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more Mar 29, 2010 7:18pm | Post# 1

daily reversal system - ideas are welcome!
 
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hi traders,

i had a very simple idea while i was watching the daily chart. actually the m5 chart is my favorite timeframe but this idea seems to be interesting in large timeframes.

i show you an example for a short-setup:
first you need a positive bar, opening in the lower 30% and closing in the upper 30% of the bar. the percentage is not important. it should only be a straight positive bar and no doji.
the next day should break the previous day's high and then come back into the previous day's bar. now it is possible to go short as soon as price comes back (i would not recommend that!) or you wait for the price to fall below the current bar's open. that may be a good short trigger. the initial stoploss would be the high of the current bar. the profit target could be a trailing stop or simply the close of the daily bar.

if you have a look at the screenshot where i printed the arrows it looks really good!

but there is one problem:
as long as you don't extract data from much smaller timeframes you never know if price first broke yesterday's high, came back into the bar, triggered the entry by falling below the current bar's opening price, goes up again and makes a new high (and stops you out) and then falls 1000000 pips in your predicted direction... that is my problem for the moment.

i extracted m5-bars from metatrader to analyse it in excel. unfortunately i can't do any mql4-programming. therefore i have to test it in excel. but sometimes excel (or me?) reaches a limit. i program for the last 3 days but in VBA it's harder than i thought.

while i am still trying to analyze, maybe somebody has a good idea how to place a useful stoploss. as you can see in the chart, these daily reversals seem to be very interesting. the only thing is how to protect yourself from beeing stopped out senselessly.
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