Background:
I have a trading idea that I'd like to develop further with the ultimate goal of having it fully automated. I have not traded it so don't have any results. From basic manual backtesting, I think it may have merit hence the reason for starting this thread to perhaps have it refined with the help of others. I don't want it to be bombarded with indicators at present. Ideally, I'd love an indicator with an alert and arrows every time the setup occurs and to also indicate with arrows all the previous instances of the setup. As mentioned, an EA would also be awesome if it proved to have some kind of merit.
Setup:
This is a basic, common reversal, similar to other ones I've looked at and tried to develop, but even simpler. The setup could be used in 2 ways. 1. as a sort of scalp. 2. to ride a trend. My assumption is that there'll be more winners using method 1 but the overall gains might be less than if using method 2.
We look for a bullish reversal bar. This bar's low is lower than the previous bar's low and its close is higher than the previous bar's close. (A bearish candle followed by a bullish candle that makes a lower low and a higher close than the previous close). For the purposes of this thread I am NOT looking for outside or engulfing bars therefore the reversal bar would make a lower high than the previous bar's high.
Reverse for sells.
Entry:
For the scalping idea, enter at the open of the very next bar after the reversal and exit at the first profitable closing bar. Stop loss at the low of the reversal bar.
For the trend following idea, enter as above but trail the stop initially under the reversal bar then using a 2 bar stop.
The setup occurs on all timeframes but for the purposes of this thread I am only looking at the 4h timeframe. I am also assuming that this will provide at least 1 trade a week on most pairs.
Pairs to trade: I haven't done much backtesting but so far EJ, AJ, AU are looking good.
RR: From preliminary backtesting some trades will have a less than 1:1 risk to reward while others will have a higher RR. (based on the scalp trade).
example trades to follow
I have a trading idea that I'd like to develop further with the ultimate goal of having it fully automated. I have not traded it so don't have any results. From basic manual backtesting, I think it may have merit hence the reason for starting this thread to perhaps have it refined with the help of others. I don't want it to be bombarded with indicators at present. Ideally, I'd love an indicator with an alert and arrows every time the setup occurs and to also indicate with arrows all the previous instances of the setup. As mentioned, an EA would also be awesome if it proved to have some kind of merit.
Setup:
This is a basic, common reversal, similar to other ones I've looked at and tried to develop, but even simpler. The setup could be used in 2 ways. 1. as a sort of scalp. 2. to ride a trend. My assumption is that there'll be more winners using method 1 but the overall gains might be less than if using method 2.
We look for a bullish reversal bar. This bar's low is lower than the previous bar's low and its close is higher than the previous bar's close. (A bearish candle followed by a bullish candle that makes a lower low and a higher close than the previous close). For the purposes of this thread I am NOT looking for outside or engulfing bars therefore the reversal bar would make a lower high than the previous bar's high.
Reverse for sells.
Entry:
For the scalping idea, enter at the open of the very next bar after the reversal and exit at the first profitable closing bar. Stop loss at the low of the reversal bar.
For the trend following idea, enter as above but trail the stop initially under the reversal bar then using a 2 bar stop.
The setup occurs on all timeframes but for the purposes of this thread I am only looking at the 4h timeframe. I am also assuming that this will provide at least 1 trade a week on most pairs.
Pairs to trade: I haven't done much backtesting but so far EJ, AJ, AU are looking good.
RR: From preliminary backtesting some trades will have a less than 1:1 risk to reward while others will have a higher RR. (based on the scalp trade).
example trades to follow