Message #26

[AlexPali]

Here is another one; Noddy manual trading strategy

http://fxaw.activeboard.com/forum.spark?forumID=117707&p=3&topicID=28558638
Hepsibah wrote:

"OK, here goes.  I am not pretending there is anything ground-breaking in this strategy, it is just one that I have been using recently that has made money - and that is rather rare for me.  If someone feels motivated to code it, that would be great as it could easily be backtested and then we could see if it has just been luck that has made it successful recently.

Noddy
Noddy was the name of a children's book in the UK when I was young (it's apparently considered to be non-politically correct these days but didn't seem to do us any harm!).  Anyway, this strategy is so simple that I have named it after the children's book.

Rationale
The strategy is based around the fact that price will tend to move towards the Pivot value except in times of high volatility/strong trending markets.

Timing
You can choose any time that is convenient to you to trade this strategy.  The trade, SL and TP are all entered at the same time and there is no need to watch the screen afterwards.  I tend to use it most days before the London open (around 6 or 7am London time) and sometimes in the afternoon before the US open.

Setup
Use Camarilla historical pivot lines with only the Pivot, H4 and L4 lines visible (indicator and template at the bottom of the post).  I use it on EURUSD, GBPUSD and USDJPY.   I do not think that it is suited to more volatile crosses like GBPJPY.

When you are ready to make a trade, set the GMT shift value to correspond to the closest hour to the current time so that new pivot lines will be drawn.  For example, if I am up around 6am London time, I will set the GMT value to 7 (I use Alpari UK which is GMT + 1).

Trade Conditions
Check the value of the current period's Pivot line (P) with the value of the previous period's H4 and L4 lines.  If prev H4 > P > prev. L4 then you have a potential trade setup.  If P > prev H4 or if P < prev L4 there is no trade (this usually signifies high volatility/strong trending situations).

If you have a valid trade setup, check the current price in relation to P.  If current price is less than P, enter long, set TP to the value of P and SL to the value of the current period's L4.  If current price is greater than P, enter short, set TP to the value of P and SL to the current period's H4.

I usually also use two further checks.  Firstly, I make sure that the current price is at least 15 pips away from P and secondly, I check that the SL is not more than 60 pips away.  I have to admit that I do not have any scientific reasons for these numbers and it is something that could usefully be checked with backtesting.

Files
Indicator and template attached below.
Noddy.mq4 (8.1 kb)
noddy.tpl (2.7 kb)
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