THE BEST FOREX ROBOT AUTOMATED TRADING SYSTEM
BEST FOREX ROBOT – THE ONLY FOREX AUTOMATED TRADING SYSTEM YOU NEED!
I highly recommend you guys check out http://www.5pipsaday.com for the best automated forex trading robot! Save yourselves a lot of time and stress and start making some big profits today!
A Brief Update
I will keep this brief…..I have been spending alot of time practising the French language. Hence I have not been updating the blof or trading. Well, infact I have not needed to as the Forex Luger has been doing all the dirty work for me! I have it setup on a VPS and it is making me a decent wage. Fingers crossed it will continue that way. Next christmas could be a great one! :-)
I hope everyone is having nice weather wherever you are, I’ve got that summer feeling coming on!
THE LUGER IS STILL LOOKING GOOD!
Well my faith in the EA is paying off this week! For the first time my account is increasing consistantly. And as it is set up on a VPS I havent even had to be near my laptop or even have it switched on! If this lasts then the life I crave will be a reality. No looking back at the end of the year with regrets. God if I didnt use this EA id probably still be trying to DTB this time next year whilst asking questions and getting ignorant answers! Well for all those EA haters out there ( I once was one) you are missing out! BUT whoever you are, wherever yo uare and however you trade then good luck to you! See you on the beach hasta pronto amigos ;-)
THE FOREX LUGER ROBOT
AKA DRAIN THE BANKS ROBOT/EA?!
- I THINK SO!
See for yourself@ http://www.forexluger.com
I have ranted before about Forex robots and how I believed they are unreliable. However I have discovered an expert advisor that has changed my opinion. Before I would say that they cannot predict the future (which of course they cannot) but nor can we traders. Yes we may be able to adapt to the market but if using a rigid system (such as DTB) then are we really adapting?! Saying that, this EA scalps reversals in the same way DTB does but the results are so much more impressive! Perhaps its because all the emotion/discipline issues are eliminated. I reccomend this particular EA and that is saying alot as I usually bash expert advisors from all angles!
After spending the best part of this year testing this EA and tweaking the settings, researching and using different brokers I came to the conclusion that Expert Advisors are highly dependant on THE BROKER. Yes, the reason I believe they get some bad rep is because people use the robots on brokers who mess with the spread. They also run the robots at the wrong times when spread is subject to change. Thats what I like about the Luger is the fact that it runs at a quite period when the spread is low on the currency pair it trades across a good collection of brokers.
The Forex Luger is doing fantastic on my live account. More information can be found at http://www.forexluger.com
A few people have asked for a forward test and here is one setup on a VPS as described in the Forex Luger Manual. Bare in mind I think the EA is relatively new to the game but so far the results are good. If it keeps this performance up the much criticised back tests can become a reality in the future. Anyways, “you gotta be in it to win it” eh!
P.S. 6 MILLION WAYS TO TRADE, CHOOSE ONE!!
Well the stats of my blog are better than I thought they would be, thus I will update the newcomers and regular visitors. To summarise all of the below and what I am doing now. Basically I came to the conclusion that chasing the reversals was dangerous and for little reward. I believe the original drain the banks method was backwards. Perhaps intentional to ward traders off, but I STRONGLY believe trading the breakouts should have been included in the rules. What I would recommend those wanting to use the drain the banks method is to wait for support/resistance to form and the candle to close. Then enter on the breakout of support/resistance by a few pips. Set a breakeven as soon as you can and then milk the trade for all that you can. THAT IS THE ROB THE BANKS method that I use. More information is posted below regarding the rob the banks method. Feel free to drop me a comment, I will respond.
Below is a detailed comment posted to a viewer: (thanks for the support and interest in my blog)
I can tell you that it works so far. Like I mentioned I believe that it is a relatively new EA to the game however it is performing well on my account that I setup on a VPS. What I struggled with in the end with drain the banks was the constant monitoring of the charts. Since I got into EA’s and actually gave this one a chance I discovered how easy it was to have MetaTrader running on a Virtual Private Server (as reccomended by the forex luger manual) so it has really helped eliminate the stress I was getting from manually trading. Plus it prevented my emotions/discipline from causing stupid errors. Believe it or not a robot could trade better than I can manually – and I get to switch my computer off!
Mate I hate EA’s more than the next man but I would be kicking myself if come december an accurate backtest of the EA shows that I would have made a briefcase full of cash!! My new motto is “you gotta be in it, to win it” where unfortunatly with drain the banks I was “In it to get drained”. I cannot elaborate on the money back guarentee because I havent needed to inquire about it, however they do provide contact details in the manual. But what I will say is that I made twice the cost of the EA in a week so the risk:reward was nice! Clickbank? To be honest I am not sure that determines the quality of a product or whether you will get a refund or not! Arent most clickbankers marketers rather than traders?
Have a great weekend!
**SPOT THE BREAKOUTS**
Using the same chart as below, spot the breakouts. Here they are, all 5 of them:
**SPOT THE REVERSAL**
This is good for practice: Spot the 11 reversals in the following screenshot (answer chart below). All reversals occured during the London session on the GU, m15, on non breakout candles with a 10 pip trigger. Out of the 11 reversals, 8 were worth out least 10 pips, 2 at least 5 and 1 less than 5 (assuming a 10 pip stop losss). CAN YOU SPOT THEM?
**CLASSIC REVERSALS REVISITED**
In addition to taking big runs on the breakouts (or small take profit – whatever suites your MM) dont forget to look for the reversal opportunities. When a breakout m15 closes wait to see if the next candle reverses to hit the 10 pip trigger. If it does then enter and grab 5 to 10 quick pips or set a break even / trailing stop and go for more.
This is happening now on 3 popular pairs:
**WEEKLY RESULTS FOR ROB THE BANKS PT13 Sep21st – Sep 25th 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
**WEEKLY RESULTS FOR ROB THE BANKS PT12 Sep28th – Oct 2nd 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
**WEEKLY RESULTS FOR ROB THE BANKS PT11 Oct5th – Oct 9th 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
**WEEKLY RESULTS FOR ROB THE BANKS PT10 Oct12th – Oct 16th 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
Be ready to place instant trades as price can breakout immediatly so you may not have time to place a pending order. Be prepared to lose often and have positive trades come back to the break even. BUT by waiting for the big moves you make up for those false big runners. You may have losing days but I can ensure you if you trade from the start of the london session untill the end and take ALL rob the banks setups on the m15 gu then by the end of the week you WILL be in postive pips!!
**WEEKLY RESULTS FOR ROB THE BANKS PT10 Oct19th – Oct 23rd 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
So todays tedious simulation testing has shown a cross of 21 & 15 NonLag Ema’s to be the best exit therefore I am taking the runners and looking to get big breakouts to make up for multiple small losses. In the long term big trades give more pips then taking 20pips at a time although that is still profitable. I will release a download link to the complete system with screenshots of all my backtesting and instructions on how to trade it.
**WEEKLY RESULTS FOR ROB THE BANKS PT10 Oct26th – Oct 30th 2009**
Take Profit: NON LAG EMA CROSS EXIT
Stop Loss: 10
Break Even@ 15
**WEEKLY RESULTS FOR ROB THE BANKS PT9 Nov2nd – Nov 6th 2009**
Take Profit: NON LAG EMA CROSS EXITS FROM HERE ON IN
Stop Loss: 10
Break Even@ 15
**WEEKLY RESULTS FOR ROB THE BANKS PT8 Nov9th – Nov 13th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXIT: +355
**WEEKLY RESULTS FOR ROB THE BANKS PT7 Nov16th – Nov 20th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: +190
**WEEKLY RESULTS FOR ROB THE BANKS PT6 Nov23rd – Nov 27th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: +117
**IMPORTANT FINDINGS REGARDING TAKE PROFIT LEVEL**
NON LAG EMA CROSS EXITS: THE BEST EXIT IS WHEN PRICE CLOSES ABOVE A CROSS OF NON LAG EMAS SET AT 15 & 21.
SO my backtetsing forward style using the simulator has shown that “Rob the banks” gives great results. Some days are small losers or breakeven albeit very rare. BUT the important thing is at the end of the week the pips are green. Testing with a TP of 20 pips has shown good results but I have watched many trades turn into runners. We could have rode these runners had we covered are ass with a breakeven (may get knocked out of some but can always catch the next bus). It was a shame leaving some trades for 20 pips and then watch them move 100+!!! I believe “Rob the Banks” provides a great entry very early in a breakout but we need to include the following 2 indicators for exit points. For those of you who have read Bill Williams “Trading in Chaos” you will be familiar with these indicators. The yare both available in MetaTrader.
ALLIGATOR: Close the trade when price closes above/below the red line.
AWESOME OSCILLATOR: Exit the trade when trend begins to change. Not straight away, wait for at around 3 bars to change direction. You can compare with the alligator to see if it is a definate exit.
NON LAG EMA CROSS EXITS: THE BEST EXIT IS WHEN PRICE CLOSES ABOVE A CROSS OF NON LAG EMAS SET AT 15 & 21.
These indicators are good to catch runners rather than bailing early at 20 pips. Look at the following screenshots that show how they gave good take profit areas:
**WEEKLY RESULTS FOR ROB THE BANKS PT5v Nov30th – Dec 4th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: +725
**WEEKLY RESULTS FOR ROB THE BANKS PT4 Dec 7th – 11th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: =150
**WEEKLY RESULTS FOR ROB THE BANKS PT3 Dec 14th – 18th 2009**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: +70
A tougher week (perhaps as we were approaching the holiday period). There were many runners however but I stuck to the 20 pip take profit level.
**WEEKLY RESULTS FOR ROB THE BANKS PT2 Jan 4th – 8th 2010**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: +200
I will not upload all the screenshots but I do have them and my put a link to a zip file at a later date. There are screenshots below that clearly show and instructions that describe how I am trading.
The hardest part of my method is to decide whether to take 20 pips profit or play for a runner. Set breakeven @10-15 pips for both cases. Please see my post above regarding the ALLIGATOR & AWESOME OSCILLATOR indicators that can give excellent Take Profit points. BUT USE NON LAG EMA CROSS EXITS: THE BEST EXIT IS WHEN PRICE CLOSES ABOVE A CROSS OF NON LAG EMAS SET AT 15 & 21.
This day had +50 with tp@20, but how much would we have made taking the runners:
**WEEKLY RESULTS FOR ROB THE BANKS PT1**
Take Profit: 20
Stop Loss: 10
Break Even@ 15
NON LAG EMA CROSS EXITS: -50
Trading London session using my “Rob the Banks” method. See screenshots for daily summary.
**FAKEOUTS, TRENDS, SHOOTING RANGE, IT’S WHATEVER**
Here is my opinion on trends and the such. We do not know when a trend will start and could therefore always be trading in a range waiting for the trend. Or we could jump in once the trend is underway but how do we know if its not about to end? We dont. So for me money management is an ass saver. Using my “ROB THE BANKS” method below with a modest tp or a set break even we will win or at worst break even during any type of day – trending-ranging-chop shop-the lot.
IT IS ADAPTABLE TO ANY MARKET SITUATION.
**WE DONT JUST DRAIN THE BANKS, WE ROB THEM**
Summary of the “ROB THE BANKS” breakout entry:
- m15 OR h1 chart – m15 gives more trading opportunities
- wait for a semafor to appear and the semafor candle to close
- place a pending order at the high/low (+1 tick & spread) of the candle. We want the semafor support/resistance to be broken
- the semafor support/resistance MUST be the first level that is formed after price has left an opposing semafor support/resistance level.
- stop loss of 10 pips and take profit of 20 pips. You can set a breakeven and hope for a runner. One will come eventually.
- Pending orders are valid untill they are triggered or another signal appears in the same direction above/below the order. E.g. We have a semafor resistance level with a pending order on it. The order does not get triggered and price moves away. This order will stand unless a new semafor resistance level setup appears below it. Additionally, the valid pending orders must only be on the FIRST instance of a breakout in that given direction. So pending orders MUST not be placed on support/resistance where price already broke out in that direction. The first instance is the first level that is formed after price has left an opposing semafor support/resistance level.
