In this article, I will show you how you can create a simple and at the same time profitable no-indicator strategy in the forex market. It will give even a small, but stable and relatively safe profit.
You will not see phenomenal results with this strategy. Instead, get step by step instructions how to make something out of nothing. After reading the article, I recommend thinking about how you can improve the results of your profitable strategies if you apply the improvement plan described in detail in this article to them.
Brief description of what will be in this article
- What will we rely on in the strategy.
- Description trading algorithm which is taken as the basis of the strategy.
- Testing the strategy in the "Forex Tester 3" program.
- Construction of profitability charts in the Excel table, taking into account the spread and swap, as well as without them for their further analysis.
- Application of the author's analysis of cycles to determine the moments of entry and exit for this strategy.
- As a bonus to this article, I will describe the main problems of non-indicator strategies and their solutions.
1. Only price and time values
Most traders work on strategies that predict the future direction of the price. They are trying to predict the market, not calculate it. There is a significant difference between me and them. I do not presume to judge everyone, but the majority work at a loss. If the majority is guessing the market, I don't want to do it with them, knowing what results it will lead to. I formed this point of view in my first three years of trading. The more time passed, the more I became convinced of the correctness of my choice.
If you want to calculate the forex market with the algorithm of your own non-indicator strategy, then you will need incoming digital data. The most important thing that you need to get from testing the strategy algorithm on history is the value of the change in the level of balance or funds, depending on the strategy used. These data are necessary for further optimization of the strategy and application of the Cyclic Deviation analysis system to it.
I will use the price and time values in the strategy algorithm, as well as in its optimization. There will be no forecasts, no visual analysis of charts or indicators. We will work only with the prices of orders, their opening and closing. We also apply a constant time value for opening and closing positions. In calculations, we will take into account the values of the spread and swap for each position. We will also consider the test results, excluding the consumables from them. In the strategy algorithm, I will use the D1 trading period, on which I will test.
2. Description of the trading algorithm of the strategy used
I must say right away that I moved the algorithm to the D1 period to minimize the expenditure side. Also, on long periods, brokers are powerless against traders, which is also quite important.
Strategy Algorithm
- Period for work D1.
- We use a candlestick chart.
- We enter the market at the close of the candle.
- Exit the market at the close of the candle.
- If the candle closes with growth - white, open a buy, close a sell.
- If the candle closed with a fall - black, open a sale, close the purchase.
- If the candle does not change color, do nothing.
- If the candle closed at the price of its opening, we focus on the previous candle.
- The volume will be constant 0.1 lots for $4,000. At the cost of one point 1$.
3. Testing the no-indicator strategy
I will test the strategy in the forex tester 3 program. This will significantly reduce the time in obtaining the necessary data for its optimization and further application of the Cyclic Deviation analysis system. You should not rely on test results as reliable, but they are optimally acceptable.
I tested the strategy in an amount equal to a thousand trading orders. I entered the data on the balance at each closing of the position into the Excel table, according to which the graph of the change in the balance was built in the same table. Based on the results of testing, I recorded a video so that you can clearly see what was being done.
Happy viewing:
4. Construction of two comparative graphs of balance changes
The most interesting is the climax, which I wanted to show to many of you. When I passed the testing threshold of a thousand positions, it became clear from the chart that the deposit gradually began to melt. If I had not stopped testing, then at one point the deposit would have been completely lost.
I built two test graphs. The first is taking into account the spread and swap. The second chart was built minus the swap and spread values for each position. In the first case, as I wrote above, the deposit began to decrease. In the second case, the balance change curve began to draw a wavy line that crossed the line of the original balance.
This is the moment when it is clearly seen that the commission destroys almost any trading strategy. Despite the fact that the D1 trading period was used, the excess between profitable and unprofitable points was not enough to cover the commission on orders: spread and swap.
When you remove the commission from the test results, you can clearly see the undulating repeatability of the yield curve. AT this example this is the balance, in your example it could be the equity line. When the strategy shows a chattering near zero, then the initial balance of the deposit serves as the equilibrium line, as in my example. If the graph of the yield curve shows uneven growth, then it is necessary to draw a sloping line from the initial size of the balance to its final value. Next, we determine the percentage deviation of this graph in both directions from this sloping line.
5. Application of the analysis system "Cyclic deviation"
In order to improve your results in trading, you need to determine maximum percentage deviations of the yield curve from the equilibrium line in the negative direction and the most frequently repeated percentage deviation in the positive direction.
