MR. Mechanical method

Note: This system was conceived of using the GBP/USD, it may or may not work on other pairs.

For this system, you use 4HR charts. Each day at 8:00 GMT you set your trades.

We are using the price range of the 4:00 GMT bar as the basis off of which to place our trades.

Every day you set your trades at the close of the 4:00 GMT 4HR bar, which is at 8:00 GMT, which is 4:00am EST.

Buy a break of the high of the 4:00 bar, Sell a break of the low. Stop is the other side of the bar.
Use a 10 pip buffer to consider a trade triggered! <--KEY POINT!

One Stop and Reverse order is allowed per day (at your discretion). So, if your stop is hit, you may if you like open a new order in the other direction.

There are 6 four-hour periods in a day. After opening your trade, you close out 1/6th of the trade after each 4HR bar closes, thus finishing up every day the next day just as you are opening a new trade.

If you end up getting a great move early, close out more aggressively.

If you get triggered later in the day, with say only 2-4 bars left, make sure to have closed out the trade entirely by the end of the 6th 4HR bar.

Always start the next day fresh!

Have you backtested this system? If so, what were your results?

past performance is not indicative of future results . I will post current trade charts on the G/U this week and beyond as time allows. It is very simple to backtest it yourself, though. Randomly spin back to any section on the 4H chart, locate the bar that was 4:00 GMT, determine it's highs and lows, and then manage the trade as per the first post. Some days will be a break-even affair, some will be small losses, but there are many days that KILL. just check it out for yourself. of course, you need to money manage, and you must be consistent in your efforts, but this has much promise as a mechanical method. Part of what makes this unique is the fact that your exit technique is consistent and predetermined. You close out 1/6th every four hours, more if you get a huge move early. There is a touch of discretion in actual execution, but the theory is mechanical. The best thing to do is to backtest yourself and see how you would have behaved in each scenario. There WILL be losing days, but it's how you manage them that make you successful. I believe everything is there in the first post for you to be successful in the long-run, but it will take practice and experience for you (and me) to know how to squeeze every last profitable drop out of the market. I hope someone here in these forums might add some input on how to make this method even more profitable...

Can we use it for other pairs ?

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RSI divergence guide

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your idea of scaling out is very well thought of. However is is really advisable to reverse on the same day? From other systems I've seen stop and reverse position for one day trades does more harm than good. No criticism here, actually from my initail testing I'm of the opinion its a good system. I'm just hoping you could tell us about the resulys you've had with stop and reverse versus only stop out (one entry a day)

Thank you very much for posting here, we appreciate your valuable contributuion.

This has only been tried on the G/U so far, it may work on other pairs.

I'm attaching today's 4H chart so far. You can see that I bracketed the 4HR bar with the dashed green lines, 10 pips above the high and 10 pips below the low. The first bar remained an inside bar. The second bar triggered long.

Now, since the first bar didn't open a trade, that only leaves us with 5 bars left in the day. So instead of closing 1/6th for 6 bars, we would now close 1/5th for 5 bars.

The second candle of the day closed +12 pips in profit - close 1/5th.

The third candle of today is well in profit, about +80 pips. This is pretty good profit for a day, so I would suggest closing out 2/5th's at this point, leaving 2/5th's still on the table. Move stop to break-even, and then come back in four hours and close out another 1/5th. There's no hard and fast rule about closing out, other than to have closed out the trade completely before the next day. As I said in the first post, when you've got good profit, close out more aggressively.

As for the question about the stop and reverse, it's a good one. I don't have a firm answer. You could do as you said and just let a stop out occur and wait for the next day, or if you want, take the other direction. There's no right or wrong here as long as your position sizes and money management are proper.

Hi,
One of the systems I trade live is similar to this, only I set the trades at 08:00 London time (currently at 07:00 GMT). So I took a hit today.
I also shoot for a bigger TP (approx 110 pips unless I chicken out before that).
Anyway, I have found (for my system) that by far the best day for G/U is Monday, and that G/J works on both Monday and Friday - but with a smaller TP on Friday than on Monday.

Food for thought?

Ian

This might be a really stupid question. My apologies in advance .

My broker works on GMT+3, therefore, if I chart at 4 hours, I won't be able to see the 4 hour GMT bar, since there is an hour offset in the middle. Example, if I look at my 8:00 hour bar, I'll be looking at a bar that starts at 5:00 GMT. Is there any way I can do this? I am thinking looking at the high and low on the one hour chart for that period, but the idea was writing an EA.

Thanks,
Max