Simple Low Risk Price Action Trading w/ TE Results

This is a strategy that I have been developing for some time now and has proven to be very consistent with great risk/reward opportunities if done properly. This strategy works best during London and US open but can be used during the Aussie session and Tokyo with smaller profit targets and stop losses. I use mainly the 15 minute chart and the 1 hour chart is used to double check trades or to take a longer term trade. Take profit and stop loss will vary upon the trade but do not take a trade unless you have at least a 1:1 risk/reward. I typically take a 1:2 risk/reward or higher. With all 4 signals lining up you can be more aggressive with the target profit. I will keep my trade explorer visible as I continue to test this strategy. Any constructive input is appreciated.


You will need a platform that has these indicators and these settings:

Parabolic SAR (Red Dots)
Stochastic Full w/ 70 High 30 Low 5 K Period 3 D Period (Red/Blue lines at bottom of screen)
100 EMA (Orange Line)
Bollinger Bands (Blue lines on chart)

As far as the order of significance to the strategy, I look for the signals in this order:

100 EMA
Stochastic Full
Parabolic SAR
Bollinger Bands

The idea is to have at least 3/4 indicators have correct signals to open the trade. This should happen a few times during the day depending upon how many pairs you are watching. Trades with 4/4 indicators will always have the best risk/reward.


EDIT: I have now attached a Template for this strategy for MT4 to be as user friendly as possible. There is also now a BOLD template for better visuals for lower resolution monitors or higher visibility.

Here is another template for the divergence indicators as provided by AngelicaMari.

These are examples of the strategy:

First picture is GBP/USD 1 hour chart. All 4 signals are lining up here with a bullish divergence. Price is above 100 EMA, the Parabolic SAR, and middle bollinger band. The stochastic indicator is below 30 with the price being very close to the other indicators allowing for a fantastic risk/reward.

Second picture is the EUR/JPY 15 minute chart with 4/4 signals and again bullish divergence. Price is very close to the middle bollinger band with the stop loss just a few pips underneath it for a favorable risk/reward.

Third picture is an example of the importance of divergence with this strategy. Each orange line is a bull divergence signal and each time this occurs there is a large bullish move. The first orange line also has 4/4 signals and creates the largest move in the picture.


For more examples, there are plenty scattered through this thread.

Grats on the new thread, let's not forget about the basket trading lol........ i will subscribe

Thanks, yeah basket trading gives me way too much free time but I am still testing multiple strategies daily don't worry. This manual approach is just too good not to share.

Nice one Embry always good to see some manual strategies
as too much Auto Trading will make our mind unreal with tons of pip that come and go _
Manual trading seem to be more like Forex trading _
Quest pls: Is this the C trader platform? I tried it before and for manual is perfect
though i could not get used to the jumping charts here and there, but there is a way to learn it well_

Also about the Exit >< For the Entry you said 3/4 Indis need to be aligned, and Do you Plan to Exit following
which order ? For example in case if buying and price above Ma/Bollinger/Sar... you will exit when Stoch reach 70 level
and the first Sar 2/3 dots are are above price and so on ? Better to use the 15 mins maybe?
Well i guess is good to try it all
One more clarification.... the Boll Bands is the normal one with 20 / dev 2 right ?
Thanx for sharing

[quote=Embry1;10296907]This is a strategy that I have been developing for some time now and has proven to be very consistent with great risk/reward opportunities if done properly. This strategy works best during London and US open but can be used during the Aussie session and Tokyo with smaller profit targets and stop losses.

Subscribed !

st888

Looks like you've got a good grasp on this, the platform I use for charting is Thinkorswim but you can also use MT4. I execute the trades through MT4. As far as exits, my typical exit strategy is when Stoch reaches 70+ on a long or -30 on a short. If the trade isn't going your way, I typically put my SL on the other side of the Parabolic SAR. 5 pips above or below the SAR is pretty safe, but make sure you have at least a 1:1 to afford that. On the 15 minute chart I typically go for 15-25 pips. On the 1 hour chart you can go for 40-80 pips. If all four signals line up on the 1 hour chart, it's usually a great risk/reward setup. On the second picture I posted, you could have had a 15 or 20 pip stop loss and a 80-100 pip target profit and it would have hit target. I set that trade up overnight and had a max draw down of 6 pips and the target profit was 45 pips and it hit. I had a 1:3 risk/reward and it still was too short on the target profit.

