Non-indicator Forex. How to work with your head
Greetings, fellow traders! Modern world digital and computer technologies gave us the opportunity to have completely different, new methods and strategies for making profits on international stock markets. But how, many decades ago, when our “great-traders” were still drawing charts by hand, and did not even dream of using the simplest market indicators, did they manage to squeeze profit out of the market?
But today, just, we will talk with you about what non-indicator Forex strategies are, how to use them, and what is the principle of their operation.
About the essence of the methodology
As the very name of this huge layer of science about trading on an empty chart says - such familiar to us, today's businessmen from the market, and convenient mathematical indicators of all stripes and directions, are not used at all in this style of "duel" with the stock exchange.
Although, I will make a reservation right away, I have already met in my practice modern types of interpretations of some non-indicator forex trading methods, which already allow the use of one or two indicators on the price chart to help the trader, if they do not violate, and do not distort the understanding of the market picture as a whole.
The “orthodox” minded “graduates” of the old trading groups still, to this day, continue to reject even the slightest hint of using something superfluous on the chart to predict the market rate, except, of course, the price itself. Price is King, they say, proudly displaying profits.
(An example of an old stock chart, the technique of displaying the price on which is called “Tic-Tac-Toe”. Such charts completely ignored the time component, were drawn only for the price and its reversals. Also, support and resistance levels were applied to them. Many generations successful traders used only them in their successful business.)
Let's think with you and think - can this be true, can the price alone tell us everything we need?
- Well, first of all, the followers classical teachings, followers of the Dow theory, have repeatedly proved (and these facts are not difficult to find) that the market takes into account everything. Only in the “language” of current quotes, they argued, is the market able to tell us everything that is really necessary for profitable trades. It is only necessary, as they believed, to be able to hear this "speech".
- And secondly, you yourself will remember that any indicators superimposed on the price chart are only “slave”, lagging behind in their readings. After all, the basis for their calculations, and this is quite clear, is something else, “leading”, and this is the price! After all, the chart, remember, is called the price chart. Do you agree with this, friends?
Repeatability of Market Behavior
Adherents of the Price Action school (price movement) believed that markets behave in the same way, which means they are predictable. Remember, even the most famous successful trader of all time, Jesse Livermore, said that speculation is as old as the world, and there is nothing new in it, and cannot be. Have you read his book?
(Jesse Livermore. One of the greatest stock traders ever lived on earth.)
Different views on the market
Supporters of non-indicator trading tactics in the exchange markets believed (and continue to believe) that there are a lot of patterns, patterns in which the market moves, and, accordingly, they are displayed by the price. Well, let's take, for example, as proof of their correctness, the most well-known fact that after a strong compression of the price in the range, the Forex market (and others too) explodes in a strong one-way movement. Do you know? Of course yes!
But here we always attribute the interpretation of this market phenomenon, for some reason, only to the Bollinger Bands indicator, forgetting that it only displays (with some delay!) these prices, which are already visible, in a graphically more beautiful form. Understandably? Let's look at the pictures:
(Currency pair British Pound/US Dollar. Hourly candles. Compression of the Bollinger Bands indicator.)
In this picture above, you can easily see the market phenomenon I have already mentioned, which is expressed in the fact that in most cases (as it should be in everything related to the market), after price compression into a narrow range, we will certainly wait breakthrough, and subsequent movement. The short blue arrows above and below show the very moment of “squeezing”, and then we clearly see the subsequent price movement down.
And now take a look at the same pound/dollar chart, but through the eyes of an adherent of the "minimalist" school, those who like to trade only based on the teachings of Price Action.
(Pair British Pound/US Dollar. Chart without indicators.)
All the same schedule, but already, somehow, "cleaner". Do you agree? The “predictability” of the possibility of movement after price compression in a narrow range remains. And for the convenience of visual perception, two lines are drawn that help to perceive the boundaries of the channel into which the quotes have been “narrowed”.
Well, absolutely, for the "orthodox", I will give an example of a completely "bare" chart (as Chicago traders usually call it "on the floor"):
(Pair British pound/US dollar. "Naked" chart.)
