As a forensic analyst, but a new Forex Trader, I can see that a big issue with trading is in predicting asset moves more than a few periods ahead. The presence or absence & length of wicks; size of candlesticks & candlestick patterns can give an indication of what the next few moves will be. And, proximity to support or resistance levels, & whether those levels have been tested more than once can give an indication whether a short-term trend may continue (break-through) or reverse. But, whether or not the price action will start, stop or continue consolidation is a problem...as is determining whether movement is a "trap", "false breakthru", etc, is a problem. A problem with a lot of signal indicators is the huge number of signals they give. Whereas, the combination of indicators, and settings, & strategy I've come up with limits the number of scenarios in which trade entries are appropriate...and increases the likelihood of being able to exit trades with a profit, while also decreasing the chances of being "stopped out".
Obviously, as always in trading, indicators are only part of the strategy. First, one should know whether if there is any news that mightl affect the action of the asset. The longer term trend should be identified (say, for the 1 hour, 4 hour or even daily charts) while entries are made on a shorter period chart, say the 15 minute chart. Likewise, support & resistance levels should be marked while viewing ht longer period charts. And, as always, money mgt is important. The common knowledge is to limit risk to 1-3% of your funds, per trade. If you want to risk more, do it with a series of stacked trades. That allows you to close some trades early, if the movement is the way you want it, and adjust stop-loss settings so that you can't lose on that portion that you want to "let 'er ride".
This combination os indicatiors, found on the Trading View platform includes: UT Bot, PASR, LSMA Crossover & RSI Divergence.
Settings:
For UT Bot, you only want its Buy/Sell signals, not its candle body changing capability. Disable the "bar" colors in "inputs".
For the PSAR indicator, try these combinations of Start & Increment settings, respectively, and choose the pair that causes the PSAR trends reversals to best coincide with the UT Bot signals. What settings work best can vary depending upon the asset or currency pair. But, any of these will give less reversals than the default settings: (.025/.025; .01/.004;.01/.012).
LSMA Crossover: Make the length 20, Offset at between 0 & -2. Trigger Length at between 12-14. I set the LSMA line to yellow color, full opacity, 2nd thinnest line width. For the trigger line, I make it orange, but more transparent.
for the RSI Divergence indicator I set the RSI line to yellow color, and left only the hidden bullish or bearish lines or labels showing.
STRATEGY:
Enter a trade only when all indicators suggest it. For a Buy:
Buy signal label appears; PSAR "dots" have reversed such that they are below the candlesticks; The RSI line is at or above the middle 50 level' AND, most important, The LSMA line must have crossed over the trigger line; the candle body at the time the label & PSAR reversal occurs must clear (be above) both the LSMA & trigger line.
If the above occurs, use the triggering candlestick to set stop loss & take profit levels....stop-loss one length below the open level, and take profit 1.5 lengths above the close. BUT, if the triggering candlestick is a big engulfing one, than ignore it and use the largest of the previous 5 candlesticks to set these levels. And, if you want to reduce the risk of being stopped out, then set your stop loss level to just below the level of the first (large) dot of the PSAR trend dots. This will reduce chances of being stopped out, but could also force you to stay in the trade longer before you can take profit.
The the BUY signal occurs before the PSAR dots reverse from top to bottom, wait for the reversal to occur and then make sure all of the indicators suggest the buy...the relevant candlestick body at the time of the reversal must clear the LSMA & trigger lines, etc. Even better, make sure the next candlestick meets the requirements. This should also be the strategy is the triggering candlestick is bullish or suggest neutral buy/sell demand (doji, hammer, huge upper wick, etc).
If you are cautious, only enter trades went the trend reversal is TO the long-term trend. It would be even better if the price is near the bottom of a range and likely to "bounce off" a level of support (that you marked up) because, for example, it has already tested that level of support.
Obviously in a price reversal from bullish to bearish, everything above is the opposite (RSI level shut be at or below 50, Triggering candlestick body should be below the LSMA & trigger lines, etc.
