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Thursday 19 April 2012

21SMA pullback strategy

Looks like my power level strategy is sort of "seasonal" one, when it works exceptionally well during some market regime and doesn't work at all (at least with tight stops I am using) during others, rangy markets when same levels get tested day after day. Basically it makes no sense to keep bleeding pips when market is not acting properly for this type of trading. So I will wait with it until we get some nice definitive turnarounds at power levels.

In the meantime, I will try with very small lots the following strategy, partially borrowed from Lance Beggs:
- using 1-pip range bars on EU, AU, UJ
- using 21-SMA based on range bar close
- entry just like for my power level trading: peding stop order 1 pip away with 2-pip stop, placed by a script when price pulls back to 21-SMA and hesitates to move further
- target 8-13 pips
- use 5-pip trail stop 
- break even at 2 pips profit



Basically we simply trade pull backs to 21 SMA while market is trending. I will trade this with 1 mini lot for few days before going for 1 full lot. If market will start respecting power levels again, I will trade both methods.

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