Help! GBP/JPY 1H Candlestick Strategy

Warning:
* Novice trader with very low trading knowledge and experience!

Hello respected FF members,

I am trying to stand a 1H Candle-stick Strategy on GBP/JPY. Why GBP/JPY? I heard about this idea a few days ago, and observed the chart, its clear that most of the time, GBP/JPY follows the direction of first 5-10 minutes (of the start of a new candle) and moves at least 10-20 pips if the higher time frame is in favor and no news release impact in effect.

The main idea is observe the 1H Candlestick for first 5-10 minutes, see which way its going, if the direction matches Trend Momentum and Higher Time Frames, then execute the trade (with the help of a smaller Time Frame) .

Thats the basic. I have thought a few other things like
> No trading 30 Mins before/after News release.
> Minimum profit target 10 pips + 8 pips (spread) = 18 pips.
> Break Even after 10 pips and trail stop.
> 4/5 trades a day.
> Stop loss: Higher high or Lower low of the observation period (first 5-10 minutes).
> Watch for Pinbars and take them if available.

I need Help about:

* Comment on the overall idea (Please don't hesitate to call it foolish if you think so) All opinions are highly appreciated. And constructive opinions are the ones I need most.

* I want to include a SMA/EMA (which one is better), please suggest a suitable value. The idea is to buy above it and sell below it. Or it will be better to use MA crossover?

* Suggest if you think any other indies should be added like MACD/RSI? With proper value please.

* Anything that will increase the chance of avoid losing (avoid losing is the priority here, not winning)

My main goal is to scalp this very fast moving currency pair with minimum risk by ensuring the maximum probability. Just hit and run and bang! 10 pips in pocket ... lol

The attached image shows what I got so far. This is the NiceGuy template with THV Coral, Stoch and Trend Momentum on it. I have added other Time Frames. The Trend Momentum indi sucks a lot but combined with stoch and Higher TF is reliable at some percentages. I just want more reliable trend confirmation and go with it, I believe 18 pips is not a lot to ask on 1H TF specially with a pair like GBP/JPY.

I have traded this yesterday late NY session, 3 traded in 3 Hour and successfully hit my TP. I was probably lucky, this method (if it has any possibility in it) needs a lot more work to make it a consistent "Not-Loser" (which is beyond my ability) so I really need your help with it.

Thank you all for your time
Have a nice day.

If you are trying to simplify it then it would be easier to have a 5 or 10 min chart on your screen, outline the high and low of the 2 bars (or 1 bar for 10 mins) and take a breakout of the range with a SL at the other side.

For example if the first 10 minutes is below the close of the previous hour then you would be looking for a break of the low and vice versa. You can have the 10 min chart alongside the hourly chart for confirmation but that should be all you need. The indicators will just add more mess to your screen and will be of little use IMO. Should be fairly simple to back test and at least you will have some parameters in place. Profit taking is completely open but you could keep in mind areas of strong S/R, you could close on a strong reversal signal (pin, outside bars) or just move to BE once at X pips and ride out the bumps.

Hope it works well

RT

Million Thanks for the excellent suggestions Razor. I really like the idea. But don't you think that at least a MA would be useful to confirm the trend or minimize risk (of breakout) ? Its not like I need to make pip on every candle, 4/5 trades a day is the max I am looking for.

Could someone please comment on the base of the strategy that whether or not GBP/JPY most of the time move to the direction on the first 10 mins of candle? Or if breakout is possible is first 10 mins high/low cross previous bars high/low?

I know there will be fake setups, my main goal is to filter them, even the filter takes some positive setups thats fine with me, avoiding lose is my first priority.

The basis for your strategy is questionable. There is nothing that I'm aware of that supports your theory that trading is any different in the first 10 minutes of the hour than in the last 10 minutes or any other 10 minute period. There might be some special circumstances such as the start of the session or after lunch break to support your theory, but to suggest that every top of the hour is significant is doubtful.

Most strategies are based on some observable phenomenon such as breakouts or trend changes. These are primarily related to price, not time. Some have proposed that time is as important as price, but most people find this idea hard to accept.

You might have observed some coincidental movements that support your theory, but in the long run I doubt it will prove any better than flipping a coin.

Thank you CodeMister. Yes of-course the theory is questionable. I didn't have enough time to observe the chart, only last NY late session, there was a pretty strong bearish trend. I'll keep an eye on this pair this week.

For the fact, this is totally unbelievable. But I thought only we pick the trend first, stay away from news impact, and somehow can filter the fakes, then maybe ...

Anyway I'll check the pair this week and keep you all updated.

It is not possible to filter bad trades without the possibility of filtering good trades in a market environment without knowing the future. It would be first wise to test your theory to see if there is any long term edge because if there is not then no matter what kind of filtering effect you put in place it will not turn a loosing approach to a winner.