Bread and Butter Trades

I have been a member of FF for a while now and I have really been blessed with this great forum. I have met great people here on this forum and also learn a lot.

As a token of my appreciation, I will like to share this simple system that I call bread and butter trade.

This system is not for every trader, but if you find it useful, pls feel free to adapt it to your personality.

Another thing I will like to say before I go to the system is that as a trader, you need to reduce the drawings on your charts to see price which is truely the best indicator. Forget about all your numerous lagging indicators, look at price, apply sup/res and you will do well. Another thing is that you should stop looking for the guru that will help you to be successful. The guru is you....yes, I mean you reading this. You are the best trader that can ever be....only if you belief.

I have been trading this system for over 3 yrs now and it has consistently given profit. It can be used as a scalping method as well as for long term trades. It is not 100%, but you can adapt it as you like...remember, you are the best trader the world is waiting for.


The System

Pair: EURUSD. (I trade mainly eu but I am sure that it work on all pairs)

Chart time frames: 1hr, 4hr and daily charts

Indicator: 24ema applied to close.

Rule: There are only 2 rules to remember.

1. When price is above 24ema (minimum of 20+ pips), and price starts to travel towards 24ema i.e. price is falling towards 24ema, set a buy limit at 24ema with anticipation that there will be a bounce back UP. Vice visa for sell. Target 10+ pips

2. When price is below 24ema and travelling UP towards 24ema, If price close above 24ema, Then open and close above 24ema, set a buy limit at 24ema anticipating a retest of 24ema for the journey UP. Vice visa for sell.

Stop Loss:

The stop loss is derived from rule 2 above.

For Buy: When price close below 24ema, then open and close below 24ema, close the trade.

For Sell: When price close above 24ema, then Open and close above 24ema, close the trade.

Avoid News time.

A picture to illustrate:

[IMG]file:///C:/Users/IBUKUN%7E1/AppData/Local/Temp/moz-screenshot.png[/IMG][IMG]file:///C:/Users/IBUKUN%7E1/AppData/Local/Temp/moz-screenshot-1.png[/IMG]

UPDATE:

Steve have been so kind to write an ea for this method. Pls find attached.

The ea keep watching for the position of the 24ema and based on the distance you choose (bufferpips in the ea property), the limit order will be sent. 20 pips is the default.

pls play around with the toy, but get the real foundation of the method manually first while you try the ea on demo. You are responsible for your own trade, so use responsibly.

UPDATE 2:

Steve updated the EA and added 2 script for us to test it out. Pls read post No: 55 for details but find below Steve's statement:

The two scripts will read the EMA for you and send the appropriate limit order at that price.

So long as you use the same magic numbers for scripts and EA, the EA will then monitor the trade for you and (should) move the trade fill price in line with the ema. Set StopTrading to 'true' and the ea will monitor and manage the existing trade, but not send a fresh one once the trade has closed or been deleted.

The only update to the EA is to display the ticket number of the trade it is monitoring on your screen to confirm that it is working with the correct trade.

Update 3:

Squolou have been very kind to improve this strategy by making a dashboard. Pls find attached the dashboard.

Update 4

Steve has done it again. He has come up with a multi pair trading ea for the bread and butter trades. Pls take it for a test and lets come up with the best optimisation for the robot.

Chk out the detail intrustructions at: http://www.forexfactory.com/showthre...33#post4820733


Cheers.

Ibuk's motto is simple makes money.

I have been with ibuk for a few months now and take these bounces when they come along. Basically when the price is far away from the 24 ema and it comes to touch it the trades are awesome. just leave limit orders and get filled very simple yet effective method. 1hr and above.

Looks like a prime candidate for an EA. Nice idea IBUK!

Could you explain the stop loss position again... the TP position is clear... a simple +10pips... I don't quite understand the SL position though?

Many thanks!

Rule: There are only 2 rules to remember.

1. When price is above 24ema (minimum of 20+ pips), and price starts to travel towards 24ema i.e. price is falling towards 24ema, set a buy limit at 24ema with anticipation that there will be a bounce back UP. Vice visa for sell. Target 10+ pips

2. When price is below 24ema and travelling UP towards 24ema, If price close above 24ema, Then open and close above 24ema, set a buy limit at 24ema anticipating a retest of 24ema for the journey UP. Vice visa for sell.

Stop Loss:

The stop loss is derived from rule 2 above.

