A STRATEGY BY TYMEN Trading Without Indicators CBL Naked Trading Method Revision Current as of: 9/2/2010 This document

contains Tymen1s thread discussion concerning Trading without Indic ators. Content taken from The finest in trend trading located at http://forums.bab ypips.com/newbie-island/32400-finest-trend-trading.html

Contents TRADING WITHOUT INDICATORS PART 1 INTRODUCTION ................................. ................................................................................ ...........................................4 How do we draw these [support and r esistance (S/L)] lines? ........................................................ ...................................................4 Drawing of price action ... ................................................................................ .............................................................................6 P ART 2 - THE COUNT BACK LINE .................................................... ................................................................................ ..........8 LONG ENTRY RULE .................................................... ................................................................................ .................................8 Important CBL Points......................... ................................................................................ ..........................................................9 SHORT ENTRY RULE ... ................................................................................ ..............................................................................11 Outline so far of the naked trading method .................................... ................................................................................ ................13 Part 3 - IMPROVING THE RISK/REWARD RATIO..................... ................................................................................ ............17 Exercises ....................................................... ................................................................................ ..............................................19 New and radical method of deter mining exits. .................................................................. .............................................................23 CBL Trade Rules Foundation ..................................................................... ................................................................................ ....25 EXERCISE ................................................................ ................................................................................ .................................26 Exercise Answer ............................ ................................................................................ .............................................................27 PART 4 - THE D.N .A. OF THE BOLLINGER BANDS ..................................................... .........................................................28 Live Examples ...... ................................................................................ ................................................................................ ......32 EXERCISE .............................................................. ................................................................................ ...................................33 Exercise Answer .......................... ................................................................................ ...............................................................34 Modified CBL . ................................................................................ ................................................................................ ...............35 Special cases ................................................ ................................................................................ ...............................................35 EXERCISE ..................... ................................................................................ ............................................................................41 E xercise Answer ................................................................. ................................................................................ ........................42 ANSWER TO EXERCISE .................................. ................................................................................ .......................................44 CBL Rules ............................ ................................................................................ ..........................................................................45 The Count Back Line rules...... ................................................... ................................................................................ ....................46 CBL Method In Detail .................................... ................................................................................

................................................48 THE ENTRY RULES ............. ................................................................................ .......................................................................51 FINAL NOTE ........................................................................... ................................................................................ ..................51 Trade Types ............................................... ................................................................................ .....................................................56 Bubble Trades You Should /Should Not Take ............................................................... .............................................................56 BB Sausage Trade s You Should/Should Not Take ................................................... .................................................................57 Some pointer s .............................................................................. ................................................................................ ...............59 Bollinger Band DNA Chat Room ................................. ................................................................................ ...................................67 Tymens Return ............................. ................................................................................ ...................................................................68 Trading Wi thout Indicators Page | 2

Multi Contract Entry Trading ................................................... ................................................................................ .....................77 BBDNA WhiteBoard........................................ ................................................................................ ..........................................78 CBL Back Test Results.............. ................................................................................ .................................................................89 Trend Tradin g Review ....................................................................... ................................................................................ .........90 IMPROVING THE WIN/LOSS RATIO OF THE BOLLINGER DNA METHOD. .......... .......................................................91 THE MACRO METHOD ..... ................................................................................ ...........................................................................92 Pa rabolic Sar Exit ............................................................... ................................................................................ ............................98 Part 5 EXCELLENT EXITS ON BOLLINGER BAND WALKS .. ................................................................................ ............99 MANDATORY READING ............................................... ................................................................................ ......................100 Exits ................................................ ................................................................................ ..............................................................108 EXIT RULES : . ................................................................................ ................................................................................ ............109 BB Breakout Entry Rules ........................................ ................................................................................ .....................................111 Example Entry BB Breakout ............. ................................................................................ .......................................................112 Slopmeter Code ...... ................................................................................ ................................................................................ ..116 USING THE SLOPEMETER ..................................................... ................................................................................ .............119 Pointers on Trading CBL ....................................... ................................................................................ ...................................122 Exitmeter ............................... ................................................................................ .......................................................................122 BB Pr ofit Walk Indicator Requirements................................................ ................................................................................ ...126 Sage Advice ............................................................. ................................................................................ .................................130 IntroductionThis document contains the teachings of Tymen and his CBL Trading Me thod. All content contained within this document comes from the thread specified on the front page. All content was formatted to fit these pages. Certain user q uestions and answers are included along with Tymens posts. These questions are cl early indicated by the prefixed TA- followed by the question. Tymens answer is pr efixed by TA-. Relevant user discussions, attachments, and remarks are also pres ented. These items are displayed in a separately outlined box and clearly marked as User Input. This document is current as of the date specified on the front c over. To join the current discussions please visit the url: http://forums.babypi ps.com/newbie-island/32400-finest-trend-trading.html. Trading Without Indicators Page | 3