- only trade the first semafor support/resistance breakout in any direction. You dont want to enter the breakout late. Unless the price does a fakeout on the first s/r level you can enter again in this case. So if you are looking to trade a breakout long then it must be the first semafor resistance since the last semafor support. You CAN enter after the first breakout but it is riskier.
- if price does a “fakeout” and reverses then set another pending order at the high/low of the new support/resistance.
- once a breakout has begun in one direction and we have got our pips, we will start wating for a semafor setup in the opposite direction.
- Avoid semafors on long bars they are usually faking it
- trade during buisy times so breakouts are POWERFULL! eg. London session
- trade pairs with high range and low spread – GU, EU and possibly EJ but I have not looked at that pair. Enough opportunity daily on one pair.
- ask any questions if you need help and I reccomend the forex simulator to practice this method also.
- no making up new rules here or adding new indicators, or not answering questions, or talking in riddles, or asking for donations, or being rude, or being arrogant, or being mysterious, or being patronising, just real talk.
**DRAIN THE BANKS UNLEASHED!!** AKA “ROB THE BANKS”
I am going to reveal some DTB secrets that they do not want you to know!! Just donate $50+ into my paypal: firstname.lastname@example.org. Many Thanks…
Of course I am just kidding. I did however run DTB using the forex simulator mentioned below. I watched it for hours upon hours speeded up in an attempt to pick up on patterns. I used the m5, m15 and h1. What I discovered is that I want to trade the breakouts! Why have I been waiting hours upon hours to scalp a small reverse when all the time price is breaking out POWERFULLY.
Anyways for those who want to still get something out of DTB I reccomend this (in fact you do not even need DTB, just the 3_level_ZZ semafor indicator). Use either the h1 or m15, m15 giving you more trading opportunities. Wait for a semafor to appear on a candle (a nice fresh semafor). Once the semafor has appeared it is showing you support/resistance. We want to trade a breakout of this support/resistance so once the candle has closed with the semafor on it, we place a pending order 1 decimal above/below this candle +spread. SO, once the support or resistance is broken we are in the breakout trade. If the breakout is false and you get stopped out then place another order above/below the new level of resistance/support. If the breakout was successfull (usually is because alot of traders use support/resistance) then take however much profit your MM states. My visual testing showed that setting a breakeven at 10-15 pips and shooting for 20 pips is a good MM strategy and gives you a healthy 1:2 risk:reward. If you exit the breakout then you must wait for a setup in the OPPOSITE direction or you risk entering a breakout that is approaching it’s end. Do not re-enter in the same breakout direction as before unless it was a fakeout, in which case you would set another pending order in the same direction. Beware of long bars that cause semafors, they do not give good support/resistance levels, wait for another setup. Use a breakeven sparingly as it can cancel out potential winners. You could also go for a runner MM option and try to catch a big move instead of bailing for 20 pips. This gives less winners but the winners do substantially make up for the losers. Also note that I am trading G/U. You have to trade during high volume times (London preferably) and high range pairs.
So download the simulator (or just try this breakout method forward testing) and watch the charts to see if they do what I have stated above. Happy trading people, please leave me feedback!
Now please view ALL of the following screenshots as they show how to trade the breakouts exactly.
**INDICATORS ARE OVERATED IMO**
**THE NAKED TRADER**
For those who are interested here is a screenshot of how I am trading naked. I use the m5 chart and wait for a big move followed by a clear retrace. Entry is on the line where the retrace began. The fib expansions are used for take profit levels. Profit levels can also be calculated by the following: original move(pips)-retrace(pips)=Profit target. Stops at retrace level. Calculate risk dependant on size of stop. eg. If stop is 20 pips then 20 pips should be the equivalent of 1-2% of your account dependant on risk you are willing to take.
I highly recommend downloading the trade simulator. It allows you to practice trading all the time and is VERY handy.
Short and sweet. You cannot chase the daily high/low for reversals. End of. I am trading naked from here on in.
This blog was originally intended for testing the “Drain the banks” reversal(s) method. However I have since discovered there is much more opportunity and reward short term when trading the breakouts, preferably naked. I may update this blog with my naked trades although it can be distracting whilst attempting to stay focused on trading. Just as I find reading forum threads/posts can be. Lots of conflicting/repetative information out there imo. When you trade naked it is up to YOU to make the decisions which is how I like it. Thats why I choose Forex because I like to make my own decisions, not to be bossed about.
**THE RAT IS BACK!!**
Good news traders, the rat is back and in full effect! Using drain the banks rev09
Price within 20 pips of the high/low
Enter on the rat reversal setup (Eg. RED RAT=GREEN CANDLE CLOSE,RED CANDLE CLOSE,ENTER AT RED CANDLE LOW!)
If stop loss is hit then add +10 to the target for the next trade. If stop loss is hit twice add +20 to the next trade!
CHOOSE TO BE A RED OR GREEN RAT AND DO NOT CHANGE YOUR COLOR. TEST FOR A WEEK AND LET ME KNOW HOW YOU GET ON!
*More DTB info**
“And i know this is simpleton, but how does one account for the 2 pip spread to enter at the correct price?”
Don’t worry about the spread… you buy the ask and sell the bid at the triggers.
P.S. I am using a 10 pip trigger.
So I decided to look at the rat reversal again whilst applying the h1 bias rule (as I had not previously). Seems like by taking rat reversal trades only with the h1 bias can be quite profitable. h1 semafor on current or previous candle still applies. So my Rat Rules are:
- 20 pips from daily high/low
- h1 semafor on current/previous candle
- h1 bias agrees
- Enter on Rat candle setup or 20 pips trigger
I have also noticed that Rat reversal trades and classic DTB reversal trades can setup at near enough the same time.
“I enter with the RAT REVERSAL or if a candle hits a price ending in 0″
I am taking the next two weeks off from trading to enjoy christmas. MERRY CHRISTMAS TO YOU!
**WHERE I AM AT NOW**
To be honest I am at where I should have been in the very beginning. From all that I have learned and all the practice I have had it comes down to the simplicity of just following the training wheels “ok to buy” and “okay to short”. That’s all. How relevant “reversal periods” are I cannot say 100% and they are not mentioned even as a rule of thumb. Where I have been saying avoid the news others have said this is where you can grab quick pips. Perhaps avoiding breakout candles and trading with the hourly bias is the best filter there is.
So therefore people do your self a favour and use the training wheels (as I will be) unless you are a seasoned trader.
Is it a good idea to avoid news when using the DTB strategy?
Only if you want to miss out on the fast trades.
**MORE GOOD ADVICE FROM FELLOW DTB TRADERS**
Please to make things simple for now just follow the direction of the hourly candle, watch the buy or sell signals beneath it clearly. Take the trade. Get out at the next support or resistance. My advise: do not close the trade just because the signal changes after a few seconds. Look at the chart and price, look at support and resistance levels on your screen. Are they still intact ? Then wait. Try on a demo account first if you want.
DO NOT TRADE AGAINST THE H1 BIAS.
If TRAINING WHEELS are ON then the OK TO TRADE for reversals will be displayed ONLY when the trade would be WITH the H1 bias.
There is only ONE TRADE message on the gauge on the right of the chart below the bias message.
It tells you what to do and/or what is happening.
Hello, I have been following DTB system for several days and found that most signals produce profits rather quickly on GBPUSD and EURJPY. However, many times the audible signal seems to come late making it necessary to watch the M15 chart and enter with visual confirmation.
I DON’T USE THE AUDIBLE ALERT. I AM NOT SURE.
For instance today at 9:40 EDT (13:40 GMT ) an alert sounded to short GBPUSD at 1.5283. But the market price was 1.5256, 27 pips below the signal price. So, the question in my mind was does the alert mean that when price returns to 1.5283 to sell, or was the alert just late in sounding?
NOT SURE. I WILL HAVE TO CHECK.
Like the system, glad to be here.
GLAD TO HAVE YOU.
NB: I HAVE ALSO FOUND THE AUDIO ENTRY ALERT TO BE LATE SO I DO NOT USE IT.
If you can SEE that price did NOT make a lower low and it going UP, then you can enter at the long trigger.
Breakouts – enter at resistance + 1 pip or support – 1 pip.
Remember.. this is trading… ANYTHING CAN HAPPEN!
It is against the rules to trade a reversal on a breakout candle.
That is a HIGH RISK TRADE.
This is TRADING – THERE ARE NO RULES!!
You make your own rules. The indicator has the rules built it. Just do what it tells you to do. Most of the time, it will say “WAIT”. That’s because that is the best thing to do – wait for the best possible time to enter. If you only get one entry signal per session, but it is profitable, is that a problem?
When a candle make a new support or resistance level, that’s a breakout candle. Trading the reversal during that candle is usually hazardous to your portfolio.
Most traders, especially me, have itchy trigger fingers and we want to get in there and take some pips. But it is usually detrimental to trade reversals on breakout candles. That’s why the indicator does NOT say “OK TO BUY or SELL” on reversal candles.
You, and most traders, have been fooled into thinking there must be rules for these systems. And when there are NOT rules, you demand rules.
But you have to understand PRICE DOESN’T CARE ABOUT RULES!
1) The reason you enter a trade DOES NOT MATTER
2) Once you enter a trade, all that matters is PRICE.
3) TP and SL must make sense or you will lose in the long run.
TRADING IS A NUMBERS GAME.
What you hope for is to have a system that has a STATISTICAL EDGE, that you can exploit repeatedly. If you have one, then all you have to do is execute flawlessly. There is nothing to think about. You will win some and lose some. So long as you stick to your exits, especially SL, then you’ll win. Otherwise, you lose.
Yes, if D1 and H1 agree, it is very risky to trade against it.
“take what you can” is subject to interpretation and a few things can be done when in position and in green
when the price goes in favor and suddenly stops
1, profit can be taken right away
2, set a breakeven stop
3, take profit on a part of the position
4, take profit on a part of the position and set breakeven stop
5, don’t do anything just wait hope it goes further
6, set trailing stop
For some reason, some of you traders FORGOT my #1 RULE OF THUMB:
ALWAYS TRADE WITH THE H1 CANDLE COLOR – NEVER TRADE AGAINST THE H1 CANDLE COLOR.
I realize some of you are new, but I know a couple of “old timers” who seemed to have forgotten.
Agreed. A few times a week we will typically get a decent breakout that will sustain for several hours. Many folks try fading the trend and get burned.
ALWAYS TRADE WITH THE H1 CANDLE COLOR – NEVER TRADE AGAINST THE H1 CANDLE COLOR.
The bias tells you which way to trade to be trading with the H1 candle color.
If you follow the rule of thumb, then it will cut down on the number of trades that you make. When you trade, you’ll be trading with the current H1 candle and that’s very profitable.
Do you traders remember the other rule of thumb?
DON’T TRADE AGAINST THE H1 CANDLE COLOR.
Hard for price to reverse AGAINST the H1 candle color.
RULE OF THUMB: DO NOT ENTER A REVERSE TRADE ON A BREAKOUT CANDLE.
What is the Training wheel?
IT IS A MODE THAT ONLY GIVES YOU A TRIGGER SIGNAL FOR THE BEST POSSIBLE TRADES.
During London and NY sessions GBPUSD, EURUSD or USDJPY.
During Asian session USDJPY or EURJPY.
REMEMBER, THIS IS SCALPING, DO NOT BE GREEDY!!
ALWAYS TRADE WITH H1 CANDLE COLOR
TRADING WITH D1 CANDLE COLOR IS SAFER THAN TRADING AGAINST
ONLY ENTER REVERSAL TRADES ON BAR 4 OR MORE OF A RUN
ONLY ENTER BREAK TRADES ON BAR 2 OF A RUN WHEN PRICE IS AT
THE HIGHEST HIGH OR LOWEST LOW OF THE PREVIOUS 3 BARS
ALWAYS CHECK THE NEWS EVERY HOUR BEFORE TRADING
ALWAYS TRADE WITH H1 CANDLE COLOR
TRADING WITH D1 CANDLE COLOR IS SAFER THAN TRADING AGAINST
This prevents you from getting WIPED OUT.
