Hi dear traders,
I've created and optimized this method and I tested it till 2008 and results are fine. It's a very easy method, using daily high/low for entry, and fibonacci for TPs and SLs. Very simple.
Before introducing the method, I should aware you that you should absoloutly test it yourself before using it for your real account. Use proper money management to stay in the game and don't overtrade.
I don't know that there is similar system on the net or not. I developed this method with the help of one of my clients. Developing and optimizing the strategy took more than 200 hours of team work.
I will update this post as needed after I saw what's more questioned. It will become more comprehensive as the time goes by, so you don't need to read the whole thread if you don't like to. Just read this first post and follow the examples.
First I will introduce how to trade, then I will tell you the concept behind it.
System Properties :
Set your fibonacci levels and descriptions like this :
Level ----- Description
0 --------- Entry (%$)
1 --------- Entry (%$)
-0.5 ------ TP2 (%$)
1.5 ------- TP2 (%$)
0.236 ----- SL (%$)
0.764 ----- SL (%$)
1.25 ------ BE (%$)
-0.25 ----- BE (%$)
0.5 ------- BE (%$)
Now, adjust fibonacci between high and low of the previous day. As you know previous day will differ on different brokers. 00:00 GMT is recommended, but I use GMT - 1 for my calculations because of my broker time. It's not that different from 00:00 GMT. For better view, you can draw fibo on M15 TF, but it doesn't make any different on how you trade.
How To Trade :
Now that you know how to detect previous day High and Low, let's get down to how to trade this :
We have two types of entries on this method that, First one and Second one. I will discuss the idea behind it after I told you what are they.
First Entry : Buy 3 pips above the High of previous day (Entry on fibo lines), SL is 1 pip below "SL" line on you fibonacci tool. We have 2 TPs. One is when price reaches "BE" line above the high of the previous day (1.25 fibonacci or -0.25 fibo, depends how you draw the fibo.), then you should close half and put your SL at BE (Bring your SL on your entry point - No risk from here). You second TP is "TP2" line on your fibo tool. Vice versa for short entry.
Second Entry : When you enter long (After entry triggered), you should place a sell order right where your SL is. SL for your sell order is 1 pip above the previous day high and TP1 (and of course BE (Break Even) Point) is 0.5 on fibo which is shown is "BE" on you fibo between two "SL"s. TP2 is 1 pip above the "SL" for short entry. You must erase the order IF price reaches TP2. Vice versa for short entry.
** You must cancel all your orders when current day comes to an end and place new orders due to current day's high and low.
** Avoid gaps. It means don't place orders on friday High/Low if you broker slip the entries due to gap. I will place the orders on the first trading hours of the new week for monday if the gap didn't break the high or low, not on friday night. If it's broken, then there is no orders for me on monday.
** I will not trade if the range is above 170 in previous day because of overbought and oversold issues.
** If you have sunday on you chart, combine sunday and monday. It means if sunday have a lower low than monday's low, then the low for setting orders for tuesday will be sunday's low, not monday. Vice versa for highs.
** If your trades continues to next day, don't change anything. Stick to last day's strategy, and also place new day's order along with your open positions.
** It is prefered not to enter "Second Entries" after US session
You may be confused. It's not that hard. I've wrote a program with visual basic for entries. First set your fibo levels, then run the program and check First and Second entries. The spread on EU is 2 on the program. I will make some changes so it can work with variable spreads. Few examples from recent trades are shown below.
Useful Posts :
Post #2
Post #48
Post #109
Post #542
The Idea behind it :
As you may know, Daily High and Low plays an important role on technical analysis for short-term and medium-term traders. So break of this levels may reach targets. But if the price didn't reach final TP (TP2), then we can consider a false break and reverse our position even if price reaches BE point after breaking the previous day's high or low. But if price reaches TP2, then we will consider it a true break, that's why I told you to remove your "Second Entry" order when price reaches TP2, no matter that you are in the trade or not.
Pros and Cons :
Pros :
** No need to be high skilled trader to understand and trade this method.
** Maximum of 7% drawdown from 2011 till now and happend just once.
** When price reaches TP2, your profit covers a little more that 1 loss. (Sharpe Ratio > 1)
** You can personalize TPs to fit you own personality.
** Very clear method. No self-judgement involved.
** Easy backtest.
** You have one trade per day in average, so if you're greedy in taking trades, you'll be satisfied.
Cons:
** Limited Profit in main form.
** May forgot to place "Second Entry" orders is not at pc. (Will be solved with an EA)
** Gaps (More smaller the gap your broker provides, the better the results.)
Last Words :
** Like any other method that works, it's not a "guru". You will take losses too. It has some pros and some cons like any other method. It's yours to tell which method to trade. Averagely it will produce between 3% to 4% return on every month with 1% risk on every trade.
