3 Amigos Intraday

Hello everybody,

I just wanted to share a system I created a while ago. It has been back & forward tested and works admirably under most conditions. In good trends it captures a lot of pips. In choppier situations, it captures smaller doses and gets you out quick with small losses - what more could you realistically ask for??

I would not recommend you follow this system if you fit any of the following:

- If you are a beginner to Forex.
- If you have no idea what 'price action' is.
- If you haven't the slightest clue what support/resistance are, and how to determine where they are on the chart.
- If you do not recognize basic candlestick formations.
- If you are a Japanese house wife with a penchant for carry trades.
- If your last name is Smith.

A word for the wise: This is NOT a 100% mechanical system. Like most successful systems, it requires DISCRETION in certain areas; the entry is pretty well 100% mechanical. Where discretion comes in is in your choice of exit, manual movement of stop-losses to logical areas, as well as the choice to implement add-ons in a good trend. In all of these cases I will try to explain what is, in my opinion, the best option for different situations.
One thing I would like to stress is the importance of trade (profit) management & properly managed exits (they go hand-in-hand). The manual trailing stop & exits were fashioned to protect larger profit while letting smaller profits breathe - thus giving them the opportunity to grow.

I do not peruse these forums like I used to and really do not have a lot of time to spend here. If you have a basic trading question, please look for it elsewhere on the site or go to www.babypips.com for a full, Trading University education.

** I cannot stress enough - KNOW THE BASICS before you even look at this.

If you have a question regarding the system itself, I will try to answer in a timely manner - I apologize in advance if I don't get to it for a day or two.

I will try to post more examples if necessary - just let me know what areas I wasn't clear on.

NO! I do not have % success rates, win/loss ratios, etc. In truth, I have little to no time to do any type of intraday trading so I have not used this system in a while. Most of my trades are long-term, position trades (the easier type in my opinion).

While I hope I have covered everything, I am pretty sure there is some small particular(s) that have slipped my mind Again, just let me know and I will try to muddle my way through an explanation!!

Good luck to everybody & happy trading!

BTW: Please do not post here until I have the first couple of messages down. They should explain everything

This system has only been used with EURJPY!

Chart: EURJPY 15m

Indicators: As per the attached template.

- Gann HiLo Activator v2.0
- 21ema
- 200ema

These are the Three Amigos


Entry Long:

Enter when a bullish candle closes above the upper most amigo.

Enter Short:

Enter when a bearish candle closes below the lowest amigo.

Stoploss is at the entry candle's HiLo indicator up to 50pips. If the HiLo is greater than 50pips away, make your SL = 50pips! This is an emergency stoploss only - most of the time you will exit prior to this.


Basic Exit is when a candle crosses over and closes on the other side of any of the amigos.


See attached!

This system incorporates add-ons.

There are two types of addons, that being an amigo bounce, or a strong trend support/resistance break.

An amigo bounce is a small retrace that bounces off of one of the amigos, followed by a strong continuation candle. The continuation candle should be significantly stronger than the retrace candles (larger in size) ...


A trend support/resistance break is when the trend momentarily reverses (retraces) creating a high/low. The trend then continues without bouncing off of an amigo. Either manually (or with a buy/sell stop) enter a new position when price goes past the high/low by 6 pips.

In both of these situations the last add-on is, in many cases, a loser. Even if you get one successful add-on, however, it will more than make up for this small loss!

Remember - PROTECT YOUR PROFIT!!

Move your stops to high/low resistance/support areas as the trend continues! If you add-on, move all stoplosses to the bounce or retrace area (6 pips beyond).

See attached!

Once you are in profit you will want to PROTECT IT!!!

If it is only a small profit, give it room to breathe!! If that means you are stopped out at a loss, so be it!!

If you are in the middle of a nice trend, however, and have just gained 50, 80 or 100 pips in one or two candles, then look for places to move your stoploss to!

Don't just pick any area, and only move after the close of a candle. These are not live trailing stops.

Pick the last, previous retracement level if you have had a few good dips (don't forget your add-ons).

If you have had two really strong candles (or one UBER-STRONG move), then trail it under the low/high of each candle that moves significantly in your direction. (if this doesn't make sense I can post some pics).

If you see a strong reverse signal (engulfing candle, strong doji, etc) then consider tightening up as well!!!

Remember - only tighten up to protect good profit; not 10 pips!!

Take care all and please let me know if I can explain anything better or if I have missed something.

Feel free to post!

Happy trades!

D.

Daemien,

Well done. A nice, simple method. Actually fits the time frame I am interested in. Thanks for the effort on this.

Can you attach just the indicator Gann HiLO? I can't download it from the zip file you posted earlier for some reason.

Also, EUR/JPY is the only pair you've tried this on? Any reason that it wouldn't work on any other well trending pair like GBP/JPY or GBP/USD?


Thanks,
Richard

thanks for sharing your system.can u pls post more of your charts? thanks:

Here it is Richard, good luck!

