Expanding my repertoire of EUR/USD tactics I’ve added a bracket trade setup that has been consistently profitable (so far). While it can’t produce the big pip gains of the Dipper, it’s reliability and risk management controls make it attractive to me.
Follow the purple horizontal and vertical lines to understand the concept. The chart is displaying 30 minute bars. First, we look for tight consolidations over a period of at least 4 hours. Ideally, the spread from the close of the high bar to the close of the low bar is > 15 pips. Then we place a BUY order 20 pips above the range high close and a SELL order 20 pips below the range low close.
We then place a 15 pip limit exit on both the BUT and SELL orders, thus limiting our potential gain to 15 pips, Finally, we add a stop loss of 10 pips to both orders based on our entry price. If you doubt that these consolidation patterns are rare you might be surprised. To maximize the return of this strategy these bracket orders should be placed on a number of pairs (such as the GBP/USD which has a fairly consistent intraday pip spread of around 145).
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