** Trade management is a skill that you should learn through experience and lots of trading. Do not change anything of the main method if you're not skilled enough (trading less than 2-3 years). Stick to main system if you're not a pro when trading live. Do anything you like on demo, but do not come to conclusion on few trades. Any particular way of trade management should be tested in at least hundreds of trades.
** Market is alive, and it's behaviour changes through time, because people approach to market changes. So there might be a little update now and then to adjust the method to latest behaviour of the market. It will not happen very often, even it could be solid through years. Don't get me wrong, the method stands solid. By "change" I mean small things, like changing 170 pips for range limit to 200 or higher for more volatile years or taking a greater TP2 if market tends to move more trendish and etc. It's not that big a deal, but if you follow the thread, or even this post, I'll include every update for it.
** I Only use this on EU, the most technical pair.
** There is something else which I think it's important if you guys know. If you don't bring your SL to BE at 1.25, your results will be better. But high profit is not the only case. When I want to design a strategy, I have in mind three things instead of two. 1) Winrate , 2) Sharpe Ratio, 3) Losing Streak. If you take partial profit at TP1 and bring SL to BE, the worst case that could happen to you will decrease alot. So you can risk more and from this way, you can increase your income, and you will feel much more comfortable if the system produce more income, even if it's smaller. But as I said you can raise your income by increasing the risk for every trade. Risks higher that 2% is not recommended.
** The important point is you can personalize the method to fit your personallity, but beware of the main concepts and don't change it too much. For example you can trail for TP2 in anyway you like or change your partial closure management. I recommend that you don't widen you SL. It's better to make change on TPs if you like. But this settings is how I use it.
** Again, backtest it yourself at least for 1 year before using it on real. Demo trade first for at least few weeks. Don't rush.
** You can easily create an EA for this. Share it if you like.
** I recommend using this only on EU, except you find something better on other pairs. Using on multi pairs will enlarge your losing streak and levels is not optimized on other pairs, because different pairs have different attitude, but the main idea behind the strategy remains solid.
** Any good thoughts or updates or ideas are highly appreciated and will be placed in this post to make more out of the main idea.
Have fun and trade safe
Regards,
Basber
I've created and optimized this method and I tested it till 2008 and results are fine. It's a very easy method, using daily high/low for entry, and fibonacci for TPs and SLs. Very simple.
Before introducing the method, I should aware you that you should absoloutly test it yourself before using it for your real account. Use proper money management to stay in the game and don't overtrade.
I don't know that there is similar system on the net or not. I developed this method with the help of one of my clients. Developing and optimizing the strategy took more than 200 hours of team work.
I will update this post as needed after I saw what's more questioned. It will become more comprehensive as the time goes by, so you don't need to read the whole thread if you don't like to. Just read this first post and follow the examples.
First I will introduce how to trade, then I will tell you the concept behind it.
System Properties :
Set your fibonacci levels and descriptions like this :
Level ----- Description
0 --------- Entry (%$)
1 --------- Entry (%$)
-0.5 ------ TP2 (%$)
1.5 ------- TP2 (%$)
0.236 ----- SL (%$)
0.764 ----- SL (%$)
1.25 ------ BE (%$)
-0.25 ----- BE (%$)
0.5 ------- BE (%$)
Now, adjust fibonacci between high and low of the previous day. As you know previous day will differ on different brokers. 00:00 GMT is recommended, but I use GMT - 1 for my calculations because of my broker time. It's not that different from 00:00 GMT. For better view, you can draw fibo on M15 TF, but it doesn't make any different on how you trade.
How To Trade :
Now that you know how to detect previous day High and Low, let's get down to how to trade this :
We have two types of entries on this method that, First one and Second one. I will discuss the idea behind it after I told you what are they.
First Entry : Buy 3 pips above the High of previous day (Entry on fibo lines), SL is 1 pip below "SL" line on you fibonacci tool. We have 2 TPs. One is when price reaches "BE" line above the high of the previous day (1.25 fibonacci or -0.25 fibo, depends how you draw the fibo.), then you should close half and put your SL at BE (Bring your SL on your entry point - No risk from here). You second TP is "TP2" line on your fibo tool. Vice versa for short entry.
Second Entry : When you enter long (After entry triggered), you should place a sell order right where your SL is. SL for your sell order is 1 pip above the previous day high and TP1 (and of course BE (Break Even) Point) is 0.5 on fibo which is shown is "BE" on you fibo between two "SL"s. TP2 is 1 pip above the "SL" for short entry. You must erase the order IF price reaches TP2. Vice versa for short entry.