If you notice, I switched to the M30 chart and a 10 pip trigger. Look at the range count. After the candle ranges 10 pips, you have good chance it will range another 10 or more. Pure statistics. Just add a little money management and risk management and you can make in a hour what the banks are paying in interest in a year.
TRO DYNAMIC FIBS SR gauge shows range:
Range is the resistance price minus the support price.
The percent in range is where the price lies between support/resistance as a percent. 0% is support. 100% is resistance. 50% is halfway between support and resistance.
TRO2009 RANGE COUNT shows the frequency distribution of the range.
How many times a range of 0 – 9 appeared and what percent of the total that comprised.
If 0 – 9 appears 25 times out of 100 bars, it would be 25%. You can use this to gauge your TP.
“DO NOT TRADE AGAINST THE H1 CANDLE COLOR” was BEFORE DRAIN THE BANKS not something that was added to it. For some reason, some traders were forgetting about my #1 RULE OF THUMB.
The bottom line is some traders are DRAINING THE BANKS using this method because they are not trying to find fault with the method.
If you trade WITH the H1 candle color, you can DRAIN THE BANK!
If price is NOT making new lows, then it must be GOING UP.
NOTE: I have TRAINING WHEELS ON. It says DO NOT REVERSE. You have to know when you are breaking the rules and trade accordingly. DO NOT BE AN IDIOT AND LOSE 40% OF YOUR ACCOUNT BY BREAKING THE RULES IF YOU DON’T KNOW HOW TO BREAK THE RULES!
|I look to reverse on “X”s on M15 through H1.If I am in a trade and I see an “X” on M1 or M5 appear against me, I will exit.|
RISK = STOP LOSS * POSITION SIZE.
RISK = 2% of account. If $1000 account then $20
STOP LOSS = 10 PIPS.
POSITION SIZE = RISK / STOP LOSS = 20 / 10 = 2
$50 / 2 minilots = 25 pips. Which is not out of the question.
The main thing about reversing is:
DO NOT REVERSE ON THE BREAKOUT CANDLE – WAIT FOR IT TO CLOSE!!
The indicator tells you that.
There is an input to turn IDIOT MODE “on”, if you have difficulty understanding this. Trust me, you would have to be an IDIOT to reverse when IDIOT MODE is on…LOL!!
Price moved against me, so I entered a second time.
Price moved against me again, so I entered a third time.
Price moved my way and I exited with a profit.
does that mean you had 3 open positions( kinds like a grid trade) or did you close the first 2?
I had entered 3 trades on the same pair. I use MBT so I don’t have 3 separate trades to manage. I just have 3 units in play.
If you left the positions open, did you increase your lot size or did yo uleave it the same as the first 2?
No. Each entry was 1 unit.
When I exited, I closed all 3 units at the same time.
I have to warn people against this unless they know exactly what they are doing. Exactly what they are doing, particularly in determining position size to achieve an acceptable RoR (risk of ruin). Doubling down, averaging down…whatever you want to call it needs a much larger account (or much smaller trade size) than more traditional approaches to money management. Having said that I rather like these sorts of approach providing it is an extremely high probability set up.
Having got the warning out of the way might I ask if the third position goes against you do you stop out?
Depends on the stop loss your money management will allow.
The DRAIN THE BANKS setup is all about support/resistance.
You are either trading the breakouts or the reversals.
Don’t make this complicated.
If you only trade with the H1 and the BREAKOUT / OK TO TRADE signals then you will NOT be over trading.
You only need 1 or 2 profitable trades per day.
Trading is a NUMBERS GAME. Make the numbers work FOR YOU and not AGAINST YOU
When you see a “3” appear on the H1, be prepared for a 20+ pip breakout BEFORE PRICE REVERSES.
So, trade WITH the breakout, then trade the reversal.
since ANYTHING can happen, you can win by trading against H1, but it IS SAFER to trade with H1. this means that there will be less opportunities, but safer ones. that is my experience.
**5 OR 10 PIP TRIGGER**
Here are some quotes from the creator regarding this:
“I either use 5 or 10 depending on market conditions.” & “That is up to you to determine which way works best for you.”
“You would have to try different triggers to see what works for you. I don’t know.”
Perhaps the bigger trigger is for longer term trading:
“Long/midterm trading… you have to adjust the triggers.”
“The triggers are set “tight” at 5 pips.
You can increase the triggers so you’ll get more trade signals.”
I would summarise which trigger to use with this quote:
“The best value is whatever works best for you. I use the default value on M15 charts.”
If the creator uses the default value of 5 pips then I dont see why I should not. Imo the creator should know the optimal setting.
**DTB RHYME FROM JEFFDACHEF**
In my humble opinion, fools don’t follow the rules,
just search the posts, you will find the tools.
One thru seven, that’s how eazy it is,
just trade the rules to be a whiz.
When the 1H chart semaphors a trend,
click the 15M chart, order ready to send.
When the price hits the trigger, “DONT THINK, JUST ACT!”
One trade each 15m candle, a rule and a fact.
If the price goes awry with a new dynamic s/r,
just watch for the trigger next to the bar.
If you understand how the s/r helps you,
then order again, to the trend be true.
Your Stop Loss is what your money management demands,
Your profit is “take what you can”, it’s in your hands!
And as you start to “DRAIN THE BANKs”
remember, TRO the creator deserves some thanks!
**BRIEF UPDATE ON REVERSAL PERIODS**
Prior to posting this I have mentioned it is okey to take reversals anytime after London has closed. I would like to clarify that this refers to the NY lunch period and after 16:00 NY time. So “reversal periods” in London time are as follows:
- London Lunch (11:00am to 13:00pm)
- NY Lunch (16:00pm to 18:00pm)
- Anytime after 21:00pm
**MORE PROOF CLASSIC DTB REVERSALS ARE PROFITABLE IF TRADED CORRECTLY**
**WHAT I HAVE LEARNED TODAY DECEMBER 16th 2009**
That the training wheels should not be taken for granted and they should be used to confirm entry. The training wheels only confirm trades when the h1 agrees and the candle is a non-breakout. I will therefore only be taking classic DTB reversals where the training wheels agree.
**MUST READ: TRO DYNAMIC FIBS SR TRAIL/TRAINING WHEELS EXPLAINED**
When trading classic DTB reversals have the training wheels option enabled. With this set to true, you will be told when it is “Ok to short” and “Ok to long”. Only take trades on the trigger when this is displayed and you are taking the safest classic DTB reversal known to man.
You can call this one DRAIN THE BANKS FOR DUMMIES…LOL!!
The input TrainingWheels (default = true) checks the H1 Bias and will only display the reversal trade when it matches the H1 candle color. Also, it will not display the reversal trade during a break out. If TrainingWheels = false, then TRO_DYNAMIC_FIBS_SR_Trail functions just like before.
The screenshot below shows the training wheels confirming it is “okay to buy”. Buying on the trigger here would have resulted in a winning trade.
**MY TRADING TIMES CLARIFICATION**
I am only taking classic DTB reversals at 10:45am to 13:00pm London time and after 16:00pm London time. The reason I start at 10:45am is that price tends to slow down for reversals just before lunch and there are usually good opportunities around this time provided you wait for the 10:30am m15 candle to close.
I am also using a 10 pip trigger and only trading non-breakout candles.
**BEST ADVICE FOR CLASSIC DTB REVERSALS**
The best advice I can give in the simplest form is this:
- Do not trade reversals on breakout candles
- Trade during “reversal periods”
- Use a 5/10 pip trigger (Whichever is hit first)
- Only reverse if m1/m5/h1 candles agree
- USE THE TRAINING WHEELS AND ONLY REVERSE WHEN THEY SAY “OKAY TO SHORT” OR “OKAY TO BUY”
**CHOOSE YOUR SET OF CLASSIC DTB REVERSAL RULES**
I have updated the classic DTB reversal rules page. There are now a set of 3 different rules. You can choose which rules suite your mentality/style: Easy, Semi-Pro, Old Skool. I am currently down with the easy newb rules for the reasons stated below. 10 pips is easily achievable with these rules, based on what I have seen trading the classic DTB method everyday for a month now.
**TRADING LIKE A NEWB**
Well after my post and little guide on how to trade the classic DTB reversal like a newb I thought I would give it a try myself. I found it less stressful than the normal classic DTB reversals I have been taking. I WILL BE TRADING THE NEWB RULES FROM HERE ON IN! If the m15 candle is breaking out I do not need to sit and watch for the trigger to be hit as I know that I am only looking to reverse on non-breakout candles with a large 10 pip trigger. I also feel that by waiting for price to reverse 10 pips before entering I am trading a true reversal. Good points about trading the classic DTB reversal newb way:
- Do not have to watch the chart as much
- Safer reversals
- Space between trigger and candle open so I can get a clearer idea of price action
- Not missing triggers on non-breakout candles
- Less false reversals
The trades I took today using the normal method were also newb entries. The newb entries were even better! I have marked them on the charts along with other entries today:
Just as a means of convincing myself and others that the newb classic DTB reversals are better (well for me at least) here are a few screenshots of setups I captured during today. These are setups based on the newb rules.
**DTB BREAKOUT TRADES**
Well I have made my feelings clear about taking reversals during the quieter “reversal periods” but how about taking the breakouts during the high volume “breakout periods”? Well, this is something I will not be doing but will briefly mention it here for those who want to. This is what the creator of the method states:
“IF PRICE BREAKOUTS OUT BY 1 – 5 PIPS, YOU ENTER THE BREAKOUT. HOW MANY PIPS YOU WAIT IS UP TO YOU. YES, CHECK THE CANDLE RANGE AND COMPARE TO AVERAGE TO SEE HOW MUCH GAS IS LEFT IN THE TANK. MANAGE THE TRADE? TAKE MY PIPS WHEN I CAN…LOL!”
When the TRO_DYNAMIC_FIBS_SR_Trail displays the “BREAKOUT” message, you have 2 options:
1) Trade the breakout – should be obvious to the reader… just enter the trade in the direction of the breakout.
2) Wait for the reversal – this one is tricky. If you are a NEWBIE, use a 10 pip trigger instead of 5 and let the M15 breakout bar close. If you are not a NEWBIE, switch to M5 and wait for the bar to close. What you are waiting for is for price to stop and reverse direction – a candle of the OPPOSITE COLOR!!
3) What you do NOT want to do is enter a reverse trade on the bar that is breaking out unless you want the banks to drain you.
TRO_DYNAMIC_FIBS_SR_Trail in TRAINING WHEELS mode will NOT signal the “OK TO TRADE” message on a breakout bar.
NOW GET OUT THERE AND START DRAINING!!
So basically when price surpasses the blue/red dots (support/resistance) then you can enter the trade as a breakout. I would suggest doing this during the high volume trading periods. Like I said before, I trade the classic DTB reversal so will not be taking these breakouts. However researching the DTB breakout will give me something to ponder when waiting for reversals and hopefully improve my knowledge on the system as a whole.
**NEWBS LEARNING HOW TO DTB**
I. What is this?
This guide is designed to give you a better understanding of what a noob is, how to recognize them, some details about them, and how to avoid or get rid of them. It mostly applies to online forums, which are the main targets of migrating noobs.
