"Shadow Doll" - almost a grail for intraday scalping
Hello friends Forex traders! As we know, the goal of the market is to take your stops. The trend is surely followed by pullbacks. It has always been and always will be, otherwise this game would be too simple.
Today we’ll talk about a strategy called “Shadow Doll". The strategy is aimed at making profit from the natural market movements that occur after the breakdown of round levels. The system is simple and undemanding, therefore it can be used to trade on almost any trading platform with the same success (there is an auxiliary adviser, but you can do everything manually).
We will enter the market exactly when the time for harvest comes - the time for collecting the stops of the losers. When the Shadow Doll hangs over the market ...
- Platform: Any;
- Currency pairs: EURUSD, USDJPY, GBPUSD, AUDUSD, NZDUSD, USDCAD;
- Timeframe: Any;
- Trading time: around the clock;
- Recommended brokers: Alpari, Roboforex
Principle of strategy
First, let's try to figure out what round levels are. In fact, round (or psychological) levels are horizontal price marks with two zeros at the end, for example: 1.3300, 1.3400, 1.3500 and so on. The same for yen pairs: 110.00, 111.00, 112.00.
The strategy is based on the idea that after a breakdown of the round level and, at the same time, activation of a large number of orders, a rollback is necessarily formed. As a rule, rollback occurs at a distance of 30 points from the breakdown of a round level.
If the price has broken the level from bottom to top, then at 30 points we must put a pending order Sell limit.
Empirically, it was found that the most suitable (in terms of profit) level take profitbut is 10 points, and for a larger percentage of profitable trades - 7 points. Optimal size stop loss - 21 paragraph.
Despite the fact that the stop goes more profit, in this case, the loss more than pays for a much larger number of profitable trades. The reason for installing a large stop is simple. The fact is that there is too much trading noise inside the day, therefore, as with many other intraday strategies, such a stop is simply necessary here.
Similarly for the breakdown level down. On distance 30 points from the level set a pending order Buy limit. We also set take profit in 7 (or 10) points and stop loss in 21 paragraph. Since initially we place two orders - one above the level, the other below, then when one of the orders is triggered, we delete the second.
Exist exception for USDCAD - the couple has a turbulent nature, so the rules for it are somewhat different. The rules for placing orders are similar, the only one is to place pending orders at a distance 50 points rather than 30. The size of the stops and take is the same.
It is important to take into account the time factor. We begin to monitor breakdowns at 8:00 GMT, or 11 hours Moscow time. As soon as a breakdown occurs (or until the breakdown) we place pending orders on both sides of the level. We finish trading at 20:00 GMT, or at 11 pm Moscow time. Upon the occurrence of this time, delete all pending orders that have not worked. If there are open positions at this time, we are waiting for them to close by stop or take. That is, we delete the pending ones, we do not touch open positions.
We have a break for 3 hours, and at 23:00 GMT (2 nights Moscow time) the Asian session begins as part of this strategy. So, the first section of trade falls on the period from 8 am to 8 pm GMT. The second stretch begins at 11 pm GMT and ends at 8 in the morning.
At the junction of two periods, we delete all orders that failed during the night, and begin trading from scratch. If there are open positions at this time, let them close in stop or take. From 20:00 to 23:00 GMT we do not trade.
The current GMT time can be found here.
Since trading is conducted around the clock (except for a 3 hour break), it is convenient to use an adviser to place orders. You simply set the levels at which to place orders, and indicate the size of take profit and stop loss. Also, at a specified time, the adviser can delete all pending orders that have not worked.
The adviser is installed according to standard instructions, no nuances.
To get started, open a chart with a time frame, on which it will be convenient for you to observe the breakdown of levels. As for me, the most convenient way to do this is on a chart M5. To start the adviser, just drag it onto the chart.
First, specify the value Lot size - volume of the order. You can set two levels in the EA (Price 1 and Price 2) Since we do not know exactly where the price will go, we set one level higher, another lower than the current price. Next, set the distance (Distance to entry) As we remember, the distance for the Canadian is 50 points, for the remaining pairs - 30. Stop-loss and take-profit are 21 and 7 (or 10) points, respectively. You can also program the removal of orders at a specific time. For this parameter Cancel Pendings at? GMT translate to true, and in the field Time to cancel specify the time for deleting orders (for example, 8 am GMT).
2 lines will appear on the chart. As soon as the price crosses one of them, the adviser will place limit orders with the specified distance, stop and profit parameters.
The strategy works wonderfully in flat. It rarely happens when a deal is knocked out in the stop, which you can observe on a five-minute chart. GBPUSD below.
There will be fewer deals during the trend. In such periods, it is better not to use a large profit, as this can greatly reduce the percentage of profitable trades.
Tip: if the price didn’t quite reach the take and then turned around, then it’s better to exit the deal.
Keep track of profit and loss fixing levels. A short take gives more profitable trades, but a take of 10 points increases the size of the total return. In any case, stop loss should be set higher than the profit level so that intraday trading noise does not knock short stops. Nevertheless, even such a stop-to-take ratio gives a substantial profit. The strategy itself is quite simple, and using an auxiliary adviser, a minimum of action is required from you at all. The percentage of profitable transactions can reach 85%