A simple intraday Trading Strategy, 3 indicators: In Progress
Hello,
I have been backtesting a strategy for the EURUSD currency pair for a while now. It is quite obvious that many people trade double tops (DT) and double bottoms (DB) when trading structure but what happens if you ignore structure and simply trade every DT and DB you see and try and take advantage of the short term trends, namely the 5m, 15m, and 1h time frames?
A few months ago, TradingView updated their DT and DB indicators to include a target instead of just highlighting the pattern. Before this, they had no target whatsoever, and was simply an M or W somewhere in the price action. I back tested these patterns at 1:2 Risk/Reward at the Bottom/ Top of the pattern with a 1% risk, with the idea of bringing stops to breakeven once the neckline has broken and adding a further 1% to the position after a rejection of the neckline with the original target being the target, bringing stops to breakeven and adding another 1% wouldn't make the returns that i expected. Roughly 50 something percent accurate, but with a lot of the trades coming out at breakeven wasn't able to cover losses. It looked like it would work, but I just couldn't get what I wanted out of it, so I have settled with structure trading
Now Trading view has updated their DT and DB indicators, I figured I wanted to try this strategy again and the results I have gotten so far are beyond awesome!!
I have given up with adding 1% and adjusting stops etc. The reason being is my personal life is relatively busy. I simply have a set risk of 2% of my account size for every trade, set the trade with stops and targets and walkaway
THE STRATEGY 5m Time Frame
Rules:
1) No new positions to be placed between the hours of 2100 and 2300 GMT (1 hour before and after market close to avoid excessive "volatility" as the spreads bounce relatively high. 1 hour before gives the trade time to move away from a potentially tight stop avoiding the spread increase, 1 hour after gives time for the brokers to bring the spreads to the normal amount)
2) All trades, whether in profit or at a loss are closed by 2100 GMT Friday, 1 hour before market closes for the weekend. No trades to be held over the weekend
3) Stops and Targets are not to be moved once trade is placed, exiting the trade is by either hitting stop loss, or take profit only, unless its Friday 9pm and only then can manual closing occur
4) 1:2 Risk: Reward at a minimum
5) Do Not react to new setups whilst in a trade. If you enter into a DB trade and mid way through, a valid DT occurs, do not close the position, and enter the second setup
Indicators required:
Trading view Double Top
Trading view Double Bottom
Trading view ATR
Conditions for entry (for LONG positions) (for short positions, reverse it)
Wait for double bottom pattern to show itself on the 5m time frame chart.
Rules for the double bottom are as follows:
I draw a rectangle from the first bottom low of the body, to the low of the wick. This is the termination zone. The second low cannot close below the termination zone (ie, below the wick of the first low)
A wick can go past the termination zone.
This termination zone MUST be touched and test either by a wick or by a candle.
Entry:
On formation of the second low, if the candle formed is green it is an entry. If it is red but a pinbar, then that still counts as bullish pressure (I define a pinbar by using the fibonacci tool, with 1 at the lowest low, and 0 at the highest high, the body must close inside the 0- 0.32 retracement).
If the second low is none of these, then I want to see the next candle green.
Entry is at the close of a valid entry candle on the 5m time frame
On the second low, if the low candle is red, and the candle immediately after is red and neither is a pinbar, then no entry, regardless of what the 3rd and onwards candles do.
Example of a good entry
Example of no entry
Stops:
Find the lowest point of the second low, and add 1 ATR to that to take into account the volatility of the market
Targets:
Defined by the DB indicator
Once trade is placed, switch to the 15m and 1 hour time frame. If DB is found there too, then target the 15m target instead for a really accurate entry and high RR.
For information, I have seen successful RR of 11:1 and numerous 6:1+ setups.
Stats so far:
February 2023
Total trades 26
Loss 17, Winners 9
Profit/loss (in £) £315.15 (based off of a £1000 account size)
Start account £1000, End account, £1315.15
31.5% gain over 26 trades
Most successive losses 7
Most successive wins 3
Average RR of all trades: 4.16:1
Average RR of winners: 3.43
Backtesting findings in February 2023
Example of successful trade
I have been backtesting a strategy for the EURUSD currency pair for a while now. It is quite obvious that many people trade double tops (DT) and double bottoms (DB) when trading structure but what happens if you ignore structure and simply trade every DT and DB you see and try and take advantage of the short term trends, namely the 5m, 15m, and 1h time frames?
