Hammer Feast

Hi,

History
This is my journal. The objective is to make me a better trader. I've been trading markets since 8 years now. I never give up, always try to find the holy grail that will put me in vacations for the rest of my life. Ehehehe. You have to have a dream right?
I have come up with this system that seems fairly nice. It combines CandleSticks + Wave Theory + Good Common Sense.

The system
Is pretty easy. Must be.
1) Look for a hammer. If you dont know what a hammer is, try read more about candlesticks.
2) There must exist a trend, if uptrend, then look for inverted hammer. If downtrend, look for a normal hammer. You got a hammer? Step 3 we go!
3)Look for a cross on the TRIX (Triple Exponential Average Indicator). It's the only indicator to be used. If the TRIX is about to cross, go to last step 4 !
4) Wave Theory! Here we must be able to draw 3 waves before the candle we just saw. The rules here are that the 3rd wave must be bigger than wave 2 and wave 1.

The Rules
Enter a trade, when all the above requisites are in place. Try to avoid Pivot points and news.
Exit the trade when the opposite hammer appears, or the TRIX has crossed again in the opposite direction.
I use the 5 min TimeFrame. Never tested other one.
Only open trades in London hours.
Only trade the EUR_USD

Will show pictures with the rules, is a lot better to understand.

Resources
Since is very exhausting to keep look for a chart or several charts in such a small time frame, i made this bot (EA) that detects hammers and inverted hammers on real Time. All this do (for now, later i will add new stuff) is launch an alert telling you that a hammer or inverted hammer was found, and you go to that chart look for the other requisites to open a trade.

Trade example from yesterday

Good luck seems clever

Hi Can you post indi and template please.

Thanks

Thank You Sim !

Hi Light786,

sure, the indi is from the TV4 Thread. I just gave it a different use to make trading simple. It has to be simple. Just put it on your chart. I use the default settings.

Why did i choose this indicator along with wave theory?

- This indicator predicts very well when market is about to turn. It may continue for a while the movement, but gives a clear picture that the move in that direction reached extreme and must turn or range.

- The wave theory is here because of the range part. Since the indicator can only tell us that a turn is about to happen, we need confirmation from the market 'emotion'. That is given by the waves. I don't follow Elliot Wave principle, by its own rules, i made the rules myself.

what about stops ?

what are your results for the past few months ...?

Great Question whatfx!

The stop is the low of the hammer (in the case of downtrend) and the high of the inverted hammer (in the case of uptrend).

The fantastic part, is that the stop is really small !! If the trade goes wrong, you only lose a small part!

Ps. Maybe the euro_usd is about to give us a inverted hammer and a trix cross !!

Here, all requisites are on to open the trade.

The stop loss is at the high of the inverted hammer.

We exit when trix re-crosses or an hammer appears.


EDIT: This one was a loss. There is no system that wins 100%. The goal is make more pips from winner trades than the loss ones. Lets wait for the next setup

EDIT2: Here is my analisis of the trade. I will try to do this to every trade, winner or looser to keep me improving.

Conclusion
Entry PointWaited for a 2nd hammer for confirmation, good. Trix cross on the overbought = excellent. Wave structure good, wave 2 length maybe too close to wave 3 length that needs to be the biggest?
Also a note for the time of the trade, just before the Americans open, usually not good, as there are a lot of fake moves.
Stop LossOn the high of the first hammer (the top) – Excellent.
Exit Point Right after these 2 inverted hammers, a normal hammer appeared. If I got out on that one, I would stay on the breakeven.Improve this.
Fit the rules?I would say 80% fit. Wave structure doubt and above R2 Pivot point was not good, as could lead to the R3 Pivot.
Profit/Loss11 pips.