TRADING WITHOUT INDICATORS PART 1 INTRODUCTION Here we will look at blank charts and see how to set up support and resistance l ines. (SR lines). These lines touch turning points in the price action and there fore point to the possibility of future price action turning at these points als o. We, therefore extend these lines into the future. My first example will be a simple daily chart of AUD/JPY with 2 SR lines. Note - no indicators!! How do we draw these [support and resistance (S/L)] lines? 1) De-magnify your chart so tha t a great many candles are visible. 2) Click on the draw horizontal line facilit y in your charting program (GFT is especially good in this respect). 3) Place a line anywhere on the chart. (It should go right across the chart). 4) Now scroll your line up and down so as to touch as many points as possible. .This is a very subjective exercise!! It is best if the price action just touches your line but you can cut through the wicks try not to clip too much off the bodies. in the c hart above I have drawn 2 SR lines and the points of touch/cut are numbered. DAI LY chart of the Cable I have improved the layout!! Each line has a reference col or and reference numbers. This is to prevent confusion. The numbers for each lin e show where the price action touches. In order to try to get as many touches as possible, I have sometimes cut a little thro the wicks. I have tried to avoid c hopping thro the candle bodies. Trading Without Indicators Page | 4

4 hour chart of EUR/USD The same code again - numbers color referenced to stop c onfusion. We again place a line on the chart, scroll it, and try to get as many touches and close touches as we can. At least 3 are required in every line!! We need to cut thro the wicks at times but try hard not to chop thro the candle bod ies. We then get a balance at what we think is the best line. Our best line is s omewhat subjective but this is not critical. 1 hour chart of USD/JPY Here I have really knocked down the magnification so that the candles all appear black. I c an then get as many touch points as possible. Again the same rules for drawing t he lines apply. 20 minute chart of the Swissy 4 SR lines appear here - colour coded. By scrollin g your line up and down, you try to get as many touch points as possible. How ma ny lines to we draw and which ones are important? Well, we will be using only 2 of the SR lines the one from which the price action just came, and the one to wh ich the price action is just going to. Trading Without Indicators Page | 5

This chart is a copy of the chart in the previous post. Only here we have 2 of t he SR lines - the others were removed. On the right hand edge, you can see the l atest price action - it is in between the 2 SR lines. Let us greatly. magnify th is chart The price action came from the grey SR line and is going to the pink SR line. We can expect something to happen when the price action actually reaches the pink SR line. It may pause, go straight thro, or reverse and go up again. At this sta ge we have no idea. It is not important to us what the price action will do at t his point. It is just a marker for us at this stage. What we note is that the pr ice action is going down, that is, going short. What we are going to do, is to f ind a very powerful entry method for trading long when the time comes. Drawing of price action The blue line shows price action on a chart. The pink li ne is an SR line. Now at first the price action is going down and we expect some thing to happen at the SR line. In the past, price action has been bouncing off this line so that is what we expect to happen this time. It does!! So we enter l ong at point E. Now the big boys do not like us tagging along for the ride. Afte r all, they are in the business of making money - which means they have to take our money from us!! So what do they do? Imagine holding a towel at one end and h aving a dog grab the other end in its mouth. If you want the dog to let go of th e towel, you will have to shake the towel, even give it a big flick. If the dog does not let go, you will really have to shake the towel up and down with a stro ng snap to it. Eventually the dog may let go. Now the towel represents the price action. You are the big boy banker. The dog is the small retail trader such as us. Trading Without Indicators Page | 6