As you can see on this already “cleared” chart, the behavior (movement) of the price remains the same. It is clear and understandable for those who have trained, initially, their eyes to see everything they are interested in on the chart, without additional help from mathematical indicators. Which, all the same traders "on the floor", call - "crutches".
It was one of them, at one time, gave me interesting advice, while talking on a trading forum. He told me: "Train your eyes to quickly see the beginning of the narrowing of the price range, and get ready to capitalize on a break out of it, knowing what usually happens in such cases." In his words, by the way, almost the entire philosophical background of this style of trading fits perfectly.
"System" Ping-Pong
These guys, using their non-indicator systems, make profitable trading decisions, basing their conclusions on understanding what the market is doing in the specific time period they are considering now, and simply trading “by the market”.
I will explain with an example. It's no longer a secret to anyone that currency pairs, closer to 00:00 GMT begin to exhibit a behavior called consolidation. This is especially noticeable on the Euro/US dollar currency pair.
This happens, among other things, because most institutional traders "dump" most of their positions, playing "hot patato", so that tomorrow, by the time the market opens, they will not be overloaded with open positions, and be able to make money on new ones. , fresh market movements.
So - this fact is known, which means that you can make money on it! Especially since old-schoolers like to talk about their trades as if they were bets. Something like: “I bet my money that the market will not move anywhere beyond the boundaries of this consolidation!”.
And now to practice
After the closing of the London Stock Exchange, and closer to the afternoon on the North American continent (we have it closer to midnight), on November 24, 2015, the EUR/USD pair began, as it should be at this time of day, to demonstrate consolidation. But we know exactly what to look for on the charts at this time! Therefore, according to the first price rebounds that happened at the right time for us, we set the boundaries of future consolidation.
In the chart below, these are the two blue arrows. What tactics we will trade is already clear. We make "bets" that the price will remain within this corridor (red horizontal lines on the chart), and will "dangle" between them. And, as soon as the price has again approached the upper border of the range, we boldly open a Sell deal (blue tick on the chart), without waiting for any more confirmations. Our goal is the opposite border of the channel. The deal is profitable - you see for yourself.
(Currency pair Euro / US dollar. 5-minute candles.)
This non-indicator Forex strategy is called Ping-Pong and is very popular among many stock traders.
And now I'd like to show you two graphs from which, in real time many years ago, I was taught this beautiful tactic.
(The first chart of two. Demonstrates the prerequisites for trading.)
(Second chart of two. Shows the result of an opportunity.)
As you can see, my friends, nothing more - just money! Do you agree?
Understanding Strong Levels
In general, adherents of the Price Action method, that is, non-indicator trading strategies, in their ways of entering the market, after understanding its current state, strongly rely on strong price levels close to the latest market quotes. To the places of the greatest accumulation of orders of participants in international trading.
Finding them is not that hard. The main thing to do for this is to become a master at identifying price reversal points in the past. Having rebounded from such levels once, the price, very often, will react to them in the future. A kind of tool to "predict" the future behavior of the market.
(Pair Euro / US dollar. 30-minute candles. An example of price response to a once-established level.)
Look at this graph above, which explains very clearly what I just told you. It is conditionally divided into two halves by a thick red vertical line.
Before it, on the left, blue arrows show the price reversal points, which tell us what exactly at this mark, at the moment, on the currency pair is located strong level which the market cannot ignore. To the right of the vertical line, on the right side of the chart, already with green arrows, I showed exactly how the price reacts to the level set much earlier, which, as you can clearly see from the chart snapshot, causes the price to reverse every time it approaches it .
In the next chart, I will show you an example of a trade by one trader from the "floor", who thus explained to me his trading logic after the release of the news.
(An example of a Mini-Dow chart, indicating the levels of opening and closing a transaction, after the release of the news. 2-minute bars.)
Please note in the picture above that there is a very strong, impulsive upward movement of quotes on the chart. No wonder - this is the reaction of the market to the latest news. Prices soared, and then rolled back a little (on the chart, a rollback is shown by the word - Pullback). The maximum point that the quotes were able to reach before the pullback is now a very strong price level, since this is where the price was deployed in the opposite direction. Do you understand?
Then, the market again resumed its upward movement, and broke through this strong level. The trader explaining this scheme to me did not enter a Buy trade on this breakdown, since he does not consider such a technique to be safe.
