algorithm of tactics
What do you need?
- Daily Candlestick Chart
- Bollinger Bands (20,1) - blue.
- Bollinger bands (20, 1.5) - white.
- Discipline
How to trade?
The rules of the trading system is best to consider some examples. I will try to provide enough examples for you to understand the principle of trading systems. There are two types of inputs. Let's call the signals at the input for easy white and blue.
The main rule is:
White signals is always important, than blue.
White signals.
My original method from which it has developed a trading strategy was based precisely on the white lights. White signal is generated when the price touches the white Bollinger and then locked inside the channel. Let's see how it works with pictures.
The two green arrows indicate when we will buy. As can be seen, in both cases, the price has reached the white line, then opened a long position at the close of the candle inside the channel. For these transactions, income is recorded on the SMA (middle line, which moves every day).
The three red arrows.
The three red arrows show when we sell. In all three cases, the price touches the upper white line, then closes within the channel. As a take-profit use center-line.
Blue signals.
Blue signals are "steroid" part of the method. Blue signals are generated when the price is within the channel, after which it goes beyond the blue line. Let's see how it works.
The price was within the channel, and then crossed the blue line up. Pay attention to the fact that she has not reached the white line, that is, White signal was not. This trading signal to go long. When the Blue signals no take-profits, the position remains open until the next white signal is generated. At this point, the position is closed.
The two red arrows.
Price came out of the canal and crossed the blue line down. These transactions were unprofitable. However, this is an indispensable part of any of even the most successful strategy.
Stop-loss orders.
Set stop-loss depends on you. Personally, I am for the installation of stop-loss using the distance from the current price to SMA (center line). That is, if the price is at 1.9635 and 1.9435 for line of centers, my stop loss will be 200 pips. Someone such large stop-loss will not like, but I prefer to use such tactics.