You can see what the banker does - he snaps the price action back and forth to m ake you let go. He accomplishes this by shaking the price action back and forth, thus causing you to hit your stops!! If he can get you off his price trend, the n he has your money!! He will then run with it. At point E, you enter long. The banker tricks you and causes a retrace at R you were not expecting that - you we re expecting the price to go the green line shown. Hit stop loss 1. (one shake o f the towel). But you are smart - you stop loss is far away, you are still in th e trade. The traders expect the price action to bounce again at S but the banker s take the price right thro - another load of stops hit!! (another shake of the towel). Traders now expect the price action to go short. But the banker plays tr icks and snaps the action back to long - more stops hit. (shake 3 of the towel). At point T another bounce is expected. The banker tricks you by going straight thro and going long like there is no tomorrow!! (4th shake of the towel). By thi s time the banker hopes to have everyones money. We need an approach that can avo id all of this!! Clearly, indicators cannot take into account these type of emot ions and actions. Indicators are great if all we are dealing with is robot style price action. But with traders emotions at work, the price action ratchets up a nd down and no lagging indicator that measures just closes can hope to keep up. That s why, with indicators, you will be at a great disadvantage competing with those who trade price action right up to the second. That is why the real power of this thread starts only now. But the material beforehand was a necessary prerequisite to understand what we are going to do. Now look at the next diagram Fo r traders who entered at E, the bankers would be rude at point R with a sudden r etrace causing stop hunting. Then they would see all the suckers at S by sending the price thro the SR line, hence hitting more stops. Then they would laugh at point L when they suddenly snap the short action back to long unexpectedly, caus ing more stops to be hit. Then finally, a trick at point T when the small trader s expect a bounce and there is none - final stops hit. In this case, the big boy s have had 4 shots at trying to take other peoples money off them. This could h appen to us quite easily if we used only indicators or if we are not wise to the se actions. So what is the solution....? The solution is to see the downtrend at point D (in blue). We have a method for tracking point E but we do not enter be cause we know what will happen. Our specialized method causes us to enter at poi nt P when all the action is over!! We then go along for the trend ride and make a profit!! So what is this fancy specialized method that we are going to use? Na ked Trading Method. To summarize...... Use the indicator method at your own peri l. I cannot and will not endorse it. Trading Without Indicators Page | 7

PART 2 - THE COUNT BACK LINE - backbone of our naked trading system. The count back line is a procedure by wh ich we get to enter at a certain point after the most extreme candle. It is impo ssible without hindsight to see the top or bottom candle of a trend, but with th is approach, we actually do spot that candle and set an entry from it. So how do es it work? Here we have a downtrend and the lowest candle is chosen (the last c andle in the trend). By lowest candle, I mean the low of the candle. In downtren ds, we always consider the low of the candle when drawing a count back line (CBL ). A line is drawn to the top of the candle, then left till it hits the next can dle, up to top again, left, then top. (3 candles are involved). The final line i s extended to the right and becomes our LONG ENTRY line for when the trend goes up again. LONG ENTRY RULE So the Rule is..top, left, top, left, top. We now wait for the next candle to dev elop and finish. It is a doji candle - that does not matter. It is lower than th e last so we do the following same procedure as before......top, left, top, left , top. We then extend the line to the right and it becomes a new lower LONG ENTR Y line. We now continue by waiting for the next candle. Again it is lower to we again set up the count back line. top, left, top, left, top - extend right. We end up with the same entry line as before. With a downtre nd the LONG ENTRY line will go down, we never raise it. Trading Without Indicators Page | 8