Edit: Not sure why TE is showing 36 pips, it was 10 lots traded and a $4739 gain so that's more than 36 pips. Yes, my Paint skills are amazing.

very simple and nice strategy, it is worth to make ea. i will keep monitor your trades, thanks for sharing such good strategy.

I'm not opposed to someone coding it into an EA, it won't be me though lol.

I think all tools you are using have PIN build in Sam thread...

Thank you mate for the strategy. Which settings you use for the psar?

For me it's default, but if it's different for you here are the settings:

Thank you ! subscribed.

Nice....will follow....and THANKS!!

Here's an exact clone of the indicators but for the MT4 platform. Thought I'd save everyone some time for this easy strategy. I did however make an error in the original post which is now revised. The MA is not a 200 SMA but a 100 EMA for those of you who have already set up your platforms. I'm attaching this template which completely replicates the indicator list but for MT4 instead of thinkorswim since most people here are using MT4.

Here is an excellent example of the strength of all 4 signals lining up on the 1 hour chart. The yellow line would be where the signals line up and your entry, the red line would be a good exit as the PSAR breaks, and the orange line would be the stop loss due to it crossing the PSAR and middle bollinger band. On a strong signal like this I would wait for the PSAR to break before exiting. It does cross the stoch 70 and top bollinger band, however you'll often see that on a strong trend. These signals happen fewer times but you can make your whole week on a trade like this so keep your eyes peeled for this setup.

Would this be a valid setup forming if it was not at market close/open time ?

Yes that is a valid 4/4 signal, it is a shame that it was at market close, I wouldn't trade it at market open today because it could be volatile. It's worth it to watch though. There's also a valid 4/4 signal on the GBP/JPY, however I don't like the risk/reward on the GBP/JPY signal as much as the AUD/JPY. The AUD/JPY is very close to the middle bollinger band and the PSAR so if that were to breach you would have a very small loss, as for the GBP/JPY in order for the middle BB and PSAR to breach you would need a 50-60 pip stop loss. Even so, the top bollinger band is at 152.23 with the current price at 150.63 so there's a potential 160 pip move if it breaks the high of 151.53. Even if it makes it to the high you have 90 pips until then. Not a bad risk/reward but not preferred.

Ok, Thanks for the feedback,I hadnt spotted GBPJPY.
I will keep my eyes peeled tmrw now I know what im looking for. Hope you catch some winners this week and keep us updated with your progress as it looks like a promising little system.

Hello, I have a question. Is your entry the stochs crossing upward when the 4 signals are lining up?

You can certainly trade it that way. I recommend loading up the indicators or template and finding where the signals line up and see if you would benefit from entering once the stoch reaches above 30 or below 70. What is going to happen just like any system is that if you wait to enter, you may have a higher win rate, but your risk/reward will suffer because you will have to increase your stop loss and decrease your target profit due to the market already moving. This may differ for each trader and their comfort level but I would rather take the trade at the absolute best risk/reward than to wait for the market to make the move. What that typically means is that if I see all 4 signals (or a great setup with 3) I'll try to get as close to the PSAR or bollinger band as I can while the stoch is close to 30 or 70 or exceeding. If I can get at least a 1:2 risk reward on each trade I don't have to be right even 50% of the time to be profitable. Luckily this system should yield much higher results than that if done properly so there is room for entries to not be perfect. The only thing strict about the system is to at least have 3 signals lining up and to not take a trade under 1:1 risk/reward. As you get used to the system you'll be able to make decisions on your entries and exits based upon previous experience.