A little later, after a few minutes, the price, slowly, began to return back, down, to this strong "barrier". This is where he "caught" the market by placing a limit Buy order on a strong price level, which, moreover, also coincides with one of the pivots, which makes it even “sweeter”.
Roughly knowing that the reaction after the release of the news should still stir up the public to create competition to buy, he boldly bought at that price, and closed his trade at a profit when the price bars began to show a decline in buying interest. Are you clear?
As a conclusion
Today, friends, we talked a little about the non-indicator method of forex trading. I tried to explain to you what exactly is the essence of this method. As a conclusion, let me just remind you that for a successful, profitable business, you need, based on the rules of this technique, to clearly and clearly understand the current state of the market for yourself:
- the mood of the crowd;
- whether it wants to continue the current trend, or is ready to calm the price in consolidation;
- where is the nearest strong level from which the price can rebound.
Keeping this information in mind and having a ready trading plan, you can easily, even today, start applying these techniques in your daily trading, and be perhaps one step ahead of your colleagues who “overload” their terminal with late indicators. That's all for today. But we will definitely return to this topic again, since it is simply impossible to fit all the available information on this topic into the framework of one article.
Subscribe to my blog, receive gifts, leave your comments, which I will gladly answer. And of course the most important secret is don't forget to practice as much as possible. See you again and good luck.
P.S. Did you know, friends, that the world famous, thanks to the documentary series "Wall Street Warriors", Timothy Sykes, also trades in the market using the principles of no-indicator trading?
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Hello. Today in the review there is a non-indicator Forex strategy, which is implemented on daily charts and is known as the "Paulus Method". This is a profitable technique low level risk and simple rules allowing you to forget about technical analysis and trade regardless of price direction. Let's move on to the description.
Video of one of the best non-indicator Forex strategies "Paulus Method".
Training
Step #1. Look at the articles "" and "". They contain all the educational material, without studying which you will not be able to trade efficiently.
Step #2. Look at the article "". Without this program, it will be inconvenient for you to mark up the candlestick chart.
Step #3. Look at the article "". It discusses the main principle of trading on foreign exchange market.
Step number 4. Look at the article "". Learn how to safely test a new technique.
Step number 5. Look at the article "". Here you can pick good company for real trading.
Setting
Step #1. Open Metatrader 4 and add any currency pairs to the chart. We recommend simultaneous trading on three pairs: USD/CAD, EUR/USD and USD/JPY.
Step #2. Set the daily timeframe (D1).
Step #3. If time appears, see the article "". It contains other methods with which you can trade and earn more often.
Chart of no-indicator strategy: "Paulus method"
The chart of the "Paulus Method" strategy does not require any special settings: select working assets and proceed to trading.
Trading rules
Step #1. At the end of the working day, open Metatrader 4.
Step #2. Wait for the close of the daily candle and look at its color.
Step #3. If the previous day closed with a white candle, enter a buy trade. If black - for sale.
Step number 4. Set Stop Loss at 40 pips from the entry point. It is important that the Stop Loss size does not exceed 2% of the deposit.
Step number 5. All transactions are carried out intraday without a fixed take profit. This means that every day before a new transaction, you need to close an active position. While the position of the previous day is not closed - enter new deal forbidden.
An example of determining entry points according to the rules of the "Paulus Method" strategy.
What's next
2) Open a demo account.
3) Trade according to the rules of the Paulus Method strategy
5) If you managed to earn - replenish the deposit and try to earn.
Sincerely, Artem Bilenko's blog team
« Your lifeline is in your hands»
Like most non-indicator Forex strategies, this one is based on an assessment of price behavior based on candlestick indicators, their ratios, chart fluctuations and the general direction of the market. Such an assessment is somewhat close to the Price Action methods, respectively, the entries are quite simple and effective. Almost all such strategies are built on some kind of pattern, revealed by observing the market, which over and over again forms the same pattern, after which a certain movement occurs. A long-term study on history allows us to evaluate the advantages and disadvantages of such a trading technique, so the algorithm in question was tested over the entire period of the existence of the eurodollar pair and showed a good result, which was improved due to some modernization of the original algorithm.
