FREE FOREX STRATEGIES

Developing a system #8 (Three line break fofo strategy)


Submitted by dr.fawwaz

A simple but powerful strategy but needs improvement for exit and take profit, sometimes it will have losses(very few) but all in all u will always be in profit, I'll describe it here and lets all improve it and beat the brokers together, here it is:

It's called the three line break fofo strategy (i made it my self).
Open a 15 min chart eur/jpy (u can use other currencies also but i like this currency) then let your chart type be THREE LINES BREAK INSTEAD OF CANDLESTICKS, that's all what u need, no indicators at all just the plain chart.

Once a green(bull) candle is formed after the end of red candles wait for it to close then go long and once a red (bear) candle forms and closes after green candles have finished just go short.

Take one look at the chart by your self then u will clearly see how easy it is to grab profits most of the time(90% or more).

Thank you and happy trading and cant wait for your feed backs and improvements.


Edward Revy,
http://forex-strategies-revealed.com/

Copyright © Forex Strategies Revealed

this strategy is simply buying and selling after a certain trend has startted. In consequence, this strategy will work well in trending markets and will lose money in sideways markets.

For those interested still interested in 3 line break, I found a review of that system's performance (along with a few other trend following systems) at x-charts.com/downloads
They say the 3LB is not "that" good. There's an awful weekly DJIA chart showing that the losses take back all the profits... I've manually backtested 3LB myself using MT4 and it seems a "OK" TS, but that Dow chart bugged me. I've been testing filters on MT4 to improve the performance but nothing seems to work and I just gave up of 3LB.

I don't know much about programming, but thought may be this general info about 3linebreak construction can be of some help:
3lpb.pdf

Regards,
Edward

how to make metastock formula to portray your 3 line break n base stoc?

Has anyone tested this over a certain period of time? What time-frame seems to be the best? What TP and SL?

Thanks

Claude

Probably. Then if to use Heikin-ashi, while waiting for 3 candles, try setting a limit order somewhere 50% away from the currently traded price - this way, if your order gets filled, your risk/reward ration should be outstanding.

..also while waiting, you can decide to enter on a candle which closed against a trend suggested by heikin-ashi candles, again, this way you'll be lowering your risks.

Is it possible taking Heikin-Ashi and when there three candles in follow are black or white I enter?

Three line break chart is one of japanese techniques. As with others charts it's not the holy grail. If You interested should read Steve Nison's books. Below is quote from his "Beyond Candlesticks

"A Japanese trader described the three-line break chart as a "more subtle
form of point and figure charts where reversals are decided by the market
and not by arbitrary rules. That means we can gear it to the strength and
dynamism of the market.
As shown in Exhibit 6.1,, the three-line break chart looks like a series
of white and black blocks of varying heights. A new block is in a separate
column. Each of these blocks is called a line. Using the closing price, a
new white line is added if the previous high is exceeded and a new black
line is drawn if the market reaches a new low for the move. If there is
neither a new high nor a low, nothing is drawn.
If a rally (sell-off) is powerful enough to form three consecutive white
lines (three black lines), then the low of the last three white lines (the
high of the last three black lines) has to be exceeded before the opposite
color line is drawn (this procedure is explained in detail later in this
section). The term "three-line break" comes from the fact that the market
has to "break" above (or below) the prior three lines before a new opposite
color line is drawn. Here again, as discussed in my first book, we
see the importance of the number "three" in Japanese technicals.
A major advantage of the three-line break chart is that there is no
arbitrary fixed reversal amount. It is the market's action that will give the
indication of a reversal."

Regards,

Andrew

*Dachel, when you say to enter and reenter when bars switch back and forth etc , do we keep all positions until their SL is hit or do we cancel an old order in favor of a new one ?*

We should keep our opened positions

An accuracy of 90% just because of a chart repainted in a special way? Highly unlikely. Btw what does fofo mean?
yes , fofo from fawwaz

A screenshot would be extremely helpful. Not everybody has a Fxsol account. An accuracy of 90% just because of a chart repainted in a special way? Highly unlikely. Btw what does fofo mean?

Dachel, when you say to enter and reenter when bars switch back and forth etc , do we keep all positions until their SL is hit or do we cancel an old order in favor of a new one ?

thank u dear Dachel Miqueli for your nice post.
note : i have developed more than 20 strategies by myself and i will post them here soon for public benefit. i also have more than 50 strategies collected from here and there that i will share soon with u all

Hey nice Strategy and as you asked I have some ST and TP recommendations. I was looking at the 15 min chart of EUR/JPY and I realize that maybe 30pips SL and 60pips TP would be fine.

Think about it, the spread is low so you have room for 30 pips SL and 60 pips TP sound pretty fair to me. At least you will have a 2/1 winning ratio which is good.

I also realize that there is times when you get a red candle, then a green, then another red one and finally the market makes a move......well my suggestion enter every time according to the basic strategy with the SP and TL and you will get your reward. After taking your profit and you are still getting the same bar color get in again and so on.

We could choose to exit when the opposite bar color or candle appear and keep the SL, we can enter if the SL is hit and the candle closes in the opposite color. Well

That's all my thoughts for now so think about it and post what you think. I will soon Upload a new strategy Im developing which has keeping me winning for 3 weeks with a very fair drawdown. Se ya later guys

Dachel Miqueli
[email protected]

And where can we found such a chart? I searched the net, but couldnt find any, either online chart, or an indicator that simulates exactly this chart.


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