II. Defining ‘Noob’
Contrary to the belief of many, a noob/n00b and a newbie/newb are not the same thing. Newbs are those who are new to some task* and are very beginner at it, possibly a little overconfident about it, but they are willing to learn and fix their errors to move out of that stage. n00bs, on the other hand, know little and have no will to learn any more. They expect people to do the work for them and then expect to get praised about it, and make up a unique species of their own. It is the latter we will study in this guide so that the reader is prepared …
Now that has been cleared up I wanted to do a little experiment with the newb friendly classic dtb reversal. It goes like this:
- Download the DTB indicators/templates from http://www.kreslik.com/forums/viewtopic.php?t=1897
- Install the indicators/templates to your MetaTrader folders
- Load the template on the h1 chart
- Open the indicator list and select tro_dynamic_fibs_sr_trail
- Ensure show target, sound alert and training wheels are set to true. Change the ipips trigger to 10 or use the default 5. Also enable idiot mode if it applies to you
- Listen for sound alerts that inform you when a semafor appears on a h1 candle
- When a semafor appears switch to the m15 chart
- THE TRAINING WHEELS WILL TELL YOU IF IT IS “OKAY TO SHORT” or “OKAY TO LONG”. IF THE TRAINING WHEELS STATE “WAIT” or “RESISTANCE/SUPPORT BREAKOUT” THEN DO NOT TRADE THE REVERSAL!
- Wait for the breakout candle on the m15 to close
- If price reaches the indigo/magenta trigger on the m15 non-breakout candle then enter the trade. DO NOT ENTER IF PRICE OPENS OUTSIDE THE TRIGGER ZONE – BELOW THE TRIGGER FOR A SHORT/ABOVE THE TRIGGER FOR A LONG!! m1/m5 price action must agree with the reversal direction. You can use the multi meter indicator to show you this information
- Only trade when there is a semafor on the current/previous h1 candle
- Take Profit @ 5+ pips
- Stop Loss @ break of s/r
- Have a small target for the day and then quit. Do not overtrade
- Reversals are more reliable when taken during quieter “reversal periods”. E.g. London/NY lunch, end of NY session
- Make sure there is enough range for you to get your pips
- Send me a comment/email if you need help
- More info@ http://kreslik.com/forums/viewtopic.php?t=1744
**SOMETHING MUST HAVE PAID OFF**
Well all the brain bashing I have done seemed to be advantageous today. I took 2 trades during the “reversal period” and won both, therefore met my 10 pip target in 2 trades. The h1 breakout targets had not been reached but as it was the “reversal period” I was not to concerned as price did not have enough volume to breakout further. The entries were on m15 triggers (non-breakout candles) and followed m1/m5 price action.
**CLASSIC DTB REVERSAL RULES REFRESHED**
I have learned so much since I orginally posted the rules that I am posting an updated set of rules here.
Look for classic DTB reversals between 11:00am/13:00pm London time, and after 16:00pm London time. Avoid the news.
- h1 semafor
- Wait for h1 breakout target to be reached (not so important if trading during the reversal periods)
- Switch to m15
- Wait for m15 breakout target to be reached (not so important if trading during the reversal periods)
- Enter on the m15 trigger if the m1/m5 price agrees
- TP@ 5+ pips
- SL@ break of S/R
- If price breaks S/R then go back to step 4
**REVERSAL TIMES FOR DIFFERENT TIMEZONES**
The following times are the best times to look for reversals when the market is not so active. It is better not to reverse during the over active hours as I mentioned earlier – price is liable to breakout during these times. Just as you would probably not want to trade a breakout during quiet times as price may not have enough volume in trading to move through support/resistance.
NB: These times are flexible if you are watching the market and can identify when volume is indicating a reversal opportunity.
6:00am NY to 8:00am NY
11:00am LONDON to 13:00pm LONDON
12:00pm PARIS to 14:00pm PARIS
I found this quote interesting. “It’s important to understand that currency prices are CONTROLLED by the interbanks so that money can be made by trading UP to resistance and DOWN to support! The banks (and any decent trader) ALREADY KNOWS these points and times” and can profit accordingly.”
**DAILY TARGET REACHED**
Thankfully I reached and surpassed my daily target of 10 pips. I am up +50 for the day. The most important thing I will take away from today is timing of the reversals. When markets open this can cause increased trading volume and make price liable to breakout. I should wait until at around 10:30am London time to begin looking for classic DTB reversals and stop looking when New York opens. Then I can start looking again if my 10 pips was not achieved when New York begins to calm down around 15:30pm London time. Of course, important news releases should be avoided at all times.
**A POINT TO MAKE REGARDING BREAKOUTS AND TRADING TIME**
We know the importance of waiting untill the breakout target is reached before reversing and the importance of taking reversals during the quieter “reversal periods”. BUT, my concern is if waiting for the breakout target is counter productive during “reversal periods”. Do I really have to wait for the target to be reached when market volume is so low and the market is moving at a pedestrian speed? I have a funny feeling that reversing before breakout targets are reached during “reversal periods” may be safe. Only time will tell.
**DRAIN THE BANKERS**
**WHEN IS THE BEST TIME TO LOOK FOR CLASSIC DTB REVERSALS??**
If I knew the stone cold answer to this I would be a very happy man. Unfortunatly I do not know the stone cold answer to this nor do I know if the perfect time exists. Imo nothing can be deemed perfect with any trading method. BUT, I can safely say that I have won more trades during the London & US quieter/lunch periods and I have lost more during the London & US opens. This is due to the high volume at opening times that leaves price liable to breakout rather than reverse. I would put my neck on the line in saying that classic DTB reversals are best taking at the following times (LONDON TIME):
10:00am – 13:00pm
Of course you do not have to follow a time schedule if you are constantly watching the charts. You can just take reversals depending on the volume/price action at any given time. “Trade what you see” so to speak.
I mentioned earlier I would compile together and post up some notes that I gathered relating to classic DTB reversals earlier in the year. There is some useful information regarding the best time to look for reversals here from fellow DTB traders and myself:
- Trade breakouts during the London open. h1 semafors usually mean breakouts during this time. Avoid reversals or you may well get caught on the breakout.
- Okay, I am in 3 lunchtime reversals from the DTB triggers. Initially we had a mini breakout but I was not too concerned as breakouts during lunch are usually false. Each trade is averging 10+ pips.
- LUNCH TIME REVERSAL TRADING 11:00am (ish) to 13:00pm (ish) GMT and 17:00pm (ish)
- 1. False breakouts – do not trade breakouts as there is not enough “Big Dog” pressure to make them significant enough to risk
- 2. Reversals on DTB triggers are good during these times but still be aware of the mini breakouts
- During London open up untill lunch (8:00am to 11:00am GMT) I took some unbelievable breakouts!! Reversals would have lost during this period. So much market pressure there are pips to be made!!
- Wait for resistance or support to be broken (red/blue dots) and then enter. The closer to lunch the smaller the breakouts.
- During the quieter times (London lunch and after 16:00pm) u can take reversals from h1 semafors for good pips.
- Looks like prices breakout untill lunch, then reverse twice (up triggers and then down tiggers or vice versa) then continue to break out in the next direction. Maybe not everytime just an observation.
- If the h1 candle is in the direction of the reversal trade (even better if the last 2 hrs are) then this is a good sign to reverse on the trigger.
- Reversals are very good after 11.00am GMT!!
- 8:00am untill 11:00am breakouts!!
- What I have learned is that breakouts are good from 8:00 am until 11:00 am, then when the “Big Dogs” go to lunch it is reversal time!
- Breakouts: 8:00am until 11.00am GMT and New York open untill New York lunch (trading the momentum with breakout volume) When it doesnt breakout you get reversals. Reversals: During lunch hours.
- Buzzard reversal = 3 or more h1 candles in the same direction – Look to reverse
- If there is a breakout during lunch, good chance of a reversal. “BIG DOGS” ARE NOT PLAYING THEN SO GET THE REVERSALS!!!
- Semafors are more reliable for reversals during slow times.
- Take reversals 20pips from the breakout. (Red dot is broken so wait for the breakout to go 20pips then reverse – during reversal time not “big dog” time). NB: This is the breakout target that I have discussed many times (Gold Box).
- AGAIN – REVERSALS DURING LUNCH!! BREAKOUTS EVERYWHERE ELSE WITH THE BIG DOGS!!
- USA lunchtime starts at 11:00pm (4:00pm London time).
- Get out of breakouts before lunch starts (I am not taking breakout just classic DTB reversals – this is advice for those taking breakouts).
- If candle has just made a new dynamic support or resistance DO NOT go for a reversal trade!!! Wait it out…If price fails to make a new high or low then it is reversing!! (E.g Look at the m5 to see if there is no new high or low then it is reversing).
- London open (3 and a half hour of breakouts – wait for lunch @around 11am then take the classic DTB reversals).
- LUNCH TIME TRADING 11:00am (ish) to 13:00pm (ish) London time. This is reversal time.
- American session: The next revival of the Forex market begins at the opening of the market in New York at 13:00 London time. At 17:00pm London time the European market closes and the U.S. financial system remain the only active market. This heavily affects the rate of the dollar to other currencies.
8am GMT to 11am GMT – heavy traffic/good for breakouts
11am to 1pm GMT – Slow traffic/good for reversals
1pm to 5pm – Revival of market.
As you can see from these notes I compiled a while back my suspicions regarding the best time to take reversal have been confirmed. I have blamed the news for loses during the time I have been running this blog but I also failed to realise that I had been taking reversals during so called “breakout” periods. As I only require 10 pips a day I can achieve this by taking trades primarily during reversal periods.
I believe that 11:00am London time is slightly late to be taking reversals and believe that reversals can be scouted from 10am London time all the way up untill the New York open. Although 11:00am London time is the IDEAL time. If my 10 pips have not been achieved by the New York open, I would wait untill 16:00pm London time (New York lunch and approaching the London close) for the next quieter period to take my reversals and make my 10 pips.
It never fails to amaze me how each day I discover something new (or forgotten/ignored) about the classic DTB reversal method. It is simple yet requires the trader to be vigilante and aware of other factors such as the news, breakout periods/candles, money mangement amongst pure common sense and intense discipline.
Just to back up the claim regarding taking classic DTB reversals from 10am London time, I took a 10 pip winner at 10:15am London time whilst typing the above post! This helped to make up for some of the losses I had taken this morning during the London open “breakout” period. Here is the screenshot:
Although I did take a loss after that and before 11:00am London time on the GU. So, maybe all the notes I collected that state take reversals from 11:00am to 13:00pm London time are justifiable. Here is the losing trade (NB: Non-breakout candle, but we are still considered to be in breakout time):
I will see what happens during London lunch today and report back.
Well I took the UJ for a loss after 11:00am London time. It should be noted that the trade was executed before 11:00am London time and could therefore be deemed a non-reversal period trade. I will not give up and see what happens for the next 2 hours.
I re-entered on the next trigger as the h1 had a semafor and the m1/m5 price action agreed, non-breakout candle and non-breakout time (after 11:00am London time).
I took a reversal on the UCAD. h1 semafor, m15 trigger, m1/m5 price action, non-breakout candle and non-breakout time (after 11:00am London time).
During the “reversal period” today (December 15th 2009) I took a total of 6 reversal trades. 5 winners and 1 loser for a total of +22 pips. had I not traded during the breakout period today then I would have won my 10 pips for the day and been happy. However hinsight is a wonderful thing and in reality I did trade the breakout period and lost enough to still be down 6 pips for the day. BUT, I have learned immensely about the importance of what time to trade reversals. I will go over my past results recorded in this blog (daily statements) to check if the time of my winners vs losers agrees with the principles brought up today.
It seems as though by only taking reversals during 11:00am to 13:00pm London time, there is enough opportunity to get at least +5 pips per reversal and my 10 pip target for the day. However if the target is not reached by then there is always the other reversal period which is after 16:00pm London time.
I did continue trading for the second reversal period as time approached 16:00pm in London. I had 2 big winners that made up for todays losses during non-reversal times and put me suprisingly on +50 pips for the day. See above post “Daily target reached”.
**SERIOUS DISCIPLINE PROBLEM!! ERM, JUST BAD TIMING IMO**
This is the main reason I have put live trading on hold. I cannot stick to the plan, period. I have lost 3/4 trades thus far today. 1 of those trades I did not even enter on the trigger. In addition to not entering on the trigger, the h1 semafor had already made a reversal for 5+ pips so I was “hoping” that it would reverse again. I know “Hoping” gets you absolutly nowhere in trading.
