Buy sell line trading

This thread is here to discuss a trading system using a simple buy sell line.

It is based on strategies used by Steve Primo, it is not my creation.

The concept is to use TREND>PRICE ACTION>MOMENTUM to get your trading consistent.

We identify a trend, we wait for a retrace, then a signal the retrace has ended and finally momentum back in the direction of the trend.

RULE 1 TREND

IF PRICE IS ABOVE THE 50SMA WE WILL ONLY LONG.

IF PRICE IS BELOW THE 50 SMA WE WILL ONLY SHORT

IF THE 50SMA IS FLAT OR PRICE IS CHOPPING ABOVE AND BELOW THEN THE TRADE IS HIGH RISK AND YOUR WIN RATE WILL BE AFFECTED.

ideally we are looking for a nice slope on the 50sma showing a sustained trend in one direction...

RULE 2 PRICE ACTION

BULLISH ENGULFING FOR LONG, BEARISH ENGULFING FOR SHORT. WE CALL THIS A SIGNAL CANDLE.

OPEN AND CLOSE OF THE CURRENT BAR MUST ENGULF THE OPEN AND CLOSE OF THE PREVIOUS BAR.

IF PRICE ENGULFS MORE THAN 1 PREVIOUS BAR IT IS A STRONGER SET UP.

IF PRICE BARELY ENGULFS THE PREVIOUS BAR IT IS A WEAKER SET UP.

AVOID H1 ENGULFS BETWEEN NY CLOSE AND ASIA OPEN.

RULE 3 ENTRY

PRICE MUST TRADE 1 PIP LOWER THAN THE LOW OF THE SIGNAL CANDLE FOR SHORTS
AND 1 PIP HIGHER THAN THE HIGH OF THE SIGNAL CANDLE FOR LONGS.
(dont wait for this candle to close, once you exceed the high or low enter the trade)

IF YOU ARE USING PENDINGS ALLOW FOR SPREAD.

ENTRY MUST BE TRIGGERED ON THE VERY NEXT CANDLE

WE ARE LOOKING FOR MOMENTUM BACK IN THE DIRECTION OF THE TREND.

RULE 4 STOP LOSS

STOPS ARE PLACED 1 PIP ABOVE THE HIGH OF THE SIGNAL CANDLE FOR SHORTS.
1PIP BELOW THE LOW OF THE SIGNAL CANDLE FOR LONGS.

RULE 5 POSITION SIZING

ALL TRADES SHOULD HAVE A RISK OF 2%, REGARDLESS OF PIP SIZE YOU MUST ADJUST YOUR LOT SIZE SO YOUR RISK IS EQUAL ON EVERY TRADE..... VERY IMPORTANT !!!!!!!!

RULE 6 TRADE MANAGEMENT

YOUR TARGET SHOULD BE 1/1

AT 1/1 R/R MOVE YOUR STOPS TO BREAK EVEN
if your risk is 50 pips you would move your stops at +50 pips.

AT 2/1 R/R TAKE SOME PROFITS OFF THE TABLE. THE AMOUNT IS ENTIRELY DOWN TO YOUR RISK TOLERANCE, I WILL USUALLY CLOSE 1/2 OR ALL OF MY POSITION.

ALTERNATE SIGNAL CANDLE

THE ENGULFING SET UP WILL NOT CATCH ALL MOVES BACK INTO A TREND SO WE HAVE AN ALTERNATE SIGNAL CANDLE THAT IS JUST AS SUCCESSFUL.

THIS IS JUST AN ALTERNATIVE TO THE ENGULFING PRICE ACTION AND ALL OTHER RULES REMAIN UNCHANGED.

1. FOR SHORTS THE SIGNAL CANDLE MUST CLOSE IN THE BOTTOM 25% OF ITS RANGE AND ITS HIGH OR THE PREVIOUS CANDLES HIGH MUST BE THE HIGHEST HIGH OF THE LAST 5 CANDLES.

FOR LONGS THE SIGNAL CANDLE MUST CLOSE IN THE TOP 25% OF ITS RANGE AND ITS LOW OR THE PREVIOUS CANDLES LOW MUST BE THE LOWEST LOW OF THE LAST 5 CANDLES.

EXTRA ANALYSIS

I tried to make this a non-discretionary system, but some basic understanding of the finer points of trend reading and stopping points will improve your results.
With that in mind this video goes over some techniques for setting up your charts.




