist passing thru it.
As long as price is above the 50 the market tries to have a bull bias.I also count waves, but in a rather unconventional way.I believe Elliot only got it half right with his five wave theory.:idea:
There's a lot more if you are interested.

perhaps try the coin system?

Gambling v Investing

puregold24carat said:

perhaps try the coin system?

Click to expand...

strategy: n, pl, -gies. 1) the art or science of the planning and conduct of a war. 2) a particular long term plan for success, esp, in politics, business etc. 3) a plan or strategem.

I did not find any reference to tossing a coin

I'm sure this strategy would give you an edge, but you need quick fingers to get in and out in time. Too short term for me, but a good strat for those who like it quick and fast.

Although saying that, could this work off an hourly chart?

GBP/USD is now through the 3rd Deviation on the hourly.

Hi,

Just been reading about your 3rd Deviation BB trading system. Seems a good set up, and it makes a lot of sense.

On the short timeframes you need seriously quick fingers, too quick for me, but I wondered if you often trade it on longer timeframes. Cable hourly looks O.K, but does it work for you in practice?

Thanks in advance!

30XTCi,

Thanks for all your input, I like its simplicity - but again im sure you are right when you say it must be run in parallel with other indicators.
Touching on the third deviation is certainly quite promising, opening a position on moment of the PA touching seemingly gives you a better than 50% chance of retracement, in most cases the if it goes against you you can tell quite quickly.

I shall look into this some more.

Thanks again.

one hour

Stuart14 said:

Hi,

Just been reading about your 3rd Deviation BB trading system. Seems a good set up, and it makes a lot of sense.

On the short timeframes you need seriously quick fingers, too quick for me, but I wondered if you often trade it on longer timeframes. Cable hourly looks O.K, but does it work for you in practice?

Thanks in advance!

Click to expand...

Stuart, The hours work well, just less opportunities. Here is one I took yesterday, still running.

Which trade did you take? The first hit of the 3rd Dev BB, or the 2nd?

Stuart14 said:

Which trade did you take? The first hit of the 3rd Dev BB, or the 2nd?

Click to expand...

First was off 15m second off hourly

Brave first trade, looks like it came all the way back again?

Nicely in the money now though

What I don't understand on the hourly though is why you didn't go long 2 hours earlier? That also went through the 3rd Dev?

Stuart14 said:

Brave first trade, looks like it came all the way back again?

Nicely in the money now though

What I don't understand on the hourly though is why you didn't go long 2 hours earlier? That also went through the 3rd Dev?

Click to expand...

My wave count showed we were near the end of a long 4hr cycle, that's what I was waiting for. I think the Daily long cycle has also finished.

How does your wave count work?