Next, we include many currency pairs on demo accounts. If it is possible to automate this process, then it is good, if not, then you will have to recruit a team of like-minded people. Everyone will need to work on a demo account for one currency pair. When the estimated drawdown level is reached on the demo account, the strategy is activated on the real account. I call this the negative loop entry strategy. Closing the cycle on real account, i.e. Profit fixation and termination of work is carried out when the yield curve of the demo account reaches the equilibrium level.
It is also necessary to take into account that if there is some statistically confirmed parameter average return strategy, it must also be taken into account. That is, if the strategy did not give a statistically confirmed profit for a long time, being in a negative cycle, then the cycle is closed on a real account when the estimated percentage on a positive cycle on a demo account is reached. The one that we selected as the most frequently repeated.
The fact is that these signals, entering on a negative cycle, are rare, which is why it is necessary to include multicurrency in the work. Working with the use of cyclical deviation will significantly improve the profit and drawdown indicators in the strategy used. It doesn't matter what strategy it is. The main thing is that it should at least work without loss, and even better, initially make a profit for its owner.
Still, there is one criterion for choosing a strategy to which cyclical analysis could be applied, and this is its accuracy. Therefore, in Forex, I recommend using non-indicator strategies, where your main guide will be the price. This will allow you to avoid ambiguous interpretation of what is happening on the market. A different interpretation of the same will introduce certain disorientations into the strategy algorithm, which will cause you to get cycle failures. Cyclic analysis can only be used in algorithmic trading, i.e. in strategies that can be fully automated.
All forex strategies need to be improved
Unfortunately, I myself had to go through many years of work to refine my strategy. It is not a completely indicatorless strategy, but there are only two of them, this is a standard moving average with a period of 14 and RSI indicator also 14 periods. This is all I use for profitable trading in the forex market.
I want to note that I do not consider strategies where stop losses or counter orders are used as a method of insurance against loss, since I have not seen a single such working strategy when the loss is closed by value, and not by a structural change in the market.
The fact is that I encountered the following problems, which in the future I began to see as unresolved in the strategies of other traders.
Here is their list
- The strategy only makes a profit in a flat or a trend.
- Protracted movements without correction.
- Long narrow flats.
- Lingering wide flats.
- Strong market movement against the trend.
- Buy entries at the peak and sell entries at the bottom of the market.
Any simple, unfinished algorithm will show either slow or fast negative dynamics in the account. The first thing you could do before starting to refine it is to move to work for longer time periods to minimize the cost. The second is to choose a broker with good trading conditions.
1. The strategy works for profit only in one market structure
It is impossible to create a mechanism that would have time to profitably adapt to a changing market. We always determine the market change with some degree of delay when there are confirmations of its change. Otherwise, all attempts to preliminary rebuild the algorithm for the market will be its prediction, which has an unacceptable share of error, which we cannot take into account in the strategy. Therefore, it is necessary to accept the fact that if the trend makes a profit, the flat will give a loss and vice versa.
2. The problem with no rollbacks for grid strategies
The only way to protect against such situations is to bring the residual trading volume to the calculated minimum, which is able to safely survive such movements. We understand what needs to be done, but we also have to figure out when. The standard indicator SMA 14 period helped me in solving this problem. No long-term directional movement occurs against the moving average. In this case, the signal for adjusting volumes is the opening of a candle above or below the indicator line.
3. Long narrow and wide flats
The problem with trend strategies is that flats create a high frequency of changing the trading direction signal. Because of what the trader has to close orders with a loss, changing the direction of work. I decided this question using locking as a money management mechanism. When a signal appeared to change the direction of work, I locked a part of the volume from the working order and managed two directions in one common bundle. Locking and management was carried out in the Excel spreadsheet. On a real account, so as not to pay additional commission in the form of a spread when reopening orders and swap, only the resulting volume was displayed. Thus, since the volume is not completely locked, we do not open additional orders if the signal to change the direction of work appears more than once.
4. Strong market movement against the trend
When you switch to work on periods W1 and MN, you are not afraid of these movements, since they lie at most in the D1 plane of the period. It is there that some unforeseen news called force majeure comes out. The main thing is to protect yourself from increasing volumes in case of movement against the trend. To do this, it is necessary to limit top-ups to the working order for corrections in the amount of one top-up per one trading day.
5. Buy entries at the top and sell entries at the bottom of the market
Everything is simple here, draw with horizontal lines the ranges of price movement from historical low to the maximum and look at the removal of the price from the SMA 14 indicator. If the price is above horizontal line the middle of the historical range, then consider options for protecting yourself from buying if the price moves away from the SMA 14 indicator. If the price is below the horizontal line of the middle of the historical range, then consider options for protecting yourself from selling if the price moves away from the SMA 14 indicator.