I will back task this, but my gut feeling is that could be as good as an 80/20 win rate. If the risk/loss ratio is 1.5 to 1, that meaning doubling your money in 100 trades. That does not account for scenarios in which you can "ride the bull" for huge rises.
If you find this strategy to work for you, let me know!
Obviously, as always in trading, indicators are only part of the strategy. First, one should know whether if there is any news that mightl affect the action of the asset. The longer term trend should be identified (say, for the 1 hour, 4 hour or even daily charts) while entries are made on a shorter period chart, say the 15 minute chart. Likewise, support & resistance levels should be marked while viewing ht longer period charts. And, as always, money mgt is important. The common knowledge is to limit risk to 1-3% of your funds, per trade. If you want to risk more, do it with a series of stacked trades. That allows you to close some trades early, if the movement is the way you want it, and adjust stop-loss settings so that you can't lose on that portion that you want to "let 'er ride".
This combination os indicatiors, found on the Trading View platform includes: UT Bot, PASR, LSMA Crossover & RSI Divergence.
Settings:
For UT Bot, you only want its Buy/Sell signals, not its candle body changing capability. Disable the "bar" colors in "inputs".
For the PSAR indicator, try these combinations of Start & Increment settings, respectively, and choose the pair that causes the PSAR trends reversals to best coincide with the UT Bot signals. What settings work best can vary depending upon the asset or currency pair. But, any of these will give less reversals than the default settings: (.025/.025; .01/.004;.01/.012).
LSMA Crossover: Make the length 20, Offset at between 0 & -2. Trigger Length at between 12-14. I set the LSMA line to yellow color, full opacity, 2nd thinnest line width. For the trigger line, I make it orange, but more transparent.
for the RSI Divergence indicator I set the RSI line to yellow color, and left only the hidden bullish or bearish lines or labels showing.
STRATEGY:
Enter a trade only when all indicators suggest it. For a Buy:
Buy signal label appears; PSAR "dots" have reversed such that they are below the candlesticks; The RSI line is at or above the middle 50 level' AND, most important, The LSMA line must have crossed over the trigger line; the candle body at the time the label & PSAR reversal occurs must clear (be above) both the LSMA & trigger line.
If the above occurs, use the triggering candlestick to set stop loss & take profit levels....stop-loss one length below the open level, and take profit 1.5 lengths above the close. BUT, if the triggering candlestick is a big engulfing one, than ignore it and use the largest of the previous 5 candlesticks to set these levels. And, if you want to reduce the risk of being stopped out, then set your stop loss level to just below the level of the first (large) dot of the PSAR trend dots. This will reduce chances of being stopped out, but could also force you to stay in the trade longer before you can take profit.
The the BUY signal occurs before the PSAR dots reverse from top to bottom, wait for the reversal to occur and then make sure all of the indicators suggest the buy...the relevant candlestick body at the time of the reversal must clear the LSMA & trigger lines, etc. Even better, make sure the next candlestick meets the requirements. This should also be the strategy is the triggering candlestick is bullish or suggest neutral buy/sell demand (doji, hammer, huge upper wick, etc).
If you are cautious, only enter trades went the trend reversal is TO the long-term trend. It would be even better if the price is near the bottom of a range and likely to "bounce off" a level of support (that you marked up) because, for example, it has already tested that level of support.
Obviously in a price reversal from bullish to bearish, everything above is the opposite (RSI level shut be at or below 50, Triggering candlestick body should be below the LSMA & trigger lines, etc.
I will back task this, but my gut feeling is that could be as good as an 80/20 win rate. If the risk/loss ratio is 1.5 to 1, that meaning doubling your money in 100 trades. That does not account for scenarios in which you can "ride the bull" for huge rises.
If you find this strategy to work for you, let me know!
Comment:
Sorry for the spelling errors. I wish there was an edit function for these ideas!. Or, if there is one, its not obvious to me. Olen