The 2 other losses I occured this morning were what I consider to be valid classic DTB reversals. Check the screens:
It may be fair to say that these trades lost as they were taken at the London open. Trading volume is high during this “Big Dog” period so there is a fair chance price has the power to break support/resistance. Perhaps this is what caused the losses? If you look at the screens you can see price was moving fast and by large margins. I recall many of my successful trades and trading days recently have been when I have begun my trading day around 9-10am London time. That success could be down to allowing the market to settle before looking to take reversals. I will look into this further in future posts. If anyone knows more about the best time to take reversals then please do comment.
I remember earlier in the year when I first begun my experimenting with DTB I saved a few notepad files that included comments/chats/tips related to taking reversals. There was sufficient information related to the best time to take classic DTB reversals. The conclusion was that the best time is during lunch when the “Big Dogs” are away as the market volume is less and therefore price is liable to be weaker and reverse rather than breakout. I will dig these notes up later to do and summarise them on this page.
**PRACTICE WHAT YOU PREACH**
So I ramble on and on about waiting until price reaches the breakout target (price in gold box) before reversing. Yet I take a classic DTB reversal this morning (London time) before the breakout target is reached and make a loss. Luckily for me I made back the loss as 4 of the safesst classic DTB reversals were setup soon after on non breakout candles. But it goes to show why demo trading untill the trade is perfected is so important. Trading the classic DTB reversal untill discipline, patience and emotions are controlled is proving to be very important for me. Here is the losing trade:
In this next trade the breakout target was reached and the classic DTB reversal therefore safe. I took this trade on the trigger of the breakout candle as th m1/m5 price action agreed. It was a winner.
**TARGET ACHIEVED AGAIN**
Thankfully I achieved my 10 pip target today (December 14th 2009)in 5 trades. 4 winners and 1 loser. The loser was a stone cold example of what I have blogged about OVER AND OVER again. Unfortunatly it is taking me longer than it should to understand : DO NOT REVERSE UNTILL THE BREAKOUT TARGET HAS BEEN REACHED. I believe I do this due to emotions and the fact that I have had succesful classic DTB reversals in the past before the breakout target is reached. BUT, this is not the risk I want to be taking when on my live account.
The 4 winning trades all occured on non-breakout m15 candles which is the safest classic DTB reversal. Of course that is provided the current or previous h1 has a semafor and the m1/m5 price action agrees with the direction of the reversal. This was the case with my winning trades which you can view by selectin “December 14th 2009″ from the list located to the right.
**HOW TO DRAIN THE BANKS FOR DUMMIES – MUST READ!!**
First it is important that you read the post below regarding breakouts a million times untill you completely understand it. Perhaps more importantly apply what is mentioned in that post below to your trading untill it is second nature.
Okay so you have done that, here comes the good stuff. The screen below shows and explains exactly how to take a classic DTB reversal on a breakout candle (Video of a live trade to come soon). Remember the most important thing to consider before reversing is the fact that you must wait until the breakout target is reached. If the m15 candle is a non-breakout candle then enter on the trigger provided the m1/m5 multi-meter price action agrees.
**UPDATE RULES FOR NEXT WEEK – YET MORE IMPORTANT BREAKOUT EDUCATION**
The market absolutly wiped the floor with me this Friday afternoon (December 10th 2009).
Determined not to let this happen again, I am recording here why I believed it happened and will use this post as a constant referrer to each trade I take next week untill it baecomes second nature (still hard in training).
I have taken classic DTB reversal trades that have been profitable after the h1 breakout target (in gold box) has been reached. This means that I was not taking into consideration the breakout target on the m15 (SHOULD TAKE THIS BREAKOUT TARGET INTO CONSIDERATION HIGHLY AND DO NOT REVERSE UNTIL IT HAS BEEN REACHED OR A NON-BREAKOUT CANDLE IS FORMED) which can differ from the breakout target of the h1 if candle after the first m15 of an hour breakout closes.
So for example if the h1 breakout target is 1.5500, then 1.5500 will also be the target on the first m15 candle of this hour. However if the 2nd m15 candle breaks out then it will set a new breakout target (as will every new m15 candle that breaks out). All the time the h1 breakout target will stay the same untill the next h1 candle that breaks out. SO, let breakout candles reach their targets and then look to reverse. After a new candle is formed you will need to refresh your charts to rid of old breakout targets (you may confuse them to be the target of the current candle).
As I stated, I have had winning trades when only taking into consideration the h1 breakout target but it would cut down overtrading and make the classic DTB reversals safer if reversals are NOT taken untill the m15 breakout target is reached. It is hard to watch many reversal opportunities go by on the m15, but as I have a small target of 10 pips I would rather take the safest reversals. A few trades a day is all that is needed!
Below are screenshots of what I deem the safest reversal on breakout candles. These trades happened within 10 minutes of each other and were both good for 5+ pips. That is the daily target in 10 minutes.
Of course there is an even safer reversal which I have mentioned before. This is the reversal when the m15 candle is NOT breaking out, therefore does not have a breakout target. As long as the current or previous h1 has a semafor, you enter on the m15 trigger. This is the best trade for newbees and a 10 pip trigger can be used instead of a 5 pip trigger in this scenario (Change this in indicator settings).
**TARGET ACHIEVED + COMMENTS – VIP LEARNING POINTS**
Okay so I have achieved my 10 pip target in 2 trades this Friday morning (December 10th 2009). A few important points about today’s tarding and how I avoided potential losses that seemed like valid classic DTB reversals. VIP information:
- Waited before in anitcipation of news and after for market to calm down
- Waited for h1 breakout target to be reached before switching to m15 for reversal
I cannot stress enough how important it was today avoiding the news and waiting for the breakout target to be reached on the h1 & M15.
This saved multiple false reversals from being executed. Please read the above points a thousand times, they are the the main dangers to not being successful at taking classic DTB reversals imo.
In the post below you can see I made my 10 pip daily target in a few trades. I continued trading as I am practising the classic DTB reversal as much as possible. Here is a screenshot of my account after more trading. I am posting it because it shows if you continue trading you may win some and you may lose some. After winning and losing you can end up where you were. In this case I continued trading and did not gain more pips. The point I am trying to express is that I believe it is compulsory to have a realistic target (do not be greedy) and settle for that target. Once it has been reached quit for the day or perhaps risking what you have gained.
**10 PIPS AGAIN TODAY**
Today I made my 10 pip target again. This time in 4 trades as my 1st trade was a loser. See December 10th 2009 results for more.
**BREAKOUT TARGET REVISITED AGAIN**
I have mentioned the breakout target a few times. It is the price in the gold box. It is safer to wait until price reaches this target before reversing or else there is a high chance you will get caught on the breakout. I wait untill price is at least around 10 pips from the breakout target on the h1 chart. The breakout target will stay the same on the current candle but can change if the new candle also breaks out. For this reason I take into account the breakout target on the h1, without worrying so much (be aware) of the breakout target on the m15.
I personally believe that the breakout target is there to stop you attempting to reverse to soon after a candle has broken out. The creator of the method does state that it is better to wait to reverse after price has just broke out.
Take this trade for example. The h1 breakout target had nearly been reached so I deemed it safe for reversing:
The next screenshot shows that price was not near the breakout target on the m15. BUT, as the h1 target had nearly been reached I took the reversal. The trade was a winner. (NB: SINCE THIS POST I HAVE CONCLUDED THAT REVERSALS SHOULD NOT BE TAKEN UNTILL PRICE IS CLOSE TO THE BREAKOUT TARGET ON THE H1 AND M15).
**TODAY WAS A GOOD DAY**
I met my 10 pip target in my first two trades. I continued trading to get yet more practice on taking the DTB classic reversal. Well I can safely say I feel I am getting close to where I want to be discipline and confidence wise. A very important filter for bad trades is to wait for the breakout target to be reached (gold box price) before looking to reverse. See todays (December 9th 2009) results for more.
I cannot stress enough how dangerous this is. Most my losing days come from overtrading. Today (December 9th 2009) I have taken 2 trades and won both. I have met my 10 pip daily target. Now before I would have continued to trade and I can safely say I would most likely lose those 10 pips. So, one of the most important aspects of trading imo is to have a target and quit when the target is achieved. “Quit while you are ahead” as they say.
In addition I would say only take the perfect DTB classic reversals. There are enough of these opportunities every day, so there is no need to take “maybe” trades. Although some would say every trade is a “maybe” trade, you highly increase your chances of grabbing 5+ pips from a DTB classic reversal when the follwing is taken into consideration:
NB: It is better to miss many trades then to risk taking them
- h1 semafor (price must have reached breakout target – in gold box – before looking to reverse)
- m15 trigger (price must have reached breakout target – in gold box – before looking to reverse)
- m1/m5 price action
- TP@ 5+ pips
- SL@ break of s/r
- Avoid news
**THE POT OF GOLD**
I just wanted to explicity clarify something. The classic DTB reversal should not be taken untill price has reached (broken out) upto the price in the gold box. This price is visible when the option show_target is enabled within the tro_dynamic_fibs indicator. If reversals are taken before this target is reached then there is a good chance of price breaking out against you. PLEASE BE AWARE: You will need to refresh the chart once the candle has closed to get a new target (if applicable). E.g. The m15 candle will close and the target may still be there, so you will need to refresh the m15 chart to get a new target/remove the previous one.
**WHAT IS A LWP?**
An acronym for Long Wicked Pattern. In a nutshell it is a signal for a reversal to occur. More detailed information can be found at http://www.forexfactory.com/showpost.php?p=2455696&postcount=29
**BETTER VOLUME INDICATOR**
Advice from a fellow trader.
What is it for:
It is a confirmation indicator
If volume rises at the same time that price increases or decreases, this can help to confirm the move.
On the other hand, if price rises or falls and no change in volume, or a drop in volume, then it probably will not be sustained
There are differences of opinion about whether it is delayed
In the stock market, traders regularly use volume
In forex, since the market is decentralized, the numbers are approximations only, so not considered, in my reading, to be as reliable
**KEY LEARNING POINT TODAY**
This has not just arised from today, it is something that I have noticed and read about for a while now but through stubborness opted to ignore – untill now that is.
Wait for the breakout target to be reached (Gold Box with Gold Target) before looking to reverse. This should not be taken as gospel however as I have taken valid trades before the box was reached. It is just safer to wait. Then again I ask myself, “What to do if the box moves??”. Wait again.
**CLASSIC DTB REVERSALS BACK IN ACTION**
After my brokers server has been having problems I am back taking classic DTB reversals and having good results. See December 8th 2009 results.
**WHAT A LOAD OF SHI**
I was recommended to use the shi-channel as a means of determining ideal spots to take classic DTB reversal trades (top – sell reversals, bottom – buy reversals, middle – sell/buy).
I have experience using the shi-channel in the past. During my period of experimentation with the shi-channel I found it to be reliable on the h4 and higher timeframes, but found that it moved around too often in the smaller time frames and I therefore deemed it unreliable (as with most indicators).
I attached it to my DTB charts out of curiosity and looking back over today it looks great. The shi-channel is at the top and bottom of todays action. This would have gave us the ideal spots to look for the classic DTB reversal. Perfect!! Erm, no. I know for a fact that the channel did not pick out the top and the bottom in real time. If it did then we could pick perfect DTB classic reversal trades all day long.
I will not leave the shi-channels on my charts as I do not want to be distracted or hesitant when my trading. I am confident I have learned loads about the DTB classic reversal and can pick them confidently most of the time without needing the shi-channel. Most traders know that too many indicators can cause mass confusion and are in large uneccasary. My discipline is the main thing that lets me down. So, I do not want to add anymore indicators unless they will really make a diference.
