Inroduction and Rational:
The rational behind this strategy is explained in Boris Schlossberg’s book, “Technical analysis of the currency market”. The idea is privileging inactive trading hours.
In GBP/JPY, for example, the highest volume is experienced at Asian and London session and there is no major move is expected in the afternoon of the NY session. Besides, there is no economic news would release for these pairs when the countries’ financial markets are closed.
The best results were taken on GBP/JPY. The set up if fairly easy: on 15 minute chart, open EMA62 and RSI 9. We may now plot a box indicating the start and finish of the pair session. It means if you are dealing with GBP/JPY, the start of the session is the start of Asian session and the end of the box is the end of UK session (which are: 8 PM, ET and 12 PM, ET next day):
In the session, we highlight the high and the low and see if at the time of the high and/or low, RSI moved into OB/OS territory or not. If the RSI had a trip to these territories, we put pending orders. For example in the above example, RSI moved to both OB/OS zones, and then we may start with a buy position, as the price is already at the bottom of the so called “box”. We may enter at any point with in the low 20% of the box. In this case, the box is between 238.91 and 236.81 (210 pips), so we can buy at any price below 2373.23. Stop would be 20% below the bottom of the box (236.39) and the first target is EMA62. There we have the choice of either bank the profit or move the stop to breakeven and go for the other side of the box.
If no OB/OS was seen in the box, we pass the trade.
Exit strategy:
All open positions should be closed before the active sessions for the pair starts.
Money management technique:
I use a multiple entry technique. In a case of a buy trade, instead of a single entry with risking 2% of the capital, I put three limit orders at the bottom of the box, 10% and 20% from below, risking 0.5% on each. In this case, even if I stopped out, I will lose 1.5%, but if the trade moves against me and then turned into my direction, I have two more positions at better prices.
The rational behind this strategy is explained in Boris Schlossberg’s book, “Technical analysis of the currency market”. The idea is privileging inactive trading hours.
In GBP/JPY, for example, the highest volume is experienced at Asian and London session and there is no major move is expected in the afternoon of the NY session. Besides, there is no economic news would release for these pairs when the countries’ financial markets are closed.
The best results were taken on GBP/JPY. The set up if fairly easy: on 15 minute chart, open EMA62 and RSI 9. We may now plot a box indicating the start and finish of the pair session. It means if you are dealing with GBP/JPY, the start of the session is the start of Asian session and the end of the box is the end of UK session (which are: 8 PM, ET and 12 PM, ET next day):
In the session, we highlight the high and the low and see if at the time of the high and/or low, RSI moved into OB/OS territory or not. If the RSI had a trip to these territories, we put pending orders. For example in the above example, RSI moved to both OB/OS zones, and then we may start with a buy position, as the price is already at the bottom of the so called “box”. We may enter at any point with in the low 20% of the box. In this case, the box is between 238.91 and 236.81 (210 pips), so we can buy at any price below 2373.23. Stop would be 20% below the bottom of the box (236.39) and the first target is EMA62. There we have the choice of either bank the profit or move the stop to breakeven and go for the other side of the box.
If no OB/OS was seen in the box, we pass the trade.
Exit strategy:
All open positions should be closed before the active sessions for the pair starts.
Money management technique:
I use a multiple entry technique. In a case of a buy trade, instead of a single entry with risking 2% of the capital, I put three limit orders at the bottom of the box, 10% and 20% from below, risking 0.5% on each. In this case, even if I stopped out, I will lose 1.5%, but if the trade moves against me and then turned into my direction, I have two more positions at better prices.
Attached Image
Making pips is easy, holding 'em is hard
- Pipsopolis
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