This guide is a concise action plan for optimizing and improving existing strategies, as well as step by step guide for creating profitable strategy from scratch. If you have any questions about this article, write in the comments to it. I wish all workers only profitable trading.
Today I will tell you about another non-indicator Forex strategy. This strategy, despite the fact that it does not involve the use of indicators, it brings a good profit.
The no-indicator Forex strategy is easy to use, so I advise all newcomers to the Forex market to take a closer look at it. Traditionally, it is not recommended to trade intraday on this strategy before the exit and within 30 minutes after the publication of important economic news.
Description of the no-indicator trading strategy
The indicatorless Forex strategy is suitable for use on any currency pair. To work according to this method of opening orders, you need to use 4 time frames at once: H1, M30, M15 and M5.
After the close of the hourly bar, the speculator should pay attention to its shade. The next picture shows that a good up bar closed at 11 o'clock in the morning, therefore, we will consider opening a buy trade.
After that, you need to open a shorter time interval, namely 30 minutes and see which candle formed between 10.30 and 11.00.
In our example, an ascending candle was also formed, which confirms the strength of the bulls. Next, we need to go to 15 minute chart and see which bar closed at 11 o'clock. In our example, a green candle also appeared on the 15-minute chart.
The 15 minute chart also confirmed to us that the bulls are winning the market. Then you can go to the five-minute chart.
On the 5-minute chart, we also see a green candle, which means that in this moment buyers dominate and you can safely open a buy order.
Setting stop and take
The non-indicator Forex strategy involves setting a stop in two ways:
- Stop can be placed at a distance of 15 points from the entry point into the market.
- The stop can be placed behind the last fractal on the 5-minute chart.
In this example, you can see that Take-Profit of 30 points was reached on the 20th bar after the trade was opened. Also note that if we had placed a stop near the last fractal, then our losses would have been less if the situation had developed according to a scenario that was unfavorable for us.
I do not encourage you to set a stop near the fractal, I just drew your attention at the moment. Each method of setting stops has its pros and cons, and which one to choose is up to you.
Conditions for opening sell orders
Now let's look at an example of creating a sell position using this strategy. First, we look at the hourly chart, we see that the red candle closed at 11 o'clock.
Next, we move to the M30 time interval and see that the red bar closed there as well.
On the 15-minute chart, we also see a red candle.
A red candle also appeared on the five-minute chart, which confirms the dominance of the bears in the market. In such a situation, you can safely open a deal to sell.
In our example, the trade would be successful and bring us 30 pips of profit.
Features of identifying signals for entering the market
Above were examples of ideal signals. I want to note right away that such signals do not happen rarely, so we did not have to look for suitable moments in history for a long time. It should be noted that ideal conditions are not always observed, but, nevertheless, the signals can be of high quality.
Let's take a look at possible deviations in which you should not refuse to open a deal. Let's say that on the hourly and 30-minute charts the direction coincides, but on the 5-minute and 15-minute charts there are candles of a different direction, such signals should not be ignored, you can continue to monitor the chart. If the desired bar appears on the 15-minute chart within three candles, then you can safely create a position.
This rule also applies to M5 time intervals, if everything is fine on the older charts, then the M5 time interval can be observed for an hour.
In order not to constantly switch charts, you can immediately open 4 charts in trading platform. You can see an example in the following picture.
It is very simple to do this: just visit the "Window" menu, which is located on the top panel. Next, you need to select the "Vertical" item, and then arrange all 4 graphs in a way that is convenient for you.
There is a little trick that allows you to increase the amount of potential profit, despite the fact that the method of creating positions we are considering involves obtaining fixed income in the amount of 30 pips. To increase the amount of potential profit, you should use a floating trawl, the size of which you should choose yourself in accordance with the currency pair used, as well as the situation that prevailed on the market during trading.
There are situations when price level, approaching close to Take-Profit, changes the direction of its movement, as a result of which the active order is closed by Stop-Loss and brings a loss. Similar situations can be avoided if you follow the recommendations of professional speculators.
At the moment when the price level passes 15 pips in the direction you need, you need to move your active position to a breakeven position. Thus, if the price level changes direction abruptly, your profit will still be 15 pips.
Some speculators, when using the method of opening orders we are considering, initially use Take-Profit in the amount of 15 pips. Such an approach to trading allows you to quickly fix profits and start looking for a suitable place to conclude a new transaction.
To learn how to competently conclude transactions in accordance with the rules of this trading technique, you should practice on a demo account. You can start trading for real money only after you have acquired the necessary skills to apply this strategy.
Below is a simple no-indicator Forex strategy that can be used daily to get a very good profit. As the name implies, no indicators are used to determine the possibility of entering the market, since the trader only monitors the direction of movement of the quotes themselves.