A few months ago, TradingView updated their DT and DB indicators to include a target instead of just highlighting the pattern. Before this, they had no target whatsoever, and was simply an M or W somewhere in the price action. I back tested these patterns at 1:2 Risk/Reward at the Bottom/ Top of the pattern with a 1% risk, with the idea of bringing stops to breakeven once the neckline has broken and adding a further 1% to the position after a rejection of the neckline with the original target being the target, bringing stops to breakeven and adding another 1% wouldn't make the returns that i expected. Roughly 50 something percent accurate, but with a lot of the trades coming out at breakeven wasn't able to cover losses. It looked like it would work, but I just couldn't get what I wanted out of it, so I have settled with structure trading
Now Trading view has updated their DT and DB indicators, I figured I wanted to try this strategy again and the results I have gotten so far are beyond awesome!!
I have given up with adding 1% and adjusting stops etc. The reason being is my personal life is relatively busy. I simply have a set risk of 2% of my account size for every trade, set the trade with stops and targets and walkaway
THE STRATEGY 5m Time Frame
Rules:
1) No new positions to be placed between the hours of 2100 and 2300 GMT (1 hour before and after market close to avoid excessive "volatility" as the spreads bounce relatively high. 1 hour before gives the trade time to move away from a potentially tight stop avoiding the spread increase, 1 hour after gives time for the brokers to bring the spreads to the normal amount)
2) All trades, whether in profit or at a loss are closed by 2100 GMT Friday, 1 hour before market closes for the weekend. No trades to be held over the weekend
3) Stops and Targets are not to be moved once trade is placed, exiting the trade is by either hitting stop loss, or take profit only, unless its Friday 9pm and only then can manual closing occur
4) 1:2 Risk: Reward at a minimum
5) Do Not react to new setups whilst in a trade. If you enter into a DB trade and mid way through, a valid DT occurs, do not close the position, and enter the second setup
Indicators required:
Trading view Double Top
Trading view Double Bottom
Trading view ATR
Conditions for entry (for LONG positions) (for short positions, reverse it)
Wait for double bottom pattern to show itself on the 5m time frame chart.
Rules for the double bottom are as follows:
I draw a rectangle from the first bottom low of the body, to the low of the wick. This is the termination zone. The second low cannot close below the termination zone (ie, below the wick of the first low)
A wick can go past the termination zone.
This termination zone MUST be touched and test either by a wick or by a candle.
Entry:
On formation of the second low, if the candle formed is green it is an entry. If it is red but a pinbar, then that still counts as bullish pressure (I define a pinbar by using the fibonacci tool, with 1 at the lowest low, and 0 at the highest high, the body must close inside the 0- 0.32 retracement).
If the second low is none of these, then I want to see the next candle green.
Entry is at the close of a valid entry candle on the 5m time frame
On the second low, if the low candle is red, and the candle immediately after is red and neither is a pinbar, then no entry, regardless of what the 3rd and onwards candles do.
Example of a good entry
Example of no entry
Stops:
Find the lowest point of the second low, and add 1 ATR to that to take into account the volatility of the market
Targets:
Defined by the DB indicator
Once trade is placed, switch to the 15m and 1 hour time frame. If DB is found there too, then target the 15m target instead for a really accurate entry and high RR.
For information, I have seen successful RR of 11:1 and numerous 6:1+ setups.
Stats so far:
February 2023
Total trades 26
Loss 17, Winners 9
Profit/loss (in £) £315.15 (based off of a £1000 account size)
Start account £1000, End account, £1315.15
31.5% gain over 26 trades
Most successive losses 7
Most successive wins 3
Average RR of all trades: 4.16:1
Average RR of winners: 3.43
Backtesting findings in February 2023
Example of successful trade
Disclaimer
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