We wait for the next candle to finish. It is lower again, so we draw a new count back line The entry is in a new position. The next 2 candles are not lower than the candle B from which we drew our last count back line (CBL) (Figure 1)We do not draw count back lines from these 2 candles because they are not lower. By lo wer, I mean the low of the candle. This is the point in question. We have to wai t for a long red candle before we get a lower low. From here we draw the CBL (Fi gure 2) Figure 1 Figure 2 Important CBL Points..... The CBL skips across candles 1, 2, 3 because they have highs that are not as high as candle C. If the candles would have the same high as candle C, then we would still skip across the top. We then hit the side wall of candle B. Note that candle 1 does not have an upper wick - its high is also its open. The high/open of candle 1 is not as high as candle C hence we skip acr oss the top. We end up with a new LONG ENTRY line. Sooner or later, the trend is going to change to an uptrend. The price action will then hit our LONG ENTRY li ne and we will enter long. We now have an even lower candle - the yellow candle. The lower wick (low) is way down. We draw the CBL (Figure 3) As the trend goes down, our long entry price is dropping steadily. Figure 3 Trading Without Indicators Page | 9

The next candles are different (Figure 4) Here candles 1, 2, 3, 4 have their low s not going as low as candle L. Therefore, we do nothing but wait. The Next chart shows some action>>> Figure 4 Here the price action is starting to reverse to becoming an uptrend. Our CBL ent ry (LONG ENTRY) has hit a yellow (up) candle and hence we enter LONG at that poi nt. OK then but that does not look very exciting. The price is hardly going up. Are we really going to make a profit? Well, here we have our answer The LONG ENTRY CBL is shown and the price action h as really shot up since then!! Important Note the position of the stop loss. It is easily figured - it is at th e point of the lowest low. So now we know how to draw and set a count back line. It can be done on any timeframe. The above candles were taken from a 4 hour cha rt. The count back line will become the major tool for our entries. At this poin t we can use the SR lines as exit points. Remember we use a 2 contract strategy for money management. Therefore, we have 2 exits - one at an early SR line and o ne at a later SR line. I have shown you how to draw a count back line when the t rend is down and we are looking for an entry into a reversal, that is, an uptren d. I must now show you how to draw a count back line for an uptrend when we are looking to enter into a downtrend. (Confusing but the diagrams will make it clea r). Trading Without Indicators Page | 10

SHORT ENTRY RULE OK, now I show you the same operation for an uptrend. The trend is up this time and we look for the highest high. From there we draw the CBL. It goes........... bottom, left, bottom, left, bottom. As before, we then extend the line to becom e our SHORT ENTRY line. We continue by seeing that the next candle has a higher high Look at Error! Reference source not found., the same procedure as before bottom, left, bottom, left, bottom. Extend to the right to give new SHORT ENTRY line. Now look at Error! Reference source not found., we forget about candle A b ecause it does not have a higher high.. But the next yellow candle does. Again, the CBL, the short entry line is much higher now, giving a better short entry. T his is also the last of the higher high candles. After this one, the trend start ed downwards. Figure 5 Figure 6 Now to look at the whole picture >>> The stop loss is placed at the highest poin t. The count back line came from this point as in the previous chart. The SHORT ENTRY line is shown. It crosses the lower wick of a red candle - we enter here. The rest of the trade is a roller coaster ride downwards!! Trading Without Indicators Page | 11