** You must cancel all your orders when current day comes to an end and place new orders due to current day's high and low.
** Avoid gaps. It means don't place orders on friday High/Low if you broker slip the entries due to gap. I will place the orders on the first trading hours of the new week for monday if the gap didn't break the high or low, not on friday night. If it's broken, then there is no orders for me on monday.
** I will not trade if the range is above 170 in previous day because of overbought and oversold issues.
** If you have sunday on you chart, combine sunday and monday. It means if sunday have a lower low than monday's low, then the low for setting orders for tuesday will be sunday's low, not monday. Vice versa for highs.
** If your trades continues to next day, don't change anything. Stick to last day's strategy, and also place new day's order along with your open positions.
** It is prefered not to enter "Second Entries" after US session
You may be confused. It's not that hard. I've wrote a program with visual basic for entries. First set your fibo levels, then run the program and check First and Second entries. The spread on EU is 2 on the program. I will make some changes so it can work with variable spreads. Few examples from recent trades are shown below.
Useful Posts :
Post #2
Post #48
Post #109
Post #542
The Idea behind it :
As you may know, Daily High and Low plays an important role on technical analysis for short-term and medium-term traders. So break of this levels may reach targets. But if the price didn't reach final TP (TP2), then we can consider a false break and reverse our position even if price reaches BE point after breaking the previous day's high or low. But if price reaches TP2, then we will consider it a true break, that's why I told you to remove your "Second Entry" order when price reaches TP2, no matter that you are in the trade or not.
Pros and Cons :
Pros :
** No need to be high skilled trader to understand and trade this method.
** Maximum of 7% drawdown from 2011 till now and happend just once.
** When price reaches TP2, your profit covers a little more that 1 loss. (Sharpe Ratio > 1)
** You can personalize TPs to fit you own personality.
** Very clear method. No self-judgement involved.
** Easy backtest.
** You have one trade per day in average, so if you're greedy in taking trades, you'll be satisfied.
Cons:
** Limited Profit in main form.
** May forgot to place "Second Entry" orders is not at pc. (Will be solved with an EA)
** Gaps (More smaller the gap your broker provides, the better the results.)
Last Words :
** Like any other method that works, it's not a "guru". You will take losses too. It has some pros and some cons like any other method. It's yours to tell which method to trade. Averagely it will produce between 3% to 4% return on every month with 1% risk on every trade.
** Trade management is a skill that you should learn through experience and lots of trading. Do not change anything of the main method if you're not skilled enough (trading less than 2-3 years). Stick to main system if you're not a pro when trading live. Do anything you like on demo, but do not come to conclusion on few trades. Any particular way of trade management should be tested in at least hundreds of trades.
** Market is alive, and it's behaviour changes through time, because people approach to market changes. So there might be a little update now and then to adjust the method to latest behaviour of the market. It will not happen very often, even it could be solid through years. Don't get me wrong, the method stands solid. By "change" I mean small things, like changing 170 pips for range limit to 200 or higher for more volatile years or taking a greater TP2 if market tends to move more trendish and etc. It's not that big a deal, but if you follow the thread, or even this post, I'll include every update for it.
** I Only use this on EU, the most technical pair.
** There is something else which I think it's important if you guys know. If you don't bring your SL to BE at 1.25, your results will be better. But high profit is not the only case. When I want to design a strategy, I have in mind three things instead of two. 1) Winrate , 2) Sharpe Ratio, 3) Losing Streak. If you take partial profit at TP1 and bring SL to BE, the worst case that could happen to you will decrease alot. So you can risk more and from this way, you can increase your income, and you will feel much more comfortable if the system produce more income, even if it's smaller. But as I said you can raise your income by increasing the risk for every trade. Risks higher that 2% is not recommended.
** The important point is you can personalize the method to fit your personallity, but beware of the main concepts and don't change it too much. For example you can trail for TP2 in anyway you like or change your partial closure management. I recommend that you don't widen you SL. It's better to make change on TPs if you like. But this settings is how I use it.
** Again, backtest it yourself at least for 1 year before using it on real. Demo trade first for at least few weeks. Don't rush.
** You can easily create an EA for this. Share it if you like.
** I recommend using this only on EU, except you find something better on other pairs. Using on multi pairs will enlarge your losing streak and levels is not optimized on other pairs, because different pairs have different attitude, but the main idea behind the strategy remains solid.
** Any good thoughts or updates or ideas are highly appreciated and will be placed in this post to make more out of the main idea.
Have fun and trade safe
Regards,
Basber
Trading methods are designed to put the odds in our favor, not predicting.
inshaallah could go there..
