Honey Bunches of Pips (Easy system for newbie traders)

Hello Traders,

I stated this thread to help a good friend of mine so that he may use this strategy more effectively as well as allow the community to add to / benefit from what I call my Honey Bunches of Pips strategy. While this is NOT a 100% completely effortless system (like the myalchemyworks website) it is intended to allow traders the comfort of not being glued to their computers yet make some very nice manual trades. I.e. you to start looking only when an alert is given and ONLY TRADE when there is high probability of a nice movement to follow.

Those of you who would like to try this strategy out are welcome to post screen captures of their charts when they get a signal so that the community as a whole can help interpret what we are looking at, what to look out for etc... so that we can all make some money.

I have attached the Honey Bunches of Pips indicator along with a template so that you may follow along / join the discussion. While I usually use a few more indicators on my charts which help me see more clearly what the market is trying to tell me, I have also included the basic template because a trader MUST learn how to read the chart and candle patterns.

The strategy is simple. Set the indicator on a chart, turn on the notification and wait. I run this on multiple instruments and I usually use this on the M30 time frame but it works from M5 up to H4. Obviously the higher the time frame, the more pips one can expect from a signal once the market starts to break.

Once you get a notification then it's time to start looking at the charts.

First step is to draw your support / resistance lines as you see them from past price action. Then we wait to see what price is wanting to do. Here is where learning to read a chart comes in very handy. Sometimes the direction will be clearly visible and sometimes we have to wait for the markets to make up their mind which way they want to move.

Unless the charts are showing me a really good pattern, I will normally wait until I no longer get a signal to think about entering the trade. This will give the markets plenty of time to show me where it is they really want to go.

This strategy / system will come in very handy for for those technical traders who like to look at candle patterns and can recognize simple chart patterns (double top/bottom, higer/lower highs/lows, etc.)

The Indicator has an "AlertThreshold" parameter which I default to 10. Once 10 consecutive indicator lines are drawn an alert will be triggered.

Keep in mind that this system does not tell you how to trade, although I am hoping that the discussions from this posting will help those newbie traders out there. Some setups are obviously better than others and those really good setups will stand out very brightly.

As always, the market only gives an opportunity to make money, not a guarantee. It's up to the individual trader to look at the charts, manage risk accordingly, and of course make some money!

Also... any changes I make to the code will be found in this post. Please check the Last Edit time, and if you downloaded your indicator before this date, please download the new version.

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Notice the nice double top within the Honey Bunches

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Notice the nice double bottom with higher lows

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Remember, what we want to look at are the support resistance areas as this will tell us where the market wants to go

My next examples will use my full chart with all my lines on it.

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Notice that now I have a few more lines on my chart. This is the chart that I trade with all the time.

Yellow = SMA200
Green = SMA75
White = EMA21
Purple = EMA34 (high,low,close)
Blue = (MTF)SMA20 (from H1 chart)

Typical thinking says, when you receive your last signal bar, if price is below the yellow look to go short, if price is above the yellow look to go long.

This can also be interpreted as which way the lines are stacking... Yellow, Green, White means go short and White, Green, Yellow means go long.

Remember, the reason I posted the first three examples without my color lines was because I want to press the fact that these lines to not guarantee which way price will go. The ONLY way to know which way price will go is to look at the candle patterns it leaves behind. This will tell you all that you need to know (including when it's changing it's mind and going the other direction)

As you can see, we could have made some pips going down, but price really wanted to go up, as indicated by the nice blue reversal bars pushing price up above the EMA21 (white) and again when it finds support on the EMA21 (white) and pushes up through the SMA75 (green).

Also notice that the Honey Bunches indicator has been changed so that it gives a different line style once our AlertThreshold has been met.

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Okay, by now I hope you understand that my lines are only to help fill in the picture of where price wants to go.

This example shows clearly why I started the examples without the lines. We must use support / resistance FIRST and FOREMOST as this is what really tells us where price wants to go.

Notice that price was below the yellow once our signal stopped, but look where price found support. It made a clear double bottom right on our line and from there took off in the other direction.

Had you went short after the signal ended, once price reversed, broke up through the white, green and yellow only to pull back and find support (read reversal bar) on the white it was time to Stop and Reverse (read close short position and open long position)

Here is an example to illustrate the strategy. First Pic shows the alert and S/R lines that we know about. Second Pic shows the outcome.

Here we can see that price was not able to break back up through the colored lines and gave very clear reversal bar pushing down through all three lines (yellow, green, white).

Once the signal ended price was well below the yellow and the lines were in good position to stack themselves.

Here we exit the trade once price finds some support on the EMA21 (white) line although when examining the three tails at the bottom one could exit with very nice profits and call this trade finished.