Here is a complete operation using the SR lines and the count back line for entr y Explanation. The SR lines from a daily chart are drawn and I have made them ea sy to see by using different color bands between the SR lines. There are 5 SR li nes in all with the bands in between being (from top) yellow, green, yellow, blu e, grey, orange. A downtrend is shown, starting with a high candle that was the top of a previous uptrend (not shown on the chart). The high candle also touches one of the SR lines. These lines mark turning points so that is not surprising. So there was an uptrend (off the chart) - it hit the SR line and reversed into the downtrend that you see on the chart. The high candle also has the stop loss drawn alongside it. (red dashed line). From that high candle, we draw a count ba ck line to give us a SHORT ENTRY line (blue line). Check for yourself that I hav e drawn the count back line correctly. The Trade We enter the trade with 2 contr acts by entering SHORT at the CBL. As the trade progresses, we hit the first SR line (green/light yellow). Our first take profit (TP1) should really be about th e same as the stop loss (SL) so this point is not enough pips. We let the trade run. Our 2nd SR line (yellow/blue) is better. Here we can exit our first contrac t for a profit. The 2nd contract exit is up to you - we have 2 choices. The firs t choice (blue/grey) if you are conservative. The second choice (blue/orange) if you are daring. Remember, the price action could turn anytime, so it a really d aring move to go to the second choice (blue/orange). TQ- I assume the same entry rule applies as to the close of the candle. Even if our entry price is hit we d o not enter until the candle closes? TA- You have a choice here!! Enter upon clo se only or Enter as soon as price action touches the CBL. Whichever choice you m ake, be consistent. I ask that readers do 2 things which are essential for good trading on this method.......... 1) Practice loading SR lines on your demo chart s. Take them from the daily + 4 hour charts. 2) Practice doing count back lines. Get this operation so good that you can do it in your sleep. User Input: Higher timeframes are used to provide "guidance" for trading - basically they identify the direction in which you are going to place your trades for the session. If t he higher timeframes (4h, daily, weekly) all show an uptrend, then your bias on the shorter timeframes (1h, 30m, 20m, etc) should be upward - that is, you will be going long on your trades. If the higher timeframes show a downtrend, then on your shorter timeframes, you will be going short. So, what happens when your sh orter timeframes don t line up with your longer timeframes (that is, the longer timeframes show an uptrend, but the lower timeframes show a downtrend)? You wait . Patience is the key, here. Trading Without Indicators Page | 12

Do not go short when the trend in the higher timeframe shows a bias for longs, y ou are more likely to be stopped out. The same is true for going long when the h igher timeframe bias is for shorts. Now - to apply it more to Tymen s method: Di sagreement between the two timeframes (say the daily and 1h) is good! You start drawing your CBL s when this disagreement is occurring, so you can get the best possible entries! This prevents you from jumping in the middle (or even worse just at the end!) of a trend, so you can maximize pips! As I see it, the idea be hind these CBL s is to get into the trend identified by the higher timeframes at the optimum time on the lower time frames. This lowers your risk, and increases your gain - making your Risk/Reward ratio more favorable. Outline so far of the naked trading method STEP 1- Pick a daily chart and find at least 2 SR lines, one on each side of the price action. STEP 2- Switch to a 4 hour timeframe and add some more SR lines. The total number of SR lines on your chart should be about 5/6 in all. Do not ad d too many or it will clutter your chart. STEP 3- Stay in the 4 hour chart. When the price action starts to approach an SR line, then begin to construct count b ack lines. If the price action bounces off that SR line, it will eventually cros s your CBL and you have an entry. If the price action continues and ignores the SR line, then you will have opportunity to construct a new count back line when the price action approaches the next SR line. Note that the CBL will give an ent ry in the opposite direction that the price action is currently moving. That is, if the price action is going up, your CBL will give an entry for going down (sh ort). And vice versa. STEP 4- When doing entries stop worrying about the spread. Your entry is your entry. The spread is included in it. For example, if your sp read is 3 pips, then you have to make 3 pips after entry before you make profit. STEP 5- Do not forget to set your stop loss at the high/low point of the 1st ca ndle in the CBL. Do this in the 4 hour chart. STEP 6- Set your TP1 at the next S R line in the price direction. Set your TP2 at the 2nd SR line in the price dire ction. Do this in the 4 hour chart. After entry, retracements may occur, causing a drawdown. But a trade is not complete until either the TP or the STOP LOSS is hit. So we wait until one of those two happens. Since we are entering 2 contrac ts, we simply keep going after the TP1 is hit. The stop loss is moved to break e ven, and then either TP2 or the stop loss will be hit. When one of those is hit, the trade ends. Here is a diagram showing the steps outlined Practice the above on your demo chart and see how you go. Do not give up if the price action hits the stop loss instead. I now here show what is optically, a more pleasing way fo r you do draw the count back line (next page picture) Trading Without Indicators Figure 7 Page | 13

