Forex Strategy “Cherry Blossom”

I looked at midnight:

Celestial River

Changed its Track.

Dear friends, Forex traders! Trading on the market, we use strategies. Strategies, in turn, are based on the vulnerability of the market and on certain regularities – recurring events. In order for the system to work well, to be lucrative, an unusual approach to the market often used (sometimes contradictory to logic). But, if any approach is profitable, why not to use it? Unlike, say, boxing and figure skating, there are no set rules in trading, which means that we can cheat by using some of the “prohibited methods”, tricks and ploys.

Today, we talk about the “Cherry Blossom” trading system, which just uses one of the “tricks”

 

TS Features

• Platform: any
• Currency pairs: AUDUSD, NZDUSD, USDJPY, AUDJPY, NZDJPY, AUDNZD
• Timeframe: H1
• Trading Hours: daily
• Recommended brokers: Roboforex, Exness

 

TS Basis

The strategy is called “Cherry Blossom” and, as you might have guessed, the main idea is to use specific movements for the Asian session – as the saying goes, we go to the East. The strategy is not tied to a specific platform and specific indicators are also not used. From chart instruments, we need only Fibonacci levels.

One of the main trading axioms – the trend is always striving to continue. In this case, the trend will be considered as a candle that from the opening position to the closing point has passed at least 30 points, that is, there was some directional movement.

As we remember about Green Red Candle strategy, the probability that the next day the price will go in the same direction as the previous day is slightly higher that going in the opposite direction. That is, if we have a bullish candle, it is likely that the next day we will also see a bullish candle.

System Rules

Directional movement usually occurs in the main trading session. That is, in the European or American one. But, in the Asian session we usually have either flat or rolling back in the opposite direction. That is the premise we will use. That is, we always enter at the Asian session towards the trend of closed day candle. On Fridays, there is no trade, since the purpose of the strategy loses – a completely different logic works in the period from Friday to Monday.

To begin, open the chart of a currency pair (see the list at the beginning of the review) and turn on the period’s separators – the vertical lines that separate trading day. The Metatrader makes it possible with a keyboard shortcut Ctrl + Y.

The first thing we look at is the size of the daily candle body. That is, the distance from the opening position to the closing point. The size should be at least 30 points. To calculate the points of entry we will use the Fibonacci levels. In the case of a bullish trend, we stretch the grid from minimum to maximum candle (from High to Low).

We do all activities in the midnight. That is, immediately after the daily candle is closed.

After we put the grid, we begin to put the pending orders – orders to buy if the candle was bullish, and to sell, when it was bearish. We put the orders at Fibo levels: 23.6, 38.2 and 50. Type of orders depends on where the price was at the time of setting. In the case of a buy position, we put a Buy Stop, if the price was below the level, and Buy Limit, if above. When buying, the stop-loss is set below the minimum candle and take-profit – just below the maximum. All the same, but in reverse, in the sell position.

Additional rules

• In the case that at the end of the day there is an open position, we just wait another day until the order closes with stop or take-profit.
• If opened positions are not closed after two days, we close them manually, despite the floating result.
• In its turn, the pending orders that didn’t trigger always should be removed at the end of the day.
• If take-profit triggered, we delete the remaining orders (if there are any)
• On Friday we do not trade

Money management

With regard to money management, you can as usually use the lot calculator that can be found in the “Trading Tools” menu on our website. I don’t advise you to put more than 2% of the risk on each position, that is, all three orders. So, the risk on one order is about 0.7%.

Examples

Example 1.

On the chart, we have a bearish candle (D1) with the body in 70 points, and therefore, we trade on the decrease. Since at the time of placing orders the price was below the levels, we put three Sell Limit orders. The stop-loss we set slightly above the maximum daily candle, take-profit – just above the minimum. In this case, all three orders were activated, and the position was closed at take-profit.

Example 2.

Bullish 35 points candle (D1). We put three Buy Limit orders at the levels of 23.6, 38.2 and 50. Only the upper one was activated and then closed at take-profit.

 

Example 3.

We have a huge size D1 candle with a body of 140 points. Because of that, the stop is at a very great distance from the price – I, personally, wouldn’t enter in that case. The only one order (Sell Limit), we close on the second day, with a small floating minus.

Example 4.

The daily candle is 40 points size. In this case, all three orders (Sell Limit) were activated, and the position was closed by Take-Profit.

Example 5.

We have 60 points D1 candle. One order is activated and closed at take-profit.

As an additional filtering, we can use the long-term trend of more than one candle. For example, opening the daily chart, try to put a simple moving average on it. Thus, while the MA shows a downtrend, we ignore all signals to buy and only open for sale. Such a filter can greatly increase the percentage of winning trades.

Conclusion

Of course, the “Cherry Blossom” is not a Holy Grail, but at times, when it is possible to avoid the market reversals and enter right at the correction, the strategy really looks like “the one”. This TS has interesting points, which I am sure you will be able to apply in your own trading strategies. Here, we see a competent idea of entering at the market correction in the direction of an established movement. And, as the orders are placed after the closing of the daily candle, it is often possible to avoid a particularly violent daily reversals.

Best regards, Michael

ForexTraderPortal.com