So, the strategy is strictly trendy. This means that it will be possible to trade only if there is absolute certainty that the movement will develop. It doesn't have to be an up or down movement, only the fact that there is a trend is important.
That is, it can be a reversal that has finished forming, or the end of a medium-term correction and the continuation of a large-scale movement - it doesn’t matter at all, since only a leading combination of candles with certain values is needed, everything else does not matter. Trading is carried out according to the charts of the D1 period, which greatly simplifies the identification of a trend, since on large time frames the main direction of the market is usually traced, except for long reversal combinations, but even in this case, an entry pattern is usually not formed, respectively, there is no false signal.
Entry rules for the "juicer" strategy
Let's consider in detail the entry into the transaction on the example of a bull market on the daily Eurodollar chart. We need to find the section of the chart where the movement begins to emerge. The first thing to wait for is the formation of a black candlestick, followed by the formation of a white one. This means a local reversal and the beginning of movement in the opposite direction. The next important point is the formation of the second white candle in a row, and it should close above the high of the previous growing candle. Thus, the entire growth range of the first day is covered.
This provides a good basis for further growth. In general, overlapping ranges of other candles is a rather important signal. It indicates that there is resistance or support. In which the price rested on the first day, it was possible to overcome. And, as we know everything from the same Price Action, the overcoming resistance subsequently becomes support, so it is very important to fix the price above the level that was an obstacle in the past. Further, we can assume that on the third day this support will have an impact on the price and it will continue to move in the direction of the emerging trend.
It is on the third candle that the pending order is entered. It should be placed at a distance of five points from the high of the second white candle, as shown in the picture below. On the one hand, these five points will save you from waiting until the price experiences some resistance in the area of the previous local extreme, and on the other hand, it will give you the opportunity to enter confidently, with a high probability of continuing the movement. This is achieved due to the fact that there will be a repetition of the pattern from the previous cycle of two-day growth - yesterday's maximum after the breakdown will continue to support in the future.
There are some factors that can help a little in determining the start of a strong move. One of these important points is the shape of the candlesticks - if they are of similar size or consistently increase, they close constantly in the same direction (albeit with a meager body of a few points, the main thing is that they follow the trend), they have not very large upper shadows - all this says about the confidence of the initiated movement, about its strength and rather large potential.
To a greater extent, this, of course, is important in terms of the probability of the stop being triggered. The more intensively the trend develops, the less likely it is that there will be a return and renewal of the local extremum, especially if it is in line with the trend on a weekly period.
The stop loss according to this strategy is set initially for the low of the second candle. That is, for it to work, the “absorption” pattern must be drawn the next day, which happens extremely rarely. At the same time, if the second candle closed according to the rules, but at the same time it has too small a total range, then the stop limit on minimum size- 50 points.
This is the average daily range for the eurodollar, for other instruments, in the case of using this strategy, you need to select a value based on this parameter. The calculation is quite simple - you can take the last 20-40 days and get the value. In the case of the euro, 50 is a conditional value, sometimes it can be 55 or even 60. In any case, you can always calculate, or simply add a small margin in the form of these 10 points to the indicated 50.
Everything is quite complicated with the take, since according to the classical scheme, it is proposed to put it at a distance of 500 points. This is a lot even by the standards of volatile crosses, not to mention the Eurodollar, so after numerous experiments and runs through history, a more relevant value was obtained - 200-250 points. Given that the stop is only a quarter or one fifth of the take, you can not be greedy, most strategies do not assume such a ratio, at best it is usually one to two, or even worse.
Therefore, without inventing anything superfluous, we simply take the value of 200 first, then, as the price moves, we set 250. At the same time, we need to monitor whether there are any prerequisites for a reversal - a four-hour chart can tell about this, as well as daily candles.
The entry rules for a bear market remain the same as for a bull market. We are waiting for the appearance of a bullish candle, after which the next bearish one is formed. This is the first signal that entry is possible soon. Next, we look at the next candle, and if it closes below the low of the first, then at the opening of the next daily candle, we place a pending order at a distance of the same five points from the low of the second bearish candle. The algorithm is repeated in the opposite direction, all indicators remain the same, with the exception of one small nuance regarding the size of the profit-taking order.