The system itself is extremely effective and is well suited for novice traders, who are captivated by indicatorless strategies with their simplicity and logic. Traditionally, in order for intraday work not to bring unpleasant surprises, one should track the release time of important news, which can create very strong price impulses.
What is the no-indicator strategy based on?
The non-indicator strategy described in this article is suitable, in principle, for any currency pairs, which means it is multicurrency. When working on this strategy, four time intervals are used at once: H1 (hourly chart), M30 (thirty-minute), M15 (fifteen-minute) and M5 (five-minute).
As soon as the next hourly candle closes, the trader should pay attention to its color. The screenshot below shows that a good bullish candle closed on the EUR/USD chart at 11 am, which means that a buy example will be considered.
So, having determined the color of the hourly candle, the trader switches to a smaller timeframe and looks at what color the candle will show on the thirty-minute chart, which opens at 10:30 and also closes at 11:00.
As you can see, the candle that the trader needed also closed green, confirming the strength of buyers in Forex. The next step is to switch to the 15-minute timeframe, where you need to check the candle that opened at 10:45 and closed at 11:00.
So, the 15-minute timeframe confirmed the bullish mood prevailing in the market, after which the trader switches to the last time period for this non-indicator strategy of 5 minutes.
Thus, the trader receives the last proof necessary for the transaction to buy. The closing of the green candle on the 5-minute timeframe indicates that there is a unidirectional trend in the market and you can safely place a trading order.
Stop Loss and Take Profit
There are two ways to set a stop loss for this non-indicator strategy:
- in the first case, the protective level is set at a distance of 15 points from the entry point;
- in another option, the stop loss is placed behind the last fractal on the 5-minute chart.
The optimal take profit in this case is 30 pips, however, some traders who use fractal levels to set a stop loss place a take profit at a distance that is twice the size of the stop loss level obtained for each individual trade.
In the case under consideration, it is clearly seen that the goal of 30 points of profit was reached on the 20th candle after the formation of the signal. You should also pay attention to the nearest fractal, since using it as a stop loss definition would give smaller losses (less than 10 pips) in the event of an unfavorable development than the classic fixed stop loss of 15 pips.
This is by no means a recommendation for action and not a hint that one should give preference to this particular method of setting a stop loss in this non-indicator strategy. Each of the described methods has its own advantages and disadvantages, so the trader must think for himself and decide which of the options will be preferable for him.
Sell signal
The same, only in reverse order, is also true for a sell signal. First, a bearish candle should appear on the hourly chart. In the screenshot below, the same EUR/USD pair demonstrates the closing of a descending candle on the hourly chart at 11:00.
The same trend is confirmed by the 30 minute chart.
Also 15 minutes.
And, finally, the 5-minute chart gives the last confirmation to open a sell trade under the terms of the non-indicator strategy under consideration.
As you can see, the signal turned out to be good and allowed to get 30 points of profit again.
Inaccuracies in signal identification
Above, two ideal schemes of the resulting signals are considered. It should be noted right away that a simple observation will show that such perfect conditions are very common and the authors of the article did not study history for a long time in an attempt to find situations that meet the parameters of the strategy.
However, it happens that the conditions are not perfectly met, but it still generates high-quality signals to enter the market, so it is worth studying the allowable deviations so as not to deprive yourself of a good opportunity to make money.
For example, the hourly and thirty-minute charts showed a trend match, but the 15-minute or 5-minute chart showed a discrepancy. So, in this case, it is not necessary to ignore the possibility of receiving a signal, but you can still observe some of the chart, according to at least until a new candle closes on the hourly time frame. If the 15-minute chart after the first discrepancy during the next 3 candles indicates the right direction, then you can safely enter the market.
The same goes for 5-minute charts. If the higher timeframes show candles in one direction, and the situation is reversed on M5, then you can watch the development of events for an hour and enter the market if confirmation is nevertheless received on the smallest timeframe.
Little tricks
In order not to switch alternately between charts of different price periods, it is better to make sure that all the necessary 4 timeframes are displayed in the Metatrader 4 window at once, as in the screenshot below.
This is very easy to achieve, you just need to use the capabilities of the "Window" menu located on the top toolbar. Having opened it, select "Vertical", after which you can arrange all four graphs in a convenient and visual way.
Another trick is how you can try to increase the potential income, which is limited by the terms of this non-indicator strategy to 30 points. To do this, you should use a floating trailing stop, the size of which should be adjusted depending on the selected trading instrument and general situation on the market.