PLEASE KEEP DISCUSSIONS REGARDING EA'S, ROBOTS OR EXTRA INDICATORS TO A MINIMUM, FOCUS IS ON LEARNING TO TRADE TREND, PRICE ACTION AND MOMENTUM. OUR ETHOS SHOULD BE TO KEEP THINGS SIMPLE AND CONSISTENT. WE ARE NOT CONCERNED WITH TRADING 100% OR HITTING HOME RUNS, WE WANT SMOOTH STEADY ACCOUNT GROWTH


M15 SCALPING IDEA
There is also a way to use the buy sell line for M15 scalping.... if you prefer that style of trading...

Works on all TF's, all pairs... preferred TF for me is H4 followed by H1.

This is simple trend trading with a momentum signal.

Resist the temptation to complicate it.

YOU WILL HAVE LOSERS... YOU MAY HAVE A RUN OF LOSERS... but I would challenge anyone to take 20 trades following the rules and come out with a negative profit and loss.

Control your risk, max 3% on any one trade...

Trading is about being consistent, not winning the lottery... rinse and repeat.

Here is a current AJ H4 chart with all the valid signals that triggered...

Here are my EA and ECAD trades from Friday

and some trade results from Thursday, if theres a positive vibe on this thread I might run a trade explorer, but im wary of posting too much information on public forums, so we will see how it goes...

Current EU H4 chart, i have arrowed all the signal candles that triggered entry...

Looks good- thanks for sharing.

Can you define "engulf"?

Can the opens and/or closes be equal and still considered to engulf the previous bar?

Early stages but this looks good, im looking at a similar method myself at the moment. How long has this been working for you?

Bill.

Engulf would be probably be the bodies only by watching the open and close prices. red -green =long green red = short

Any trading strategy is just a set of rules to give you an edge, its important to think why a strategy might work, and why it might fail.

Everyone knows that when a pair is trending we have a thrust in the direction of the trend, then a pull back before continuing in the same direction.

If we want to enter this trend then the safest most profitable place to enter is at the low of the pull back.

But how do we know the pullback has ended and the trend has resumed? how would that look on the charts? well an engulfing would show that, wouldn't it?

If it only just engulfed the previous open and close or was equal to it it still fits the rules, but its not quite as strong a signal as if it engulfed it by twice as much?.

Which would be more successful over time? I don't know, theres too many variables, how strong is the trend? how long has the trend been running? etc etc...

Sorry it doesn't really give a clear answer but they don't happen too often, perhaps something i could have a look at.

Here's a GCHF H4 chart from last week, 2 seperate signals, 1 with a strong engulf and one that barely engulfed, I took the first signal, but i would of been happy to take either as the trend was strong.

Nice shooting 60Minuteman.

Simple effective setups make money hand over fist.

The challenge for most is resisting the temptation to overcomplicate things by throwing indi's at it trying to optimize their results.

Bottomline is... simple disciplined trading is the best way to go.

I would recommend NOT sharing through the trade explorer. What's the point?
You know this method works, I know it works and any trader with any degree of competency and experience knows it works.

Good job Minuteman keep er simple and keep raking in the pips.

Cheers,

Bluesteele

Welcome simplebeans,

Its a simplification of something I have been doing for over a year, I have been live with it for 3 weeks after a lot of paper trading...

Cheers Bluesteele,

yeah I know many will try and throw stuff at it, less is more in my books, the only thing I ever add is some simple analysis, if a pair is chopping over and above the 50 sma all the time then its going to be more risky, on H4 there is plenty of time to watch a lot of pairs and cherry pick the strongest trends.

Match strong currencies to weak ones and make it easy on yourself.

on that subject, these are the pairs i'm backing for easy pips this week.

EU/U
EU/CAD
EU/AU
CAD/YEN
AU/YEN

GBP/U.. not 100% on that one yet, will see what develops

is there an EA to this strat ?

joking
nice to see you here 60

knew I should of changed my name...hahaha.. cheers Bradu

What time frame are those results for?

H4 I think one or two were H1... I tend to stay on H4 but around London open time you can get some very nice H1's, I generally find H4 to be more consistent.

The philosophy is nice.

I like your method

Wrote an EA and checked the results

The are not so much pleasing

maybe my misunderstanding of the method

I just did a backtest for the year on E/U 4H.

7 W
2 L

Not too shabby. Nine trades don't prove a lot, but it's a good start.