Over the past 18 months we (lotsofpips.com trading club) have developed and tested a manual trading strategy that has been working really well. I want to share it here so we can get some more minds testing it and tweaking it.
It uses Elliott Wave and Fibonacci heavily
It will always have a positive risk reward ratio, (wins larger than losses) if you follow the rules.
We have found it to be about 85% accurate so fat in the past 18 or so months.
It is called the C3PO trade because we are trying to catch either wave "C" or wave "3" from its starting position. (the PO stands for Profit Opportunity) plus it is a memorable name.
The trade is formed by what we call the "key move". The key move is when the market is trending in one direction or another and all of a sudden without much hesitation it changes direction and makes a progressive wave in the opposite direction. That progressive wave is the key move.
For example, if the market is trending up, making higher highs and higher lows, and in one move it drops and makes a lower low changing the trend direction in one move. (We have found that the 1hr and 4hr charts are best) What we can expect with some bit of certainty is that there will be some kind of retracement and then another motive wave down. In Elliott Wave theory, there are not any moves that have only one motive wave, there are usually at least 2 motive waves in any direction.
To trade it: What we do is watch for the key move, after it starts retracing we place a fibonacci on the key move and place a pending order at the 62% retracement level or higher to go short. (assuming our key move was a downward move), then we place a stop loss at 10% above the key move, (I have a custom fibo level at 1.1 for easy placement) and a take profit somewhere between the bottom of the key move or the gap (-.23 fibo level) and I usually place a trailing stop loss for the number of pips from your entry to the zero level.
This will alwayse give you a positive risk reward ratio and it is pretty accurate.
Check out the free Video and PDF on this strategy on my site
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I am looking at a key move on the eur/usd 1hr chart right now, waiting for it to climb back up to 62% before I go short.
Good Luck
Jared Passey
P.S. also please come visit our live online trading mastermind club every Tue evening at 6pm Pacific.
