round numbers

15 minute chart.

Hey Dean,
Well I Dont think this idea is rubbish at all. In fact I have been demo trading something similar. It involves pivots, but any line in the sand would work. It has been theorized that pivots, fibs, Brns etc are merely arbitrary imaginary lines that hold no real significance. That you could draw a series of any lines on the chart and your brain would see the interaction of them to price and try to make a pattern out of it. Its what the brain does best. This is why we see animal shapes in clouds, faces on mars rocks, and jesus christ on our grilled cheese sandwiches.

There is something to that theory of any old line could work, I think, see: murray math lines, sixths trading, eighths trading...etc (try it, put these on your chart and see what I mean). That being said I dont think that means that it isnt exploitable. Especially those lines that are widely accepted as psychological levels or as we are calling them BRN's. Pivots are widely used in trading speculation as well so I think that they hold some value as well, I even use them as a trend filter: above daily pivot=uptrend; below daily pivot=downtrend. But, this use is the most arbitrary, one could argue.

As far as how do we exploit these levels for profit....I think we are assuming that more often than not price will bounce at one of these levels, at least temporarily "pullback" if not completely reverse. Therefore I suppose that exploiting these reversals involves guaging the price direction and placing a pending order at the appropriate next BRN. Lets use the E/U for example: Price today has dropped from a high of 1.3675, hesitated slightly at the .xx50 line, then cut through that line like a knife, and is heading towards the 1.3600 BRN. We could place a pending BUY order on the 3600 mark. Ok that much is obvious, but what about stops, and take profit. This is the hard part, and what could make a winning strategy a loser.

I propose that we have to look at momentum as price approaches these levels as to whether or not we expect continuation or reversal....If the candles are long and getting longer (momentum) or shorter (slowing down). I think we also have to look at using a recovery system with this type of trading rather than a small stop loss. This turns some folks off a bit, but in essence in the same thing. We just have to do some backtesting to determine the levels at which we reverse our positions or cover our losses at as close to BE as possible. Example chart

Can anyone tell me what dean is trying to say by the screenshot? Is his arrow are random or is there any specific rules for entry


Thanks

hes pointing a reversals on the lines

Hi Dean,

So you created the monster

I have looked at the chart and pm and need to spend some time digesting.

BRNs usually feature in my entry points when I am setting up on pending trades on TDI & Fractals although I have not been setting up any limit orders - just sell stop and buy stop.

I'll add this into the test trades and see how it plays out - unfortunatey on some time crunches on a couple of prohjects at the mo.

Cheers - thanks for setting this up and posting the chart

I am initially opting for 2XATR for SL and TP - may run a second trade and open up the TP depending on the current range of recent moves / nearest S/R / Fractals.

Interesting when you run this on Day charts