In this new way of drawing, the rule is still....... bottom, left, bottom left, bottom. However, when you go left, draw right in to the centre line of the candl e. That is, when you go left if you hit a wick, you go alongside the wick. If yo u hit a body, you go into the body to the centre line of the body. The diagram s hows it clearly. You will find it is an easier and more visually pleasing way to draw the count back line.

Trading Without Indicators Page | 14

TQ- . I think it will be interesting to share our ideas about this strategy, you ll find this chart, not convinced about it, what do you think ? TA- According to your chart The CBL is drawn correctly and you hit the stop loss. Bummer!! But n ow look at this >>> Here I have drawn the 2nd CBL that would result from your tr ading. It gives the same entry line but now look at the profit!! TP1 is clear bu t I cannot place TP2 on your chart because of lack of SR lines. Further, DO NOT use pivot point lines - they are calculated lines according to a formula. Theref ore, effectively they are an indicator. SR lines are direct observations from th e price action and are not mathematical manipulations such as pivot lines. TQ- D on t forget to factor in the spread to the prices that you want to enter at/exit at. TA- NO!! Forget about the spread!! Just enter the trade. The spread will qu ickly be paid as the trade goes into profit. The idea behind the SR lines and fi nding appropriate count back lines is not to make heaps of pips. I do hope your practice is on a demo account. It does not matter if your trades hit the stop lo ss. It is the practice of this approach that is important - to get acquainted wi th it. Let me post an example myself >>>

Here I have set 3 blue SR lines from the daily chart of AUD/JPY Here I go to the 4 hour chart and add 1 more pink SR line I have chosen 4 trade areas, 3 long, 1 short. Here is the 1st trade and its asso ciated stop loss The price action goes completely short, (see main chart, previous post). As a re sult, the CBL never cuts thro a candle and the trade is not filled. The 2nd trade The CBL and associated stop loss are shown. Observe that the TP1 w hich is the SR line, is very close to the initial entry at the CBL. There is lit tle profit in TP1 here. But TP2 is much better!! Trading Without Indicators Page | 15

Here we have the 3rd trade At the beginning the price action was going up and a CBL for short was set up (red lines). The stop loss is shown. Also shown is the TP1. After price action hits TP1, we move the stop loss to break even as shown o n the chart. However, after TP1, the price action went up, going against us. So eventually it hit the break even stop loss. Result - TP1 profit only. Here we have the 4th trade The CBL and stop loss fall into place nicely and some time later the entry is triggered. To see the rest of the action I have to zoom out, so much so, that I have to revert to a daily chart!! >> The CBL entry is a short green line, the stop loss is the dashed red line. The T P1 gets filled, the TP2 is still yet to come!! Error! Reference source not found . Remaining Page Left Intentionally Blank Trading Without Indicators Page | 16