For Buy: When price close below 24ema, then open and close below 24ema, close the trade.

For Sell: When price close above 24ema, then Open and close above 24ema, close the trade.

Pls read the red letter very well.... read it twice and digest it.

When a candle closes on the opposite side of your trade, you take note of the opening price (at the opposite side of the trade) and the closing price. If these 2 are on the opposite side of your trade, then close it.

At this point you want to reverse your trade. You put a limit at the 24ema in anticipation of a retest.

Try and keep it very simple. Hope this answer your question??

Ibuks

Thanks Ibkus for your reply. I must be being thick today. On the EU chart for the 12:00 GMT trade on the 1hr you could enter a sell limit because the current market position was >20pips from the EMA.

That part I get.

The 12 o'clock 1hr candle will open and close under the EMA. So I presume you close the limit order and enter a new one at the new EMA position for the 1 o'clock candle (if it meets the >20pips rule).

So far so good.

My TP is 10pips from the sell limit order.. but I am still not understanding where to place the SL.

Thanks for your patience Ibuks! You are very kind.

I'm going to code it up and see what happens...
80)

@Ibuks
Thanks!
Looks like a brilliantly simple and clean-cut method.
I will be surely checking it out!

If I understand the concept correctly you don't place a stop loss (other than your usual emergency SL). You eyeball the trade and get out if one full candle (from high to low) closes on the wrong side of the EMA.

You either place the order with no SL or the SL is far away as a sanity stop.

The exact SL isn't a level you can know when you enter the trade. You exit when the price bar closes below the EMA. It might close far below the EMA or maybe closer but you have to wait for the bar to close to know.

This is as simple and effective as it can get in fx trading...............great one ibk

Thanks for the guidance on the SL everyone... I'll give it a try.

Would you adjust the pending order each hour to account for movement in the EMA?

I also watch EMA at this level. You just have to watch out for new trend(s) that is(are) developing. See example below:

A moving average indicator showing price label would be very useful for this system. Anyone?

Here is an example trade which I normally trade. I avoid news like plague as nothing respects news...lol.

You can treat the bread and butter trade as bounce or break. Bounce on the 24ema is the bread while the break of 24ema is the butter.

With the bounce, you can get as much pips as you want if you manage your trade properly while the break can be a trend change that can give you lots of pips until you get another trend change.

Remember, you need to own it and use it as it fits your personality but pls make it simple. The more complicated you ty to make it, the less pips you get and the more confused you are.

Happy trading.

Ibuks

"set a buy limit at 24ema with anticipation that there will be a bounce back UP. Vice visa for sell. Target 10+ pips"

Thank you for sharing your system.

Could you please explain how you set a buy limit at the 24ema

1) since the ema is formed only when bar closes. How do you "catch the bounce" accurately,

2) do you use the previous 24 ema as reference and add/subtract a few pips?

3) SL is bar open and close "on the wrong side" of 24ema - that would mean that SL could be more than 10 pips (could even be very big) - so risk could be bigger than reward ( may not be 1:1) Do you have a maximum you let it run?

Thank you.

sounds interesting, i'll give it a whirl on demo.

If I'm not mistaken, that would be a whoppin' 50 pip loss ;-)

Pls see update on post 1.

EA can be use to trade manually helping you identify the position of the 24ema.

Play the bounce also remember you can play the breaks as well. The ea currently play the bounce, further update will play the breaks as well I belief.

Happy trading.

Ibuks

hi ibuk


some obvious questions arise, as pointed out by laimonk.

to set a limit order in advance , you need to guess the position of the 24ema in advance. the problem here is, you cannot accurately 'predict' the position of the 24 ema as it moves constantly and can indeed have huge moves on big price movements. the closing position could be way different then the point at which you set the limit order..

how do you deal with this and how do you set the limit order yourself. an illustrated example would be helpful..

i still dont understand the SL criteria. again if you can show an example please.

lastly, it seems that this method only works well in a trending market, in a ranging market you will get stopped out many times ?

also, what is the least number of pips distance the price needs to be at before the you can consider the bounce as valid.


cheers

couple of other things just sprang to mind:

does there have to be a touch of the 24 ema. if not, then what is the lease distance it can be from the 24 ema before we can take a trade ?

sometimes the price just follows the 24 ema very close by. so not much of a room to enter bounce trades.