I see no reason why it wouldn't work on other pairs. I did a visual backtest on GJ last night (somebody was asking the same question) and it appeared like it would work. Would just have to iron out the small points.

D.

Sure fx. Is there anything in particular you are looking for? (entries, add-ons, etc)?

I am on the way to work - will post in about 12 hours...

Take care,

D.

Hi Daemien,

What a beauty! No doubt it's lot of hard work to come to such a simple system. Wonder what time you used to trade this system? (JPY open, London open or after NY open?)

Best luck to your positions!!!

SF

Hi Seafront - thanks

Yes, it can be time consuming mostly - but fun all the same when you think you are on to something. At the time I had one or two days per week where I could trade the US/London cross-over (8:00 EST to 12:00 EST approximately) so I used it there - also the few hours after JPY open comes to mind.

The problem now is that after both a geographic & a job change, I have absolutely no time for US or London sessions - just about 1.5 hours in the first part of the JPY open. Sux but them's the brakes Then again, I have been in love with long-term, position trading for quite a while now; and it fits my schedule perfectly

Take care & here's to many pips in the bank!

D.

Edit: Forgot to add, if you take a look on the 1H chart, it is also usable there (and appears to be even more reliable)! Good luck!

Attached is a chart of today's analysis using the 3 Amigos system.

As you can see, the first trade goes nowhere fast!! In a case such as this give it an hour or two and then release the position at break-even (or as small a loss as possible). With everything clustered, a nice long breakout will give us a great entry signal!

Let me know if you have any questions...

Funny, I am using a VERY similar strategy.

I was using a 100 smoothed moving average and an 8 period smoothed ma both in MT4. To my surprise, the 200ema and the 100smma are the same thing! Also, the 8smma and the 21ema are pretty much the same. To be precise, the 15ema is the same thing as the 8smma. This makes sense now that I've reviewed how a smoothed moving average is calculated.

I don't find that I need the Gann indicator. Works great w/o it as long as I keep my losses to a min.

Anyway, great strategy, just thought I'd like to tell you that we're on the same wavelength. Happy trading!

is there any replacement indicator for the gann hilo? i can't seem to get it to work on my version of metatrader. i would, however like to try the 3 amigos system. thanks in advance, bob

Hey Damien,

Just want to tell you that I decided to test your method, so I took 3 trades based simply on the Gann activator cross.

As this was a test (but with real money), I did not let the trades run for long.

I also placed a 50-point stop loss

Trade#1: 20/9/2007

UDSJPY sell @ 115,42
USDJPY buy (close position) @ 115,22
------------------------
Trade#2: 20/9/2007

EURJPY sell @ 161,53
EURJPY buy (close position) @ 161,17
------------------------
Trade#3: 21/9/2007

USDJPY buy @ 115,15
USDJPY sell (close position) @ 115,35
-------------------------

These trades were made on my REAL account, so I will give you a well deserved credit for your efforts.

Good job,
Leo

Hi Dave,

Yes there seem to be many indicators that react very similar to each other. Sounds like you have a winning system!!

Stitch: I have attached what appears to be an older version of the HiLo. To be honest, I am not exactly sure what the difference is. You will have to put it on your charts (assuming it works) and compare it to the ones I have posted to find out.

Good luck and happy trading all!

D.

Awesome famagusta!!!

Yes, today was a nice strong bull trend for yen pairs. I incorporated the brown, 21ema mainly to assist with exits but if you have your own ....

Congrats on your results! I am jealous hehehe. Gotta love work - it really does get in the way of life doesn't it??

Take care,

D

Hello daemian, thx for sharing this simple system !!

I suppose you trade this system in a live account. So what's your last results ? Or results of anyone ...

Thx again, nice job !!

Chapi

Hi Chapi,

Yes, I was trading this live quite a few months ago. Not so at the moment tho as I do not have much (if any) live-time to trade during the best hours.

I have been getting quite a few private PM's and Skype chats on the system, actually. For the 15 minute time frame, I would highly recommend trading from the start of the London session (approximately 2-3:00am EST) to around 3:00pm EST. I have gone through many historical charts now and these are where you will get your strongest and most reliable breakouts with the most pips gained (EJ of course). I would NOT recommend trying this on the Asian session with EJ as it seems to give a lot of false breakouts (sorry if I misled anybody on an earlier post).

Also, if you go to the 4-Hr charts you will see that 3 Amigos works very well at this time frame and may actually be even more reliable.

Good luck all & happy trading,

D.

Damien - congratulations - looks like a good strategy on the history I have reviewed. Nice clean charts with a focus on price action. I'll test live with micro lots for the next month or so.

Hi Orientso,

Glad you find it useful!! Just a FYI if using it with EURJPY; ignore asian breakouts & center mainly on the London / US open timeframe. Much more reliable ...

I know I mentioned this is a previous post, but I have done some more eyeballing of the charts and it is quite apparent.

Take care,

Daemien