Hello everybody!!
I am going to introduce you to a very convenient IB/OB egy. All you need is a naked chart with only one indior (Average Directional Movement Index, ADX).
Which are IBs and OBs??
-IB or Inside Bar, is a pub that's completely within the range of the previous bar, i.e. it's a higher low and lower high compared to the pub instantly before it or when it is has a lower high and also an equivalent low and vice-versa.
-OB or Outdoor Bar, is a pub that has a higher high and a lower low than the pub immediately prior to it. A pub with a higher high and an equal low can be acceptable, and vice-versa. (For example, see post #40)
--------------------------------------------------------------------------------------------------
System Explained
Time frame: 1 hour
S/L: 30 pips (such as Spread)
T/P: 40 pips Spread
Currency Pair: GBP/USD (you may try other pairs, but I only use this)
Ideal time for trades: 6:00am - 5:00pm GMT
ADX Indior settings: Default for MT4 users.
ADX line - Yellow
DI - Green Dotted -DI - Red Dotted
Provided an IB/OB has formed, to go:
Extended
Wait till the next candle (verifiion candle) has fully formed and is a bull candle. Then, a fantastic entry point would be when the 1st or 2nd candle after the confirmation candle moves 5 pips greater. Additionally criteria should be fulfilled:ADX line (Yellow line) above 40. DI line (Green dotted) crosses above -DI line (Red dotted) ADX line (Yellow line) curving up at entry. Short
Wait till the next candle (verifiion candle) has fully shaped and is a bear candle. Then, a fantastic entry point would be when the 1st or 2nd candle after the confirmation candle moves 5 pips reduced. Additionally, at this entry stage ONE of the following criteria should be fulfilled:ADX line (Yellow line) above 40. -DI line (Red dotted) crosses above DI line (Green dotted) ADX line (Yellow line) curving up at entry.
EXCEPTION RULE (LONG): Only time it is possible to enter the market with no confirmation candle is when an IB/OB has shaped and through the creation of the verifiion candle, the ADX line is above 20. And DI crosses above -DI. Look to enter 10 pips above the high of the IB/OB.
EXCEPTION RULE (SHORT): Only time it is possible to enter the market with no confirmation candle is when an IB/OB has shaped and through the creation of the verifiion candle, the ADX line is above 20. And -DI crosses above DI. Look to enter 10 pips below the low of the IB/OB.
--------------------------------------------------------------------------------------------------
Pheww!! I know that was long, but once you read it a couple of times, it is not too difficult to follow.
Okay. Time for a few cases of the system in action. I know my drawings aren't the best. :
This is a trade I made today:
This is a transaction I made on Friday:
About sums up this post. I'm always looking to improve the system, so please feel free to give me your views on this particular system.
Thanks and I look forward to the answers!!