The fact is that an interesting trend has developed in the markets - the fall of the main instruments usually occurs faster and more intensively than their growth. It is difficult to say what this is due to, perhaps due to the fact that participants succumb to panic moods faster and more strongly than positive mood and propensity to buy. Therefore, you can try to slowly move the take into the range of 250-300 points.
At the same time, you need to look at the dynamics - if the movement fizzles out, or candles with a long lower shadow begin to appear on a four-hour time frame, then in this case it is better to stick to the usual values. But if it falls like a stone with very slight kickbacks, then it is quite possible to move the profit further. Also, don't forget that a bearish scenario requires a downtrend on the weekly time frame. An example of an entry in the picture below:
Position tracking
As the price moves in the right direction, the stop order should also be moved. After the next bullish candle appears, the stop can be dragged up to a distance of about twenty pips from the entry point. If this daily candle turned out to be large, then you can set breakeven. Further, each time a growing candle closes, we move the stop beyond the low of this candle.
This technique will allow you to quickly react to a potential reversal, especially if it is sharp and with an absorption pattern, which usually promises a very dynamic continuation of the movement on subsequent bars. On the one hand, this is the minimization of losses, on the other hand, the opportunity to let profits grow as long as possible.
Often there are situations when the trend develops rapidly. In this case, of course, it makes sense to try to save, if not all, then at least part of the position and keep it as long as possible. A prerequisite for this may be a confident closing in the bullish direction of the weekly candle with a large range and a very small upper shadow.
This is a good signal that the next one or two weekly candles will also close in the same direction. In such situations, the profit can be much more than the declared 200-250 and even 300 points. If a powerful trend has begun, then it will continue for more than one week. Especially if it happens after exiting a long consolidation.
Other tools
The strategy was tested on the Eurodollar pair. But since it is focused on the use of trend movement, it turns out that you can use almost any pair that can show a good trend. These include pairs with the Australian dollar and the New Zealand dollar. The picture below shows the daily chart of the Aussie against the US dollar, which clearly shows the prospects for using this algorithm on this pair.
These trends are driven by the market's attitude towards these Pacific currencies, they are very long and have cycles of several months. Accordingly, you can try to build trend pyramids, where the first entry will be just the entry for this strategy.
Adaptation to other time frames
Testing on H4 showed pretty good results. The only “but” turned out to be a very large spread in the ranges of these four-hour candles. They can differ from each other at times, while being located inside the same trading day. This makes it difficult to enter, as it is not entirely clear how this trend will develop further. As a small filter, you can use only the candles of the European and American trading sessions.
This will rule out false breakouts after the slightly volatile Asian one. In this case, we are interested in the reversal patterns of the previously described scheme, which formed within 10-12 hours from the opening of the London commodity exchange. If such a reversal is formed during the day and the two candles we need will have approximately equal or increasing ranges, then an entry is possible according to all the rules described for daily candles.
On the hourly time frame, the strategy did not show itself at all, as the currency markets change their short-term trend too often. Accordingly, the algorithm either needs to be changed or applied in another area, for example, on stock market, where trends last for many candles, regardless of the time frame. That is, a reversal on the index can provide an opportunity to enter both the daily time frame (usually only in the bullish direction) and the hourly time frame. You can also individually select instruments, any trending currency pairs are suitable without strong fluctuations.
Conditions for signal generation
This kind of reversal is not uncommon in the market. Let's try to highlight the main reasons:
1. Change in the direction of movement of fundamental indicators from positive to negative and vice versa.
2. Changes in monetary policy, interest rate changes.
3. Profit taking after a very long movement, which amounted to more than 1000 points.
Under all these conditions, a major reversal is formed, followed by a powerful trend, which can be several hundred points. At the same time, the strategy is often used when there is a good movement along the main trend after local corrections. That is, it has a trend on the weeks, we enter on a reversal in the main direction after a rollback on the daily.
Which do not depend on the direction of price movement. In continuation of a narrow topic, today we will consider another simplified Forex trading tactic. From the title, I think it is clear what will be discussed.
Indicatorless Forex trading with an ultra-precise market entry technique can theoretically attract potential profits. How can things be in practice when using this trading strategy? About everything in order. Let's start with the basics.
