Simple High Probability Trading

As the title suggests this thread is dedicated to a simple high probability trading strategy that I have been using for many years. It has evolved over the years as I have learnt different things from different traders and gone through the cycle of adding and/or taking away indicators for confirmation and that warm squishy feeling of entering a trade knowing or thinking rather that just because an indicator says to get into a trade it must be a winner.

Have I eliminated all of the indicators? No, but I do have considerable less than what I have had on my charts at one point or another. My charts today are pretty much bear with only a moving average and a cycle indicator to filter out some of the lower probability setups.

Now it is important to remember that none of what I am about to show you is new or magic or bullet proof. However with some practice, patience and discipline you will find that this system is about the easiest to trade, the most straight forward to learn and provides you with a high winning percentage. All of these are factors that I believe retail traders need to become a success in this market.

Ultimately I am going to show you how I make money from the markets.

Before we get started… I would like to outline a few rules for this thread. I haven’t done this before but it does seem that unless people do outline rules threads end up going off topic or arguments erupt. So here they are:

1. This thread is for the strategy I outline in this thread and that strategy only. If after some experience you start to add your own flavor to the system you are still free to post here but please do not let the thread turn into a thread of many strategies. The basic premise should remain the same which is trend trading with range bars.

2. No arguments! I am not saying I know everything about the markets and perhaps my approach doesn't suit your personality. That’s ok… I can accept that but please do not start attacking other posters on this thread or indeed myself just because we may have a different way of doing things to yourself.

3. Let’s have fun and make some money… so please post your trades, charts and questions

So what about the system… well to ensure that I don’t write war and peace in any one single posts and I keep the learning process simple and in bite size chunks I will outline the system over the next few posts.

Thanks for reading and I hope you find profitability with this system as I have.

nexas. good to see you back.


i thought your other threads were really good. curious to see what else you have in your arsenal ?


get cracking ! the sooner the better.

Sounds good to me, let it buck

You have my support.

So let’s start with the charts. I personally love range charts. These are charts that are based on price and not time. So whereas with a time based chart the candle will open and close based on a predefined period of time and the price action for that period of time will be contained in that one candle, a range chart will open and close based on the price.

Now why is this important? Well during particular choppy periods in the markets, a time based chart will print many bars simply because of the elapse in time. This can make a chart look a little untidy and hard to trade. With range charts however this is not a problem because the consolidation can be contained within just a few bars as oppose to many bars. So trends are easier to spot and trade!

If you want a deeper dive into Range bars please take a look at the following link - http://www.investopedia.com/articles...erent-view.asp


So the first thing to understand is that I trade range charts. I use time based charts to gain a perspective but in reality I can do all of my trading just based off of these charts.

How big is the range I hear you say? Well to be honest this changes based on the volatility of the markets. But at the moment I am trading 8-10 ranges for day trading and 40-50 ranges for longer term trading.

Where can you get range bars? Well I did a google and found the following which may be helpful - http://www.dailyfx.com/forex_forum/g...-mt4-fxcm.html


Please note that I trade with NinjaTrader who provide range bars as part of their standard offering, although you do have to pay for the data feed… unless of course you trade with FXCM in which case I think you can get FX for free.


So in summary the charts I trade are range bars and as we proceed into this thread you will see just why I love them so much.

I'm wth you. after trading range bars, time based bars are more difficult to look at and trade. Everything looks much smoother with range.

Are Renko bars the same as range bars? Not really knowledgeable about either but this is an interesting thread, thank you Nexas.

The range bar measures a set range of price movements or number of trades and when that range or trades is met the bar prints. A renko bar does the same except the range has to be all in one direction for the bar to print. So with a 10 tick renko bar the range has to be all up or all down for it to print

Ex: A 10 tick range or trade bar could open at 100.00 and have 5 ticks up to 100.05 and 5 ticks down to 99.95 and the bar would print. A 10 tick renko bar would have to have 10 ticks up to 100.10 or 10 ticks down to 99.90 before it would print.

Got it? I hope so it exhausted me explaining it. Google with copy and paste is a lot of work

You should go on the road to teach forex seminars at high end resorts and hotels - very clear and succinct. Thank you

I'm looking forward to his ideas. His starting point of tick charts, 1 indicator and 1 MA appeals to my style and way of thinking. I want to see and hear what Nexus thoughts and findings show with this style and mindset. Personally I use ticks, what appears to be a slow MACD (except the Histogram) and trendlines

Where did this get moved to?

Subscribing!!, Nexas ,Good to see you around again and range bars , well , my favourite.
good trading to you as always

doc.

range bar indi's for mt4 are still found here - http://www.forexfactory.com/showthread.php?t=326958

I clicked on the link. Which range bar does Nexas use? Nexas can you post the range bar indicator that you use opn here so we are all on the same page?

Also does anyone know of a good renko bar indicator? Would love to compare the 2. Many thanks.

well, i look to go into it ...i personally found good setups when a range bar open and close up/down a moving average , i use a 10 period sma and 20 pips range/renko bars .
The cross is really a good setup , because it's based only on price..no time is involved , if you open a chart and apply this setup you will see that many times the moving average acts like a trendline.
i only presented my recent strategy , i am really curious about yours.

please go on

Hello Fellow dr.!!, nexas uses ninjatrader which has rb's built in. If MT4 is your thing then either 's constant range bars' or 'range bar chart v103a' should work fine.

doc

I use TradeStation broker/platform for my charting and it has native support for Range Bar and Renko. Below pictures are comparison between a regular time-based 15mins chart of EURUSD vs Range Bar 5pips vs Renko 5pips. That's as far as we should talk about Renko, it's really not relevant to what Nexas has to share.

Hi Everyone,

Wow lots of posts! I see that you all seem to be helping each other which is exactly as it should be.

OK so onto the next part of the system. The Indicators.

I have played with a few different things but as I said simplicity always wins. I find I can see the market best and take the best setups when I am not distracted by loads of lines so I always come back to one moving average and that is the 100 EMA.

The rule for this is simple. If the market is above the line I am looking for buys and if it is the below the line I am looking for sells.

In addition to the moving average I use one cycle indicator to stop me getting into bad trades and that is the CCI. I use 7 period CCI but I don't use it as you would imagine. As oppose to using it as an entry indicator I use it as a filter. So I let it tell me when not to get into a trade.

The rules are simple when I get my entry signal (to be covered in a later post) for a long the CCI must be above -50 and for a short the CCI must below +50.

The reasoning for this is simple. We are trying to ride the trends but only want to be involved when the trend is in motion and not during the retracement. So we use the CCI to indicate to us when one cycle is finishing (the retracement cycle) and the new cycle is beginning.

So to summarize...

100 EMA
7 Period CCI

For Longs
Price above 100 EMA & CCI above -50 on the entry signal



For Shorts
Price below the 100 EMA and CCI below +50 on the entry signal

My entry signals are very easy... I just wait for a pull back and then for two consecutive candles back in the direction of the trend.

I place my stop behind the swing high and look for a target of over 1:1

So if you look at the previous post you will see that the arrows are pointing to two consecutive candles in the direction of the longer term trend in the same instance as we get the CCI setup. If these happen together we are good to go!

Next I will talk about price action. Up til now I have talked about the technicalities and science of the system but now we need to look at the art of the system

Hello, thanks for the system. I have some questions.
What bar height do you use?
What is the system winning percent?
What is the time to trade this system? (from what to what time)
thank you for answers.