Helllo all. Thank you for stopping by.
The basis for this system, the Rainbow Squeeze, is the belief that the (hourly) candle sticks will “climb” or “drop” along the edge of the Bollinger Bands as they dilate after a period of running parallel.
I have developed this system directly out of the brilliance of the “Pivot point squeeze, high probability system”. If you haven’t read that thread I would recommend you do for two reasons: 1. it is better than mine, and 2. it may give you a better idea of where my system is coming from. I began using the ideas on that system differently enough that I felt I was not keeping true to the intent/direction of that thread.
I don’t take credit for either the great template or indicator which I use and post here, both were designed by other FF members who are clearly much more intelligent that me…J
O, yes, one more thing before I get to the details – I am trading on a micro account, and only trading on money I could afford to loose (but hope not to!
Please use your own due diligence before placing any trade!
OK that said, here is my system:
I never, ever, expose more than 2% of my equity to the market.
I never, and I mean never, move my stop loss against me.
I will place a LONG trade only if:
The most recent hour candle pierces into the upper light pink upper bands AND
The price is above the daily pivot (if it has recently broken above, even better) AND
The price is above the moving average AND
The MCAD is above zero and it’s bar is larger than the previous hour (if is has broken over zero in this hour, even better) AND
the Bollinger Bands have been in a more or less parallel channel before this (the longer the better) AND/OR
the Bollinger Bands have just squeezed, or pinched, and have now begun to dilate.
I will place a SHORT trade if all the above is opposite.
I will set a stop loss, around 30 pips, at least 10 pips beyond the daily pivot point in the opposite direction of my trade.
Exit strategy is very variable, and arguably the lest developed part of this system. For now, I look to take profit at a daily support (1,2 or 3) or resistance (1,2, or 3) line. So for example, if I get in long on a currency pair just after it passes above the daily pivot, I will either take profit at R1, or sell half at R1 and let the rest run to R2. A sign that the trade is over is when the hourly candles begin to loose contact with the bollinger bands.
Got it?
Now for some extra details -
The system appears to work best on the E/Y, but also nicely on the E/P and the Cable. It works variably well on different pairs, and I have not experimented with it on too many other pairs often enough to know how well.
I move my stop loss to break even plus one when I am up 15-30 pips (depending on volatility).
I consider the signal ‘stale’ if it is three or more hour old and I have not gotten in.
In some cases, when the price is well above or below the daily pivot, but the signal still looks good, here I will use the moving average line or a S&R line to set my stop loss.
The closer the moving average is to the daily pivot at time of signal, the better.
Be extra careful if a signal develops during the release of big news – probably best not to use this system on news.
Still with me?...
One more big point:
Theoretically speaking there is an “optimal” bandwidth which signals when price action is about to make a decisive move. And when I say “bandwidth” I mean the distance from the lowest upper Bollinger Band, measured in pips, to the highest lower Bollinger Band. This optimal bandwidth changes over time and from currency pair to currency pair. However, generally speaking the tighter the bandwidth the better. When the bandwidth is very tight, the colored Bollinger Bands begin to blend and look white-hot – this is an *excellent* sign of an impending big and decisive price movement, but does not come around that often.
As (probably) with all systems, you can improve your success rate if you are simultaneously aware of the overall market direction at the time of your trade.
To use this system, you must have MT4, and add the indicator and template listed in my next post.
Okay, if you are still with me… I’m impressed
A picture is worth a thousand words, so soon I will post a few MT4 screen shots to give you a better picture of how my system works (no pun intended, really!). I don’t claim to be a guru, but have received a lot of great ideas form FF, and wanted to give something back. I will post pics of some of my trades over time, so you can see how I’m doing with this system. Be warned though, that they don’t come around every day, and I have a day job – so some times it may be a while between posts.
Cheers and Good Trading to All.
The basis for this system, the Rainbow Squeeze, is the belief that the (hourly) candle sticks will “climb” or “drop” along the edge of the Bollinger Bands as they dilate after a period of running parallel.
I have developed this system directly out of the brilliance of the “Pivot point squeeze, high probability system”. If you haven’t read that thread I would recommend you do for two reasons: 1. it is better than mine, and 2. it may give you a better idea of where my system is coming from. I began using the ideas on that system differently enough that I felt I was not keeping true to the intent/direction of that thread.
I don’t take credit for either the great template or indicator which I use and post here, both were designed by other FF members who are clearly much more intelligent that me…J
O, yes, one more thing before I get to the details – I am trading on a micro account, and only trading on money I could afford to loose (but hope not to!
Please use your own due diligence before placing any trade!OK that said, here is my system:
I never, ever, expose more than 2% of my equity to the market.
I never, and I mean never, move my stop loss against me.
I will place a LONG trade only if:
The most recent hour candle pierces into the upper light pink upper bands AND
The price is above the daily pivot (if it has recently broken above, even better) AND
The price is above the moving average AND
The MCAD is above zero and it’s bar is larger than the previous hour (if is has broken over zero in this hour, even better) AND
the Bollinger Bands have been in a more or less parallel channel before this (the longer the better) AND/OR
the Bollinger Bands have just squeezed, or pinched, and have now begun to dilate.
I will place a SHORT trade if all the above is opposite.
I will set a stop loss, around 30 pips, at least 10 pips beyond the daily pivot point in the opposite direction of my trade.
Exit strategy is very variable, and arguably the lest developed part of this system. For now, I look to take profit at a daily support (1,2 or 3) or resistance (1,2, or 3) line. So for example, if I get in long on a currency pair just after it passes above the daily pivot, I will either take profit at R1, or sell half at R1 and let the rest run to R2. A sign that the trade is over is when the hourly candles begin to loose contact with the bollinger bands.
Got it?
Now for some extra details -
The system appears to work best on the E/Y, but also nicely on the E/P and the Cable. It works variably well on different pairs, and I have not experimented with it on too many other pairs often enough to know how well.
I move my stop loss to break even plus one when I am up 15-30 pips (depending on volatility).
I consider the signal ‘stale’ if it is three or more hour old and I have not gotten in.
In some cases, when the price is well above or below the daily pivot, but the signal still looks good, here I will use the moving average line or a S&R line to set my stop loss.
The closer the moving average is to the daily pivot at time of signal, the better.
Be extra careful if a signal develops during the release of big news – probably best not to use this system on news.
Still with me?...
One more big point:
Theoretically speaking there is an “optimal” bandwidth which signals when price action is about to make a decisive move. And when I say “bandwidth” I mean the distance from the lowest upper Bollinger Band, measured in pips, to the highest lower Bollinger Band. This optimal bandwidth changes over time and from currency pair to currency pair. However, generally speaking the tighter the bandwidth the better. When the bandwidth is very tight, the colored Bollinger Bands begin to blend and look white-hot – this is an *excellent* sign of an impending big and decisive price movement, but does not come around that often.
As (probably) with all systems, you can improve your success rate if you are simultaneously aware of the overall market direction at the time of your trade.
To use this system, you must have MT4, and add the indicator and template listed in my next post.
Okay, if you are still with me… I’m impressed
A picture is worth a thousand words, so soon I will post a few MT4 screen shots to give you a better picture of how my system works (no pun intended, really!). I don’t claim to be a guru, but have received a lot of great ideas form FF, and wanted to give something back. I will post pics of some of my trades over time, so you can see how I’m doing with this system. Be warned though, that they don’t come around every day, and I have a day job – so some times it may be a while between posts.
Cheers and Good Trading to All.
"Discipline is the key ingredient to Personal Freedom"