Price Action Strategy Without Indicators
Alternatively, it can literally be translated as "action at a price." This is the main meaning. The fact is that the reaction is not to the signals of various indicators, but to price behavior.
Price Action or “price action” is the general name for a non-indicator trading strategy in the Forex currency market. Due to its relative simplicity, unlike, it is quite attractive for beginners. Among the main advantages are the following:
- ease of mastering trading tactics;
- not much time is required to analyze the situation;
- multiple indicators are not required.
In addition, there is another attractive side.
There is a high probability of entering the market at the initial stage of a trend change, and not with a delay, as when using some classical approaches.
In fact, this can lead to a better deal. After all, profit matters in the end, right?
Now let's look at how it all works.
Buy and sell signals
Let's consider two strategies of non-indicator Forex trading:
- Simplified;
- Pattern based.
Do you know what a pattern is in the currency market? If plain language, then these are well-established graphic models, and if it is even simpler - a template of some figure.
The simplified scheme is based on the patterns of movement of minima and maxima.
For example, in an uptrend, each next high is higher than the previous one. The reverse situation with the downward movement of the chart. For clarity, I will show in the screenshot.
Lines can be drawn through peak points. They are also called support and resistance. Together they form a channel. When to conclude a trade deal?
Let's say the chart is moving steadily up. As soon as the candle closes below the lower border of the channel, in theory, you can make a sale. However, for insurance, you can wait until the next figure closes in the same direction.
The second scheme is based on the analysis of specific geometric formations.
For example, consider quite specific patterns that indicate an increased probability of a price reversal.
What does this mean? If the trend is up (“picture 1”), then it is highly likely that its direction will change if the following conditions are met:
- The first candle is rising.
- The second has a small body and a long tail. Her direction doesn't matter. It is desirable that the length of the tail is not less than 2-3 times the length of the body.
- The third closed in a falling direction.
The reverse situation with "picture 2". After the completion of the formation of the third candle, you can start trading.
In the two cases described above, Stop Loss is set at the end of the tail. Where is the profit taking? We'll talk about this further.
There are two more similar patterns. I'll show you an illustration.
The situation is almost the same as the previous one. The only difference is that Stop Loss is set at the end of the middle candle on the opposite side from the tail.
Where to put Take Profit is up to the trader to decide. One thing you need to understand is that the smaller the time period selected for trading, the smaller this value. For example, you can focus on the following values:
- 20-40 pips when trading on M15-M30;
- 80-120 - H1-H4;
- 150-200 - D1.
As noted, it may turn out to be the most profitable within a single transaction, but you can wait a lot for the entry point.
Ultra Accurate Entry Technique for Forex Trading
Let's think logically. I can say with confidence that even when using numerous tools for a trader, it is simply unrealistic to determine a successful entry point for 100 percent. Given that non-indicator Forex trading is simplified, such an ultra-precise entry method is possible in practice, except perhaps in perspectives bordering on fantasy.
Beginners should immediately understand one nuance. Trading in the foreign exchange market is always a risk, not a solid profit for fabulous break even strategies which work in absolutely all situations.
If we consider the ultra-precise entry technique from the point of view of reality, then we can get closer to it, but again, not with a 100% result. And then, this will require a huge practical experience, analysis of heaps of information from various analytical systems and other information.
How to be? Everyone decides for himself. Some use the advantages of successful traders, others are looking for a "golden mean" among other options.
Effective time to trade
Along with for trading, there is another nuance that largely determines it.
Timeframe growth.
No matter how trite it sounds, it is with the growth of the time parameter (M15, H1, D1 and others) that the predictability of the chart movement and the potential profit increase. Accordingly, with a decrease in this parameter, the opposite situation is observed.
There is one drawback - at large intervals, for example, D1 or W1, you can wait weeks or even months for a successful entry point. How to be? You can simply choose the "golden mean", for example, in the M30-H4 range.
This is the end of the publication about non-indicator Forex trading. How real and effective the ultra-precise method of entering the market, I think, is now clear.
Tell me, do you know how many normal ways to make money on the Internet? Among the real options there are those that do not require investments. Descriptions of some of them have already been published on the blog. You can watch now. Stay in touch, subscribe to project updates, a lot more will be published ahead useful information. See you soon in the open spaces of Workip.
