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103# Day Trading GBP/JPY

Submit by Joy22

 

The Rules

Currency to be traded: GBP/JPY

Chart timeframe: 5 minutes

RSI setting: 14

Bollinger Bands setting: 20,2,SMA

Step 1

We start viewing the 5 min GBP/JPY at exactly 00:00. We wait for

the RSI indicator to either reach a reading of 70 or a reading of 30.

 

The first reading that is reached will dictate if the trade is going to

be a long trade or a short trade. If RSI reaches first a reading of 70

the trade will be short. If RSI first reaches 30, the trade will be

long.

Step 2

For short trade: we wait for market to penetrate lower part of

Bollinger band by 3 pips and initiate trade at that same exact price.

For long trade: we wait for market to penetrate upper part of

 

Bollinger band by 3 pips an initiate trade at that same exact price.

Step 3

We immediately place out stop loss at 20 pips from entry.

We place out take profit order at 50 pips from entry price.

Examples

 

 

 

We will quickly go over this first trade example so you can see

how the trade worked out from start to finish on the same chart. On

the next trade example I will be more specific in my explanation.

A: 00:00, start time.

BRSI reaches 30 first. This means we will be looking for a long

trade.

 

C: We where looking for market to penetrate upper part of

Bollinger band by 3 pips and it did at 207.53. Long trade is

triggered.

D: Stop loss is immediately placed 20 pips from entry at 207.33.

E: Profit target of 50 pips is reached at 208.03

 

 

 

So, we can see that at point A the RSI reaches 70. This means that

we will be looking for a short trade. If it was the opposite and the

RSI would have reached 30 first we would have been looking for a

long trade.

 

At this point the RSI does not concern us anymore and what

matters now is the market price and the Bollinger band. We are

now waiting for the market to penetrate the lower part of the

Bollinger band by 3 pips, and it does so at point

B. We enter ashort trade at 208.72 and immediately place our stop loss 20 pips from entry or 208.92 (point C). After stop loss is placed we either wait for the market to reach our profit objective of 50 pips or we enter a take profit order with our forex broker. At point

D we cansee the market easily reached out profit objective and the trade turned out to be a 50 pip winner.

A: 00:00, start time.

B: RSI reaches 30 first. This means we will be looking for a long

trade.

C: We where looking for market to penetrate upper part of

Bollinger band by 3 pips and it did at 209.89. Long trade is

triggered.

D: Stop loss immediately placed 20 pips from entry at 209.69.

Market reached our stop loss and trade got stopped out for a loss of 20 pips.

E: As per the system rules we re-enter trade at 210.08 (3 pip

penetration of Bollinger band). In this occasion it was a long trade but could have been a short trade as well if the opportunity would

have appeared first.

F: Stop loss immediately placed at 209.88.

G: Profit target of 50 pips is reached at 210.58.

 

A: 00:00, start time.

B: RSI reaches 70 first. This means we will be looking for a short

trade.

C: As expected the market penetrated the lower part of Bollinger

band by 3 pips at 212.36. Short trade is triggered.

D: Stop loss immediately placed 20 pips from entry at 212.56.

Market reached our stop loss and trade got stopped out for a loss of 20 pips.

E: As per the system rules we re-enter trade at 212.91 (3 pip

penetration of Bollinger band). In this occasion it was a long trade

but could have been again a short trade as well if the opportunity

would have appeared first.

F: Stop loss immediately placed at 212.71.

G: Profit target of 50 pips is reached at 213.41.

 

Comments: 2
  • #2

    Forextradingstrategiesresources (Wednesday, 12 June 2013 21:47)

    Yes, GMT.

  • #1

    Abhijit Barua (Wednesday, 02 January 2013 10:36)

    103, the 00:00 start time is GMT?

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