In addition, sometimes the price has almost reached the take profit level, but then reverses, goes down, and the trader, to his great regret, sees how the trade closes at a loss on the stop loss. This is a very painful phenomenon, which can be avoided if desired. To do this, as soon as the transaction brought 15 points of profit, you should move the stop loss to breakeven. Some traders who use this non-indicator strategy are completely limited to a take profit of 15 points, believing that it is better not to wait and quickly take a small part of the profit, then waiting for a new opportunity to make a deal.
Nowadays, any experienced trader uses a lot of different indicators for Forex trading, which help to identify successful moments for entering the market. Many beginners, starting trading with indicators, get carried away and forget to follow the price line itself. There is only one way out of this situation - the use of non-indicator strategies. home distinguishing feature of these strategies lies in their easy assimilation and high profitability. Any non-indicator Forex strategy is based on certain rules, following which you can achieve good profits.
What is a non-indicator strategy
The no-indicator strategy is a visual analysis of the trend movement, which is based on logic and competent decision-making. This strategy is great for those who doubt the reliable forecasts of indicators.
Nowadays there is a large number of non-indicator strategies, which we will talk about today.
Non-indicator strategy based on the use of pending orders
This strategy is perfect for experienced traders as well as for beginners. It is based on visual inspection price movements and determination of value levels. It is recommended to enter the market as soon as the price overcomes a given level. You can use this strategy on any instrument of the Forex market. The main thing is to make a discovery on time.
This strategy is great for trading during small price changes when there is a horizontal trend in the market. The course should change within 10 points. In this case, traders expect the news to appear, after which a sharp price jump should occur. The main task of a trader is to determine the direction of the jump.
General characteristics:
- The right timing for trading. A large number of traders make a serious mistake by trying to trade the market when it suits them, and not when the market is in a good position.
- may be very different. Experienced people in this business are advised to choose with a small brokerage firm.
So we choose currency pair with a trend, which is located in the side corridor (flat). If there is no such currency pair at the moment, then it is better to wait a bit and wait for a more opportune moment. The indicatorless Forex strategies, the video of which is presented below, are very easy to use and highly effective.
Market Entry
As mentioned earlier, this strategy is based on opening. To open an order, we perform the following actions: find the "New order" section, click on it, click add and select the appropriate type - pending.
Experienced traders advise placing a sell order in case of a sharp price jump up, and a buy order in case of a jump down. Do not forget also about the need to set "Stop Loss" and "Take Profit".
"Three Candles"
This strategy is great for those traders who cannot often be at the screen, but devote several hours a day to the market. To use this strategy, there is no need to use a large number of indicators. To use it, it is enough to be able to analyze candlesticks. Due to this, the strategy becomes excessively easy to use. It is advised to use it during the daytime.
How to make a buy entry:
- Choose a currency pair and time frame D1.
- We analyze the market for the previous 3 days, and if today it has become higher than in previous days, then you can make a purchase. The main thing is that all 3 candles are bullish.
- The stop loss must be set a few pips below the low of the previous day's price.
- It is necessary to fix the income gradually. First, the profit must be taken as soon as the price rises by 30 points, after that you can set "Take Profit" by 100 points.
To open a Sell order, all actions must be performed exactly the opposite. The main difference is that the price for the previous days should rise, and all 3 consecutive candles should gradually go down. "Stop Loss" is set very close to maximum value previous candle. Income is also withdrawn in stages.
The main advantage of this strategy is that a person does not need to constantly monitor the market, since this principle of trading eliminates all the risks of unsuccessful entry into the market.
Indicatorless simple strategy "80-20"
This is another non-indicator simple strategy on forex, the creator of which is L.B. Raschke. It is very simple and effective.
The necessary conditions:
- Trading on this strategy is recommended to be done during the daytime.
- Currency pairs can be very different.
The basis of the 80-20 strategy is as follows: if a candle was opened and closed at the 20% limit of the D1 chart, then with a probability of 90% it will continue to move towards the close of the day. In other words, there is a possibility of a complete trend reversal, which is exactly what we need.
The candle, marked in green in the figure, perfectly meets all these conditions.
To enter the buy market, the following conditions must be met:
- The price should go below the low of the previous day. A price reduction of 20 points is enough.
- If the trend is already less than yesterday's level, then you can open a pending order to buy with the level of the minimum value of the previous day.
- "Stop Loss" should be set a few points below the current low.
If you want to open a Sell order, then all the actions described above are performed exactly the opposite. Similar signals very rarely appear on the price chart, in this regard, it is best to use several currency pairs at the same time.
Almost all indicatorless trading strategies Forex are closed by the set stop losses. In very rare cases, there is an opportunity to get out of the market before the set stops are triggered.