I am 100% sticking with the way of taking classic DTB reversals (the original way that has worked for so many) that I have made so much progress with. Too many times I have got stuck into a way of trading only to confuse and frustrate myself by constantly changing it. I then go on to the next one and do the same. NOT in this case. I have identified my discipline as the main problem and this blog will not end untill I have this problem erradicated and I am a successful trader.
Watch this space whilst I trial the shi to see if it would have prevented trades that broke out…
**BREAKOUT TARGET – IF ANYONE KNOWS MORE ABOUT THIS PLEASE COMMENT**
If this option is enabled then a gold box will display a price that a breakout is aiming for. I did not consider this option before and I have still made good trades. However I did just see 3 classic DTB reversals that were only valid once price reached this breakout target. On a few of those pairs, taking a reversal before the target was met would have resulted in losses.
How important it is to wait until price reaches the breakout target, I have to say I do not know at this stage. However this is one of the main things I will look out for during this weeks testing.
**SAFETY FIRST – THE SAFEST M15 DTB CLASSIC REVERSAL TRADE**
There is an option using the DTB indicator that will tell you when to buy and sell. This is based on the safest trade. The safest DTB classic reversal is when there is a semafor on the h1, the m15 is on a non-breakout bar, and price is in the trigger zone, heading for the reversal trigger. See the screenshot below:
**BACK IN ACTION**
Well, after a dismal day I have finally earned a well deserved boost. My broker decided to allow me trade again (thank you – with irony) and I executed a classic DTB reversal on the GU for 5+ pips. A classic DTB setup: h1 semafor, m15 trigger, m1/m5 price action.
Please note. News was released 20 minutes prior to this trade. I deemed the entry to be safe as a new hour candle had begun. However it would have been safer to wait for the breakout target (in gold) to be reached.
Okay, another three trades set up and were all good for 5+ pips. I took two of them, but left the other as I was already in a trade. Here are the screenshots:
**A FEW MORE DTB TIPS**
I decided to re-read forum posts related to the DTB classic reversal. I found that people using the system have noticed these additional things that I have also noticed:
- If going short/long price must be approaching the trigger from above/below. This sounds obvious, but there will be trades where price opens on the trigger or below/above when you are looking to go short/long. Hence if this does happen you should wait for price to get within the trigger zone (5 pip zone). This will help prevent entering on the trigger of trades that may break out. E.g. Price is going up towards the short trigger on the m15. We want to wait for price to go above the trigger to see if it will break resistance before we go short when price makes its way back down to the trigger.
- When you see a semafor appear for the first time.. think BREAK OUT instead of thinking reversal.
- Gold number displayed in the gold box is the breakout target. When price is breaking out it would be wise to wait for this target to be reached. You can of course trade the breakout. However my blog is focused solely on the classic DTB reversal.
Well the screenshot below shows my action for the day. I had a fair few loses which I duely what I deserve for trading classic DTB reversals around news on multiple pairs. I am clearly finding it difficult to drill discipline into my trading, but I will prosper and not give up untill I have succeeded. Had I avoided news I had my 10 pips for the day. Of course, thats sounds good in hindsight. To add to my frustration today my MT4 platform/broker decided to throw me “off quotes” and “too many orders” errors that prevented me from placing trades. The market looked very unpredictable today anyhow and I am sure I would have caught a few more losers had these trades been executed.
I will not let the dissapointment of today hold me back, especially after the success of last week. Bring on tomorrows trading!
**HOW TO AVOID THE NEWS**
Please take this advice with a pinch of salt. Every news release/day has a different reaction. It is impossible to know what exactly will happen, but I can safely say that something will happen. Hence I am learning to back out of trading around news. Planty of other time to take classic DTB reversals and achieve my 10 pip target.
The obvious answer to this question is: DO NOT TRADE during important news releases. What I am trying to get at is exactly what time frame around the news I should not trade.
I originally thought 30 mins before and 30 mins after was the solution. Now I believe it is okay to trade up untill just before news, provided there is enough movement in the market and it is not frozen in anticipation of the news.
I have noticed from my observation of charts after news is that it seems like the safest option would be to wait untill a new hour begins before trading. So if news is at 9.15am, then do not trade untill 10.00am at the earliest. If we began trading at 9.45am today (news was released at 9.15am) then we would have got caught as the market was still reacting to the news upto 30mins after. After the 9.00am candle had closed, classic DTB reversals were valid from the 10.00am candle. If these were taken before, price would have broke out against us due to the news reaction still being present.
Take this screenshot of this mornings trading for example. I have marked the trades that were taken durign the news. Most of the were losses. The classic DTB reversal trades were valid ones, but the market was breaking out. This could be a reaction to important news. As you can see the trades I took after a new non-news hour began were valid and gave me my 10 pips for the day.
It will be very hard to pull back from these losses. I would have had my 10 pips and been very happy had I waited for the news hour to close. Again I am afraid to say clear signs of my lack of discipline/concentration are on show for all to see. This is something I really need to work on. I do not need to be trading during news periods especially as I am only targetting 10 pips per day. Plenty of opportunity at other times. Back to the drawing board for me.
**DTB classic reversal unofficial guide**
I feel that I have gathered a vast array of information related to the classic DTB reversal. Yes, some may say it is too simple to require a guide, but I beg to differ. There are other factors that are not expressed clearly enough on forums, that I have posted on this blog and will put into an organised guide. I should say however, this guide will not be published untill I am successfully taking 10 pips daily on a live account. This is when I will deem myself to be a DTB classic reversal trade expert and will have the confidence to guide others.
To be continued… (P.S. The majority if the information that will be in the guide can be found scattered around this blog – I just think it would be nice to have it organised into one document).
**WEEK DECEMBER 7th – 11th 2009**
The most important thing for me this week is to incorporate the points below that I need to improve on. I will be target ing 10 pips a day using classic DTB reversals. h1 semafor, m15 trigger, m1/m5 price action. Just to reiterate what I aim to improve on:
1 PAIR AT ANY TIME
1 TRADE AT ANY TIME
EXIT TRADE ON BREAK OF S/R
TAKE PROFIT AT 4-5 PIPS
AVOID NEWS COMPLETELY
I will be starting my trading day at 7am London time and will be looking to get my 10 pips and quit as soon as possible, providing opportunity presents itself. I will of course avoid rushing and forcing trades that do not exist.
**VIP INFOMATION – WHAT I HAVE LEARNED THIS WEEK & NEED TO IMPROVE ON**
Okay so to summarise, the first week of December was successful. I achieved my target of 10+ pips each day. Some days more, but I would have stopped trading at 10+ pips on my live account. I think I have learned some important points this week and need to improve on the following gaps in my discipline and confidence:
- Only 1 trade open at any time
- Focus on the reversal of one currency at any time
- Do not trade around important news releases
- EXIT a trade if it breaks support resistance. I have been lucky this week with some trades going upto 10 pips in drawdown before turning back in my favour. This is unrealistic for testing as I will not be doing it in my live account. Exit at break of s/r. Then I can always re-enter at the next trigger(s) to recover the loss(es).
- Stay in the trade for at least 4-5 pips. Perhaps take 3 if price action looks uncomprimising. Many trades a took 2-3 pips on this week ended up going for 5+. Thus I can achieve my 10 pip target in a couple of trades.
- CONCENTRATION. This should be at the top. If I am trading, then I should just be watching charts, nothing else. No gym and trading at the same time. No watching tv, No playing games, No trying different strategies, No nothing but trading the DTB classic reversals. I have been known to be awaiting for a DTB classic reversal to setup whilst doing something else and therefore I just miss out on the trigger (sometimes even enter after the trigger!). Even more frightening is placing a reversal trade, then looking away from the chart (perhaps to lift some weights) then coming back and trade has gone against me, through support/resistance (where i would have exited) and messed up my trade results for the day/week/month/year. Very silly way to trade. FOCUS IS KEY.
- Do not overtrade. This relates to why I should trade only one pair at a time and why I should take more profit if price action is favourable. 10 pips can be achieved in 2 trades. Next week I will try to keep each day below 5 trades.
1 PAIR, 1 TRADE, SL ON BREAK OF S/R, TP 4-5 PIPS, CONCENTRATION, NO OVERTRADING.
**10 PIP TARGET – 5 DAYS IN A ROW**
**ANOTHER DAY 10 PIP TARGET IS REACHED**
I have reached my target of 10 pips for the fourth day in the row. This is when I would quit if trading with my live account. I have found that when I continue trading after my target has been reached, I overtrade and my winners are cancelled out by losses. A few profitable trades a day is all that is needed.
I would have had my target earlier had I not made the mistake of trading around the news which is where my substantial losing trade was made. I also need to wake up and take a coffee or two before trading as looking at the charts half asleep is unprofessional and a recipe for disaster imo. I also feel a bailed a few trades to early at 1-2 pips that were good for 4-5 pips.
Here is a screenshot of todays trading:
I took a few more DTB classic reversals today (December 3rd 2009) making sure I avoided the major news releases for the rest of the day, especially after my losing trade during news earlier today. Here is a screenshot of all of today’s trades:
*UPDATE: I conducted a few money mangement plans after those posted below and have decided I will risk 4-5% of my account per day when I go live. This is what I am personally comfortable with although some may consider 4-5% slightly risky. As I will not be investing large amounts into Forex I need to use more than 2-3% risk in order to see faster gains. I have studied and planned for hours, days, weeks and months to be successful at Forex and the plan is to trade as a career. Forex is not just a hobby for me, but how I want to make my living.
I have created two documents covering money management. The first option focuses on increasing risk by 0.1 lots per week considering a pips value is $1. The daily target is 10 pips and starting balance $500. The first week of trading is with 0.2 lots or $2 per pip. Over 5 months the account increase steadily and healthily. 10 pips is a very realistic daily target when trading DTB classic reversal trades. The document that I compiled proves that this is all that is required to see good growth in an account starting at only $500.
DTB Classic Reversal Money Management Option #1
Increase lots by 0.1 each week. Implying that 0.1 lot is equal to $1 pip value.
|January||Account||Lot Size||10 Pip Target||Daily Total|
|February||Account||Lot Size||10 Pip Target||Daily Total|
|March||Account||Lot Size||10 Pip Target||Daily Total|
|April||Account||Lot Size||10 Pip Target||Daily Total|
|May||Account||Lot Size||10 Pip Target||Daily Total|
The second option is to risk 2% of your account each day/trade. This leads to slower gains but is for the more conservative trader. I did not calculate five months as with the previous option because it is very time consuming and not the money management option I am going to opt for. I will be opting for option 1. I do believe you could risk more than 2% and see a faster increase in your account, BUT it would be riskier.
DTB Classic Reversal Money Management Option #2
Risk 2% of the account each day. The risk can be increased up to 10% which would quickly increase the account. However this is considered very risky and 2-3% risk is considered normal/high.
|January||Account||2%||Lot Size||10 Pip Target||Daily Total|
|February||Lot Size||10 Pip Target||Daily Total|
|March||Lot Size||10 Pip Target||Daily Total|
So to summarise, it does depend on the individual trader. How much investement they have, how much risk they are willing to take. I myself believe increasing trade volume by 0.1 lots per week gives a balance between risk and time. I will not have to to wait months on end to see good profits and at the same time I will not be exposing my account to uneccasary risk.
**DAILY TARGET REACHED (OFFICIALLY)**
I have reached my daily target of 10 pips (Decmeber 2nd 2009) again. I would have reached this target hours ago but I was given the “off quotes” error as I described below. Well I kept my chin up, kept trading and eventually got my daily target to show on my statement.
**HOW MUCH PROFIT TO TAKE REVISITED**
I take a few pips, period. My target is 10 pips a day so a few pips is all I need. I am sure some of my results that show me taking 2 pips, 3 pips, even 5 pips have people saying “Why did you not stay in the trade for more?!” An example of this is happening now. I took 5 pips on the EJ and it has reversed 30+ pips! But I can assure you there will be occasions when price will reverse just a few pips and then go against you. Like I said before, my money management and target of pips mean that I can afford to just take a few pips whilst not being to concerned about those that I missed, albeit I may be a little dissapointed. To summarise, it is upto the individual trader, dependant on their goals. My advice for those wanting to chase the big runs is to use a break even when profit is realised.