Novice traders sincerely believe that work on non-indicator trading strategies- this is Forex aerobatics, they say, this level can be achieved only after years of training, having studied tons of information in the process. Perhaps, if we are talking about the analysis of volumes, this is true, but there are also simple methods, for example, the system “ british week».
The standard version of this strategy focuses on trading the British pound (GBPUSD) and involves a maximum of two trades per week. If desired, this method can be transferred to other assets, so you do not need to immediately criticize it for the lack of "drive", as they say, "quieter you go - you will continue." But first things first.
Algorithm for indicatorless Forex market strategy
First, I will fully describe the algorithm that the author proposes, and then I will express my comments and suggestions. According to the rules of the system, the first thing to do at the market opening on Monday is to analyze the previous week's GBPUSD range.
It is better to do this on the H4 chart, where by default the main dotted grid lines just correspond to the beginning and end of the week. Here we will be interested in the intraweek High and Low.
They can be schematically marked with horizontal levels, or even better - highlight the entire range of the last week with a colored rectangle.
Then, according to the rules of the no-indicator trading strategy for GBPUSD, we look at where the opening price of the current week is. If it is located outside the designated corridor, we do not conclude deals.
If a new week opens within this range, we place buy-stop and sell-stop pending orders 5 points above/below the found High/Low.
Then we just wait for the market to hook some order (ideally, only one pending order should work). If the price moved towards the take profit by more than 50 points, move the stop loss. With this simple technique, the trader protects the account from situations of the following kind.
Positions are held strictly until the stop or take is worked out, i.e. if by the beginning of the new week the old deal has not been closed, it remains hanging in the market, but the postponement that has not worked, which is no longer relevant, is deleted. At the same time, new positions are opened in the regular mode according to the rules described above.
That's all the rules of the no-indicator trading strategy "British Week". Despite the fact that the idea underlying it is elementary, this approach really works, at least it will definitely not lead to a lightning-fast “drain” if you stick to it.
Comments on the considered non-indicator strategy
And now I will briefly state my comments. The first drawback that immediately catches your eye here is the fixed offsets from the weekly High/Low, stops and takes.
I can definitely say that with this approach, signals at low volatility will often be closed by stop losses, and in an active market, delays will be triggered by the slightest “noise”.
For this reason, it is reasonable to add a 60-period ATR to the template (we are talking about the H4 timeframe). Yes, formally, this is an indicator, and we are considering a non-indicator trading strategy, but the mentioned tool simply helps to assess volatility and does not generate any signals that can confuse a trader.
Here is an example of how ATR can be used:
- Pending orders are placed from the borders of the range at a distance equal to 0.5 ATR;
- Stop loss and take profit are set in the amount of 1 and 2 ATR, respectively.
With this approach, the system will be more resistant to changing market conditions. By the way, the author who proposed this non-indicator strategy tested it in 2016. Let's open the W1 timeframe and see how the current volatility is consistent with that period.
Obviously, at the stage of a thorough test, the GBPUSD pair was much more active, therefore, with the standard author's recommendations, the British Week system will show mediocre results these days.
Is there a place in the system for pending orders?
The next point is that the developer of a non-indicator strategy does not see much importance in the activation time of a pending order. My experience shows that such “breakout” systems generate profitable signals in the first half of the week, i.e. up to and including Wednesday.
On Thursday and Friday, the market is either already correcting after the main impulse, or it does not have the potential to properly move the price in the right direction. I'd better explain the situation with an example.
Here, in the second half of the week, the system really broke through the Low of the last W1 session, but how many points did the price pass after that? The take-profit was obviously not reached, but the next week the market turned around and would have hit the stop-loss for sure. Or here's another situation.
In general, everything is bad here - the price hooked a pending order with a shadow and did not return to this level anymore. Therefore, it is reasonable to add an additional filter to the non-indicator trading strategy - we wait for the signal only from Monday to Wednesday, and on Thursday we delete all non-activated orders.
And the last remark (more precisely, a recommendation) - the considered method should work better not on the GBPUSD pair, but on trend assets, which include CFDs on blue chips(shares of popular companies) and US bonds (treasuries). You can even use several of these assets by creating a diversified portfolio.