Forex Strategy "Empire" - Old School Tactics
For a forex strategy to work for many years, it must be simple enough that you could explain it to a 10-year-old child.
Also, to take losing periods calmly, you need confidence in the system.
How is confidence in the system achieved? By testing the trading system on historical data and understanding WHY it works and brings profit. That is, we need a clear and understandable logical foundation on which the strategy is based.
"Empire" has all of this: there are no cheerful indicators winking with little lights and arrows, no calculations of planetary movements or voodoo magic that course sellers love. There is only cold calculation and an understanding of statistics. If you have already outgrown childish things, perhaps it is worth taking a look.
Characteristics of the "Empire" forex strategy
The idea behind the strategy
In the screenshot above, we see the EURUSD Weekly chart, that is, one candle shows what happened over one week. And, like any candle, a weekly candle has High and Low points. That is, the highest and the lowest prices of the week.
According to statistics, the High and Low points of the EURUSD weekly candle most often occur on Monday and Friday.
Other pairs show a similar tendency.
How can we use this in trading?
If we know that Monday's High or Low will most likely hold, we can enter on Tuesday and hold positions until trading closes on Friday. Since we do not know the direction in which the price will move, we will use the simplest method: pending orders above and below the extreme points of Monday's candle.
Entry and exit rules
After Monday's candle closes, we place a Buy Stop slightly above the High point of that candle (by 5-10 points), and a Sell Stop slightly below the Low point.
The stop losses of both orders are placed at the level of the opposite order. That is, if the stop loss of one order is triggered, the opposite order opens automatically.
If one of the orders is activated, we do not delete the second one until the end of the week.
On Friday evening, we close ALL orders, regardless of profit or loss.
Important!
Additionally
- As with any strategy, support/resistance levels can be used to filter entries. If there is a strong level in the way of the entry, it is worth skipping the signal.
- If an important fundamental event is expected this week, for example an FRS decision on the key rate, it is better not to trade this week. Or exit the position BEFORE that event. For example, if Non-Farm Payrolls are expected on Friday, you can exit the position on Thursday.
- If Monday's candle is very large, you should not enter; perhaps the pair has already exhausted its movement potential.
- An interesting filter is suggested by our forum member Bryanwins - http://forum.tradelikeapro.ru/index.php?topic=13354.msg275000#msg275000
Money Management
Since trading across many instruments is assumed, and drawdown periods across pairs may coincide, we use a maximum of 1% of the deposit per trade. You can calculate the trading lot using a special calculator.
Conclusion
"Empire" is not a holy grail. There will be drawdown periods. But there is a clear and understandable foundation here, there is understanding. Understanding not only of the system itself, but also an understanding of losing periods, strange as that may sound. Knowing that the High and Low of weekly candles most often fall on Monday and Friday, at the same time we understand that they also occur on other days, just less often.
It is like understanding that the sun does not shine every day, there are rainy days. Likewise, we understand that there will be stops and that this is normal. This very understanding gives the confidence that is necessary to follow the rules of the strategy, especially when it is in a drawdown period.
Respectfully, Pavel Vlasov TradeLikeaPro.ru
For a forex strategy to work for many years, it must be simple enough that you could explain it to a 10-year-old child.