This System Worked Today
March 30, 2007 by Trader Rich
The GBP/USD reversal trade that I talk about from time to time has been working very well. It's probably the only thing that has been working for me as of late, but it gave me a little jolt of optimism today. I profited 64 pips on 1 lot in a very short period of time. This obviously is ideal and doesn't happen all the time but nevertheless, it's given me the motivation to put together a 10 minute video about this simple strategy. I would recommend that you perform your due diligence to see how you can take advantage of this system if you're interested. I can certainly improve on the video but I think you'll probably get the point. I hope you can take all of the "UMMS" in my commentary.
http://www.forexproject.com/forex_videos/gbp%20reversal.htm
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very, very risky. I think the good thing would be to recognize general trend of the market. It could improve results a bit. Buying on close after break in down trending market will always stopped you out. In trendless market it can work.
It’s not risky from my perspective over months and months of observation. Risky, maybe a bit much if I’m going in with 30 pip target and 30 pip stop. I’ve talked to someone else that has been looking at this and they’ve found success using less of a stop than 30….
I underestand from your piont of view. By “risk” I mean that u try to pick the bottom or u trade against the trend. I close of “that”candle would be above important support of fibonacci level I would underestand the trade. If it is “in the air” u basically try to trade against daily trend. Please consider this as my opinion. Thanks.
I appreciate your opinion and certainly welcome it… Thanks for taking the time to give me your point of view
Well done piece of multimedia, Rich. I\’d appreciate it if you would post the links to your other posts where you discuss the rationale for this strategy. In particular, I wonder how you infer that a reversal should happen after the price breaks out of the channel? In the example you provide it seems the market is consolidating (narrowing bands) which I generally view as an opportunity to catch the breakout by placing OCO orders above and below the bands to catch the initial run. It is interesting to me that you are looking to catch the reversal on the initial breakout. Seems kind of like a modified Bollinger bounce using previous highs and lows as resistance? I\’d like to read more about it. Also, it\’s nice to put a voice to the man behind the site. Looking forward to more of these kinds of presentations.
I think your system can work pretty well even with other pairs. Have you considered the xau/usd (gold)? I’m currently using a different one, based on the congestion/breakout of the eur/usd, only between 6 am to 1 pm (ET). Actually it works exactly the other way, you’re up to catch breakouts and not reversals.
Take care