This will be my last historical example. I will try to find time to put a live example up when we get our next LIVE signal so that we all have an opportunity to see and learn in real-time how easy and effective this strategy can be. If you have any questions, please don't hesitate to ask.

I just updated the attachment and organized the files a little bit. Now you can extract to your MT4 folder and it will put the files where they are supposed to go.

I've also included a Profile Folder that has all the charts coded into the indicator so it's just a matter of extracting to your MT4 folder, executing MT4, and choosing the profile "Honey Bunches of Pips"

I originally had my friend put in the default settings for each markets time frame. I since went in and adjusted the M30 settings on some of the pairs since that's the time frame I use this indicator on.

Okay,

We have our first signal of the week. From the looks of this it wants to go up. I'm liking the floor down on the Weekly Pivot. Typically I don't trade on Sunday's so I will continue to watch this guy a little longer.

Any other observations???

Also, I've updated my color scheme slightly to make it more easy to see the actual candles... All updates I make will be put in the very first post.

Now it appears that we have a fight on our hands. (This is what we've been waiting for ) Notice the three tails that could not penetrate the Daily Pivot.

A good breakout strategy would be to place pending orders on both sides of the Daily / Weekly pivots. Once this sucker breaks, it should break nicely

Appreciate your thread and I'll be watching this with interest. Thanks.

Well it looks like the weekly pivot won over the daily pivot. Was anyone surprised? The Higher time frames should always be given more precedence than the lower time frames.

Now we have higher lows and higher highs. I think this market will move up, and if you trade it, please manage your risk as that tail up there (R1) looks more than just a little ominous.

As expected the daily pivot resistance now broken has turned into support. We are finding support on the blue line, but I do expect a pull back to the white line.

We have completed our last signal with 18 bunches and I will follow up once more once this trade opportunity has completed.

So as I expected, the R1 line up there was heavy resistance. If you traded that, hopefully you were not greedy and banked some profits If not, hopefully at least you managed risk and did not allow your trade to go negative

We are waiting for the break out, and this was not it... don't worry... it's coming

Now we have another signal, and now with two ominous tails going up there, the Weekly Pivot will be put to the test. So far it's been doing a good job, but the resistance is pushing down.

For my Chartist out there... what pattern does this look like?

Ok, this is setting up quite nicely. These are the type of movements my Honey Bunches of Pips was design to alert to. All of this sideways trading means we are going to break, and once we do, hold on to your pip counter

Right now I do not have a bias other than to say the Weekly Pivot will be throughly tested.

My advice... watch out for false break-outs and if your going the wrong direction don't be afraid to stop & reverse.

Thank for sharing your way to trade for newbie like me. I've gone through your post so far. How frequent the setup will form per week? Coz I look back to the history and saw that they are very rare. And I run backtest at full speed on M5 but cannot find any setup. Can you explain about the frequency we can take trade per week/day/... Great thanks again.

It you watch all the currency pairs you should have maybe at least one good trade per week. It really does depend on the markets. So far this week we have had signals on 5 symbols (although I've only focused on one of them here)

Remember that this is a break-out strategy, and the longer the bunching occurs time wise, the bigger the breakout can be expected.

As for back-test, just attach to a chart, and manually go back and look and see what pops up. (again, I run mine at M30) and you can see some nice trading possibilities.

So he we are with 61 bunches (not counting the previous series of bunches). We have clear support and resistance converging on each other. One side will win the war and we want to take advantage of it

My bias is now maybe to the down side 1) simply because price has been on the weekly pivot for awhile now. Typically when a Pivot point doesn't reject price and price tends to hang around, there's only one reason... it wants to go through the pivot point; and 2) The bottom support lines have been penetrated. While there is still support down there we are making lower highs and lower lows.

Again, beware of a false breakout. A safe entry (once the signals stop) should give plenty of pips once this battle has been decided.

Well to be honest I'm happily surprised that this thing hasn't broke yet. Maybe it's waiting for Wednesday/Thursday night... First thing is for sure.... once this thing starts to go, hold on to your seats, and try not to miss it

Hopefully it will give us advanced warning via the candle patterns... Second thing for sure... this weekly pivot is working over time and all-in-all is doing a very good job of supporting price.

I still stick with my earlier bias that we go down... again simply because it's hanging around so long and not being rejected with any real authority. (or when it was rejected.. there was an authoritative reply) Last thing for sure... one side is going to win... still to early to choose sides, but once we have a winner it's time to ride!

Well look what finally decided to break... And as predicted it was the Weekly Pivot that gave way. This is a pattern that seems to repeat itself over and over again. If price does not get rejected by a pivot and "hangs around" chances are it will break through.

Lets see how many pips we can squeeze out of it before it's done with it's break-down.