**H1 CHART – FOR THOSE WITH LESS TIME**
For those traders out there who want to take DTB classic reversals but do not want to watch the charts all day then I suggest take the trade this way: Check every hour for a semafor on the h1 chart. If there is a semafor you are looking to reverse in the opposite direction. So, enter on the trigger provided price has not already passed the trigger in the previous bar. No trading reverses on breakout candles unless you are prepared to watch m1/m5/m15/m30 price action. Here is an image to show what I mean:
**OFF QUOTES MESSAGE**
Well today (December 2nd 2009) I have made my 10 pips as far as I am concerned. I was attempting to enter on the trigger of a few trades and got the “off quotes” message. Absolute nightmare and completely unfair after the amount of time and effort I have put into learning how to trade the Forex. I am counting these trades as winners today as they went for 5+ pips and I was attempting to trade them for 5+ pips but the “off quotes” error was preventing me from doing so. If anyone knows why this problem occours then please let me know. It is very frustrating, although I do not expect it to happen when I trade live. I will certainly not be trading live with this ECN broker if I keep getting “no connection” and “off quotes” messages.
The message has since stopped this morning (although I did not get to take some trades I was attempting to!) and I have taken a few more successful trades since. Check todays results from more.
I am sure I am not the only one who suffers from morning syndrome when it comes to trading. I cant seem to get into trading for at least a few hours. Looking at the screen with tired eyes and a sleeping brain is a catalyst for bad trading imo. Luckily DTB classic reversals can be taken anytime of the day. With my target being just 10 pips then perhaps I do not need to be trading during times when I am liable to make unneccasary mistakes.
**WHAT TO DO IF PRICE GOES AGAINST YOU**
So, you see that perfect DTB classic reversal setup (as I did earlier today). h1 semafor, check. m15 entry on triggger, check. If m15 is on a breakout bar then make sure price action on the m1/m5 agrees with the reversal, check. It looks like the perfect enty but price goes against you and makes a new level of support/resistance. As I am sure those of you who read forum threads over at kreslik.com know, you should re-enter on the trigger after the new level of support/resistance is formed. As I stated in a post below, you may re-enter upto 3 times.
Now I will clarify the options I would consider:
- Close the trade that goes against you as soon as support/resistance is broken (around 5 pips)
- Leave the trade open and hope that price will at least make it back to break even (risk losing alot more)
- Whether you chose option 1 or 2, the third option is whether or not you should re-enter on the next trigger provided the trade is setup again.
- If you re-enter on the next trigger you can take the normal 5+ pips to cancel out the losing trade or stay in for 10+ pips in the hope that you will cancel out the losing trade and make 5+ pips (as I did on December 1st 2009).
I am going for option 1 and 3. If price goes against me I will exit for a lose of 5 pips. I will then re-enter on the trigger and look to make at least enough pips to cover the loss. Depending on price action at the time I may stay in the trade to make some extra pips on top of those that cover my loss.
**DAILY TARGET OF 10 PIPS ACHIEVED +MORE**
I made my 10 pips in two trades. I continued trading classic DTB reversals as I am using a demo account and have the luxury of having enough time to watch forex currency charts all day (if you can call that a luxury). When I am consistantly making 10 pips daily I will go live and at all costs will not trade beyond this goal. I plan on posting my money mangement spreadsheet soon that will further backup my reasoning for targeting what some consider a small amount of pips (not myself I hasten to add).
TRADES TODAY: 8 trades/ 8 wins. See screenshot below. Of course these results are subjective as I would have stopped trading at 10+ pips on my live account.
Just after I posted this I took another trade for good measure +4 pips:
So thats 9/9 trades for today.
**WHY I WANT TO STOP TRADING FOR THE DAY AT TEN PIPS**
So I make my 10 pips for the day. I continue trading and take some more winners, all good? Not exactly. I become over confident and take more trades resulting in loses (only one lose that I did not close – I allowed it to go into -10 drawdown in order to test the re-entry method). The following trade was setup for a classic DTB reversal. h1 semafor, m15 breakout bar closed and the m15 trigger was hit. The m1/m5/m15 candles were all agreeing with the reversal. I entered the trade and would have been stopped out. Again, a prime example of why to quit when you are ahead in trading.
The creator of the DTB method does state “If the trade goes against you and forms a new level of support/resistance get ready to re-enter at the trigger”. They also go on to say that they have “re-entered upto three times”. I will apply this to the trade shown above. Here is my first re-entry on the trigger after a new level of resistance was formed.
Well, the second entry I would have clawed back the 5 pips I lost (I would have closed the trade on -5 pips) from the first trade that I took on the trigger before price broke out. However, the original and second trade both reversed into profit as the following screenshot shows:
**THE 5 PIP TRIGGER ON THE M15 CHART**
A few people have asked me about the trigger I take on the m15 chart. Just to clarify even further this is how I trade classic DTB reversals:
- h1 semafor on current/previous candle (I look to reverse in the direction opposite to the semafor)
- Switch to m15 and wait for price to hit the trigger.
- Enter on the trigger and take a few pips.
- Do not trade breakout bars unless the m1/m5 agree with the reversal.
The trigger is 5 pips from support/resistance. The logic behind this is that if price moves 5 pips (the trigger) from support/resistance then the reversal is on for at least a few more pips. I will trade a breakout m15 bar provided the m1/m5 candles are going in the direction of the reversal. As I mentioned previously, there is a “multi meter” indicator that will show you what price is doing on all timeframes. This means that I can trade from the triggers on the m15 without having to switch to the m1/m5 chart to see price action.
Now for those new to the DTB classic reversal: You can use a 10 pip trigger and enter on the m15 chart without having to worry to much about the m1/m5 chart price action. As I type this the GU and EU have had two 5+ pip scalps from the 10 pip triggers on the m15. I will post the screenshots in todays results (December 1st 2009).
**BEST REVERSAL TIME**
When the “Bigdogs” go to lunch during the London session (11am to 13pm London Time) price tends to reverse due to the decrease in trading volume. At times when the volume is high then price is more likely to breakout. Therefore the London/NY lunchtimes may be the best time to take reversals. Although we are only trying to grab 5+ pips from classic DTB reversals so in theory they can be taken anytime and we still have a good chance of getting those few pips.
Along with overtrading (and perhaps hand in hand with it) my other kardinal sin is most certainlypair hopping. I do this like there is no tomorrow. Sometimes I will have 8 pairs up and flick through them constantly waiting for oppotunity. An obsolute catalyst for frustration imo.
Not only do I not have a clear idea of what an individual pair is doing at any given time, I also end up making irrational decisions. PLUS, the DTB template that I am using (rev8) has an alert option when a semafor appears – so another reason to elimante the need to jump from pair to pair. This leads me onto my target of 10 pips a day as I mentioned below.
I want 10 pips, period. No more (well I would not be complaining) and no less. So why do I feel the need to eyeball 8+ pairs all day long as if they are going out of fashion? Well the answer is that I dont! My arguement for doing this is that I am testing a method and therefore want to get as many opportunities as possible to try it out and get used to it. Well the DTB reversals tend to happen at the same time on different pairs so I am therefore juggling trades and not really concentrating on any one! This is most certainly a recipe for disaster and obviously not the way I will want to be trading live. Hence my results could be deemed unrealistic. Besides my low investement will not allow me to have more than one trade open at a time (nor would my stress levels for that matter).
So, from here on in I propose to have only one trade open per time, win or lose 5 pips per trade and end my day at +10 pips (provided I reach this target). I have to say I feel this realisation is another feather in my cap of becoming a successful trader. Albeit a year into the game. Additionally the creator of the DTB method did clearly state to me, “I highly suggest you master this trade on one pair!”.
**TOMMY TEN PIPS, THATS ALL**
As I have read a million times and I am sure many of you have: 10 pips is all it takes to increase your account by 2% a day. This may not seem like much to some people, but 2% increase on your account soon adds up. As your account increases so will the value of your pips. Before we know it we will be trading 5 standard lots and making around $500 per trade. Forex is long term, no quick way to these figures unless of course you have a hefty investment ready.
When I go live with my ECN broker and take classic DTB reversals I will be aiming for 10 pips a day. I am fed up of attempting to chase 50+ pips around all day and getting into a complete pickle doing so. A few more reasons why a will be aiming for 10pips:
- Avoid overtrading
- Less stressfull
- Realistic target
- Suitable for DTB reversals
- Allows for a 2% daily increase
- Less Risk (potentially, but Forex is very unpredictable)
- Less commsions paid to the broker
- Potential to finish trading in the morning/early afternoon and therefore have the rest of the day to do other things that I enjoy (Yes, I do enjoy trading and would not have spent so many hours educating myself on it had I not).
- STICK TO ONE PAIR – DTB classic reversals tend to happen at similar times on different pairs. Pairs will breakout and then reversal at the same time. Due to my low initial investment and the fact that I am only targeting 10 pips per day it is in my best interest to trade just one pair. There are enough DTB reversal opportunities on each individual pair for me to reach my target in doing so.
**NEXT WEEKS TEST**
I will take classic DTB reversals on the m15. I will trade breakout bars depending on the lower timeframe action of the m5 and m1 charts. I also plan to look at the feasability of trading breakout bars for a few pips – UPDATE: Lower timeframe price action can be reliable provided price is on the m15 trigger and the multimeter shows the m1/m5 candles are going the way you want to reverse.
**BREAKOUT BARS REVISITED**
Well, I posted a few days ago mentioning how to never take a DTB classic reversal on a break out bar of the timeframe you are taking the reversal triggers from. As I look for semafors on the h1 then look to execute the trade on the reversal triggers of the m15 I would avoid trading breakout bars on the m15. However, I have noticed from observing the charts “intensively” that these bars can be traded if you know what is happening on the smaller timeframes – eg. m5 and m1.
The DTB method comes with a FREE indicator (I will never in my life pay for any indicator/system/EA/whatever you care to offer me) that shows you what price is doing on these smaller time frames without you having to switch to them.
So in summary, if the m15 is on a breakout bar –> Look at price action on the m5 and m1 charts to see if the reversal looks like happening, if it does look like happening, then BOOM! Enter at the trigger on the m15 breakout bar. Risky? Maybe.
The creator of the DTB method does state you can even go down to the m5 chart and wait for the breakout bar there to close and enter on the trigger there. However, the triggers are in the same place on any timeframe (5 pips from support/resistance) so it makes little difference imo. Of course, looking at the smaller charts will give you a clearer view of price action, but the indicator mentioned previously when attached to my m15 chart is enough to tell me if I should enter the reversal on the breakout bar without having to check the m5/m1 charts. The indicator tells me if the m1/m5 are going in the direction I want to reverse.
Only future testing will tell me whether it is safer to wait for the m15 breakout bar to close. The reason I have opted to attempt to take reversal trades on m15 breakout bars is because many times I have seen this happen when not trading m15 breakout bars:
- h1 semafor (look to reverse on m15)
- m15 breakout bar (wait for it to close)
- Enter at trigger on new bar
- BUT, the new bar opens above/below the trigger and the reversal has already happened (during the breakout bar)! Too late then, unless the reversal sets up again.
So, I will next week take DTB classic reversals when
- h1 semafor
- m15 breakout bar
- Watch price action on m5/m1 timeframes to see if the reversal looks on
- If the reversal looks on then enter on the trigger of the breakout bar
I am not sure if this can be deemed a riskier trade than waiting for the breakout bar to clsoe on the m15. The whole point of this blog is for me to attempt to become an expert at taking these classic DTB reversals, so by testing the various ways to execute on the trigger I hope to find which option suites my style of trading and discipline. Subconsciously I believe that waiting for the m15 breakout bar to close will give me more confidence. BUT, why should it when on the lower time frames the real price action is happening and can be found. As I am looking for a few pips here and there then perhaps that is what I should be looking at.
A good weekend to you all. If there is anyone out there.
**UPDATE & SCREENSHOTS**
Okay so I have been posting results/progress/advice on the DTB classic reversal for around 10 days now. I plan to keep posting untill I master the DTB classic reversal. It may take weeks, it may take months. I have targeted the end of this year for myself to be ready to trade this method live next year. I will post money management to supplement the method in the future provided I do have the discipline and will to make this methid work for me. I am however going to stop posting screenshots of every trade as it is time consuming but more importantly I have already posted enough examples of what a classic DTB reversal looks like. They do often look similar. Picture this: h1 chart with a semafor on the candle, m15 with a reversal from support/resistance moving 5+ pips from the trigger. It is that simple. The hard part imo is what to do when the m15 bar is breaking out and you want to take a classic DTB reversal. That leads me onto my next post (see above).
Again, I will keep this short and sweet. The DTB classic reversal works because price tends to bounce a varied amount of pips from support/resistance. It is impossible to understand or predict why/how many pips this will be. Sometimes it will reverse a ton of pips but others a few pips. Henceforth, I take around 5 pips. Just as I would lose around 5 pips if price went back through support/resistance. The key is to win more than we lose. The creator of this method takes around 5 pips which gives me yet more confidence in this figure. DONT BE GREEDY PEOPLE! By holding in there for that few extra pips you are risking the trade going against you. I take profit as soon as I see it.
Im going to keep this short and sweet. When trading DTB classic reversals I believe the best stop to be breakout of support/resistance. So around 5 pips . If you enter on the trigger and price decides not to give you those few pips then dont let it take more than a few pips from you. If price does go against you, you can if you want re-enter on the next trigger opportunity provided the bar is not a breakout bar! Simple as.
**NEVER LOSE AGAIN, REALLY?!”
Of course this statement does not apply to any Forex trader that has ever existed. There will be losing trades/days/even weeks/months/years! However taking the DTB classic reversal is as safe as I have ever felt trading Forex. Today I felt like pac man eating up a few pips here and there. Please be aware that I am an intraday trader looking to gather a few pips, not a long term trader who can afford to have a huge stop and massive drawdown in order to bring pips in by the truck load. Remember a 2% increase can go along way. Heck, even if each DTB classic reversal was a 2% increase and you took 5 successful ones a day then you would have increased your account by 10%! Of course I am still in early stages of testing (although I did first get involved with DTB back in March time) so I plan to demo trade for at least the rest of the year before going live ECN style, no bucket shops please.
My goal today is to try to determine if reversals should not be taken when the h1 is breaking out, not just the m15. I have had 5/5 successful trades taking classic DTB reversal trades during the London open. On some of these trades, the h1 was breaking out and therefore in do not reverse mode. However I was trading on the m15 and waited for the m15 to stop breaking out and took the reversals. So my question is: Should not trading breakout bars only apply to the timframe I am taking the trigger on? Coming back to this point. Of course if you waited for the h1 breakout bar to close you may aswell just take the trigger on the h1 chart. However today I made many a classic reversal on h1 breakout bars, using the m15 chart provided it was not on a breakout candle.
**DTB CLASSIC REVERSAL RULES PAGE ADDED**
I have added a page with the rules for a classic DTB reversal trade and an example. I will add to this page any tips I discover during testing. My tip for today would be to avoid trading half an hour before and after major news (see http://www.forexfactory.com/calendar.php). Of course you should not enter reversals on breakout bars either. Infact some of the most accurate DTB classic reversal trades I have taken were when the h1 candle closed with a semafor. I then took the reversal from the trigger in the h1 provided it was not a breakout candle.
**THE RAT LEARNS A NEW TRICK!!**
Well after my well documented fall from grace attempting to trade m5 rat reversals in one direction, I have made an interesting observation on the charts. The “Rat” pattern is still valid – Candle of opposite color closes, enter at this candles high/low. However the new trick is to trade this way on the h1 and in whatever direction the pattern appears. NO just be a green rat or just be a red rat business. Heck, I dont even want to be in the Rat Race! Observe the EJ with this method and see if you have the confidence to trade it live. The attractive nature of this method is less screen watching and the ability to place set and forget (easier said than done) orders.
**GOODBYE RETAIL BUCKET SHOP, HELLO ECN**
Well after careful consideration and a fair amount of spikes I have decided to take what I believe to be a big move in becoming a successful trader – Leaving my broker who consistantly trades against me to join an ecn who will give me honest quotes and behave whilst I am trading. This is especially important as I am a day trader who relies on small spreads, fast execution and no bs requoting or spikes. If I am going to be taking reversal trades for 5 or so pips then why the hell am I going to want to pay 3 pips plus on the spread. I feel like I will be giving my money away and making trading harder than it needs to be.
**TRADING HORIZONTAL LINES – MY EXPERIENCE**
I have taken some nice 5+ pips trade on a few pairs by entering on the horizontal lines (drawn every 10 pips) using the h1 chart. If an up candle approached the line I went long and if a down candle approached the line I went short. There were many opportunities I have seen to take this trade for profit that I was unable to trade as I was buisy with other pairs. I will keep taking these trades and post up my results along with the classic DTB trades. Just to clarify, with the classic DTB trades I am waiting for a semafor on the h1 and then taking entries on the m15 triggers. I am not trading on breakout candles (both m15 and h1 apply).
Well, after repeated Rat Reversal losses, I have opted to stop testing the rat reversal way and go back to the traditional DTB reversal which has proven (?) to be successful in the long term. Many traders claim to use this method with great success. Therefore testing as of November 24th will consist of reversals where a semafor has formed on the current or previous h1 candle and the trade will be executed when triggers are hit on the m15 chart. I will keep it that simple.
This week I will only be taking green rat reversals above the weekly open and from within 20 pips of the daily low. YES, this will give less opportunities but I am hopeful the opportunities I do get will be successful ones. One of my biggest mistakes is overtrading and this should help stamp it out. In addition to this I have been taking green rat reversals above the weekly open (regardless if price is within 20 pips of the low) and needless to say there have been a fair few loses. Its mid afternoon (london) on monday and I have not had a perfect green rat reversal setup on the pairs that I trade. Like the creator of the method says, you only need a few trades.
**ENTRY RULES EXTENDED VERSION*
Choose your rat color, red rat or green rat. You must never change your Rat color.
GREEN RAT REVERSAL TRADE – ANY CHART PERIOD
1) price within 20 pips of the daily low – that is OPPORTUNITY
2) red/black candle closes
3) green/white candle closes – note the high price of the green/white candle
4) enter long at the green/white candle’s high price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
RED RAT REVERSAL TRADE – ANY CHART PERIOD
1) price within 20 pips of the daily high – that is OPPORTUNITY
2) green/white candle closes
3) red/black candle closes – note the low price of the red/black candle
4) enter short at the red/black candle’s low price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
- If you are a green rat do not trade within 100 pips below the weekly open
- If you are a red rat do not trade within 100 pips above the weekly open
- It is safer for green rats to trade only above the weekly open and red rats below the weekly open
- Green rats trade below daily open with caution/red rats trade above daily open with caution
NB: FROM MY EXPERIENCE I WOULD SUGGEST ONLY TRADE GREEN RATS ABOVE THE WEEKLY OPEN AND ONLY TRADE RED RATS BELOW.
I add red and green areas to my chart so I can clearly see what rat territory the pair is in. See Pic:
**IMPORTANT RAT INFO**
Please check my new category “Rat Rules & Quotes”. There is alot of important information gathered there. I am ashamed to admit I have not been sticking to one Rat color, hence I have not been trading the method as it should be traded. However, I still feel the past few days has been a good learning experience and enabled me to practice taking Rat reversal trades albeit not always in the right direction. I feel alot more confident after reading and re-reading the information gathered over in that category. Happy Trading Rats.
Well, having tested DTB “Like a Rat” for just two days I have already discovered major flaws in my testing.
- A Take Profit of 10 pips. I believe the take profit should not be rigid. The creator of this method seems to agree when they say “take profit whatever you can”. The amount of profit to take should be determined on the current situation of the currency pair/market. Such as range, time, trend and movement.
- High Spread Pairs. I included pairs that have high spreads on my broker during my trading times. This makes it harder to be profitable and leaves me at a rather expensive bucket shop.
- Overtrading. Switching between 7 pairs means that I am never really follow what is happening with any one given currency pair.
- Only trading when a 3 semafor occurs. The original “rules” state to trade the rat reversal within 20 pips of the daily high/low, not only when there is a 3 semafor. I have seen valid trades pass me by whilst only trading 3 semafors, albeit it could be argued 3 semafor trades are the most reliable.
SO, I will be restarting testing with a $500 account, trading 0.1 lots. Instead of posting up screenshots of each and every trade (very time consuming and imo uneccasary) I will upload the daily detailed statement which I believe will be more useful. I will keep a SL of 10 pips including spread but will take profit when I can. I am dropping the high spread pairs UCAD and the GJPY. “Rat Reversal” trades will be taken within 20 pips of the daily high/low, regardless if there is a 3 semafor. This testing commences from November 19th.
I am a novice trader who has been learning all aspects of Forex for nearly one year. I have a live account that is currently on hold while I learn to trade with discipline, using a method that suites my personality and style of trading.
Here in my blog, I will be posting my daily trading results. I am using the well known cult status “Drain The Banks” method. It can be found@ http://kreslik.com/forums/
The purpose of this exercise is to give myself a resource where I am able to identify mistakes that I may have made in trading and also to help me decide which pairs and money mangement I would like to adopt with this strategy.
I will be taking “Rat Reversal” trades on the m5 chart only within 20 pips of the daily high/low. I am currently using a demo account and plan to trade this method live if this test proves to generate positive results.
I will upload screenshots of each “Drain The Banks – Like A Rat” opportunity that occured during my trading time (8am to 4pm London Time).
Additionally, I am using a Stop Loss of around 10 pips (including spread) and a Take Profit of around 10 pips. I mainly trade five currency pairs: GU, EU, EJ, UJ, UCHF but will be looking for good opportunities on the GBPJPY & UCAD. During early testing I have noticed high spread pairs (dependant on broker) are not producing results as good as those with low spreads so may consider removing them (UCAD, GJPY and UCHF). I have also begun recording the maximum amount of profit that could have been taken (within reason and whilst still applying the 10 pip stop loss). Please see my results pages for more information on daily observations.
I have already discovered that a small majority of “Rat Reversal” trades could have run for alot more than 10 pips. I will need more results in order for me to decide if using a break even and trailing stop/higher take profit would be more suitable than a fixed 10 pip take profit, but this is definatly something to consider. This could potentially greatly improve the risk:reward ratio. However one could argue that by lowering the Take Profit to 5 pips then there would be more winners, but I am currently not comfortable with 1 loser knocking out 2 winners.
In fairness to the creator of the method who states “take profit is whatever you can” I can safely say after using the system and based on my limited experience in the markets, this is a sound statement. It may not be ideal to have such a rigid take profit level as it should depend on what the market is doing at the time. If it looks like price is going to go against you take what profit you can seems to be sound advice. In saying that, this testing is just to give an idea of the average amount of pips one could expect, although this of course will not always be the case.
Another disadvantage of a fixed take profit (setting it during trade) is you may struggle to close an order if you need to. Usually if price is to close to your take profit level your broker will give you an “Order Modification” error. So if you wanted to close a trade at 8 pips because it looks like it is going to turn, you would not be able to. Whereas if you had not fixed the take profit level in the beginning you could manually close the trade.
Consideration could be given to using a break even @5 pips in order to protect against uneccasary loses. However for the time being I will be sticking with TP10 and SL10, although as stated before I will record the maximum amount of pips that could have been gained without the initial SL10 being triggered.
Select a page from the menu to view trades taken from that day and overall results. Please be advised that as of November 19th , the rules are stated in the update above.