Part 3 - IMPROVING THE RISK/REWARD RATIO. At this point in our thread, things start to hot up and get exciting!! If we can now get more pips profit for less risk, we are well on the way to developing a quality trend trading method. Some very unexpected surprises are yet to come!! T hen we will work on improving the win/loss ratio as well and so we will end up w ith a super trading method!! Our 1st step in improving the risk/reward ratio is extremely simple after drawing the SR lines from the daily and 4 hour charts, we move on to the 1 hour charts!! We use the 4 hour chart as our home chart and th e 1 hour chart as a timing chart. Lets see what happens when we do this....... H ere again, is the daily chart For an example, I am going to use that 4th trade i n my last trade examples. And below is the 4 hour chart The green line is the correctly drawn CBL taken from the lowest candle. Now lets go down to the 1 hour chart Trading Without Indicators Page | 17

The green line marks the CBL entry line. But it is too difficult to see. Lets ma gnify it >>> The old entry line (green line) can be seen at the top of the chart. The new ent ry line (pink) is in the centre. Note that the new entry line is also below the immediate SR line. We have to be careful here that we do not confuse SR lines. T hat is why we monitor the trade on the 4 hour timeframe. The difference between the 2 entry lines is enormous!! In fact a total of 92 pips (100 pips round figur es!!). So lets have a look at some percentages....... Stop loss = 78.18 OK, some math....... Before (4 hour) Worst reward is..... TP1 only = TP1-old CBL = 290 p ips. Risk is....... stop loss-old CBL = 150 pips. Worst Risk/Reward = ~ 1:2 Best reward is....... TP2 + TP1 = 946 + 290 = 1236 pips. Risk = 150 pips. Best Risk/ Reward = ~1:8 After (1 hour) Worst reward is.......... TP1 only = TP1-new CBL = 382 pips. Risk is.......... stop loss-new CBL = 58 pips. Worst Risk/Reward = ~ 1 :6.5 Best reward is TP2 + TP1 = 1038 + 382 = 1420 pips. Risk = 58 pips. Best Ris k/Reward = ~1:24 Old CBL entry = 79.68 New CBL entry = 78.76 TP1 = 82.58 TP2 = 8 9.14 That last figure is a staggering improvement!! ....... 1:24 compared with 1:8 Le ts consider the percentage improvements...... In this trade, if we get TP1 only, we get a 25% improvement in profit. In this trade, if we get TP1 + TP2, we get a 13% improvement in profit. The risk is reduced by an amazing 60%. So you can s ee that just by using a 2nd timeframe we greatly improve our trading efficiency. NOTE - we do not go down to a very small timeframe. If we did we would experien ce waves like the sea and this would confuse us. There is a practical limit to h ow far we can downsize. Trading Without Indicators Page | 18

Exercises 1) Set up your SR lines on the daily/4 hour as before. 2) When the pri ce action approaches an SR line, switch to a 1 hour timeframe (timing chart) and set up the CBL from there. 3) Once the CBL is in place, wait for an entry. Use the 2 contract money management method (TP1 + TP2). If you practice this diligen tly, you will see how simple this method is, and you will also start to make som e substantial amounts of pips with little risk!! But beware!! Practice on demo o nly!! All the work everyone is doing is basically just practice. Practice for wh at is to come. This is all I can get you to do while I am away. We are nowhere n ear the final method yet. Those who are participating here have the clear advant age - you are learning by experience!! All the hangers-on who are just reading t his thread are getting none of the practical benefit and experience needed to co mpetently trade the finished system. Who has the greater benefit is learning to play a guitar - a person who learns just from reading a book or someone who not only has the book but also a teacher who teaches then how to play from the book? So it is here - those who participate are discovering all sorts of things inclu ding their own levels of confidence and ability to withstand pressure. None of t hese things are available to the watchers-only. So I say to all of you who are r eading this thread and not participating - get off your backside and give your d emo account a solid workout. You will reap many benefits in doing so!! Recently we appear to have identified a number of things....... 1) The SR lines appear to be very subjective - one is tempted to put them far away from the TP1 position so as to maximize profit, even if the line is not really a good one. 2) The risk , cut down on the1 hour timeframe, still appears to be large. Merchant Prince ha s in particular lamented at this I have good news for him ahead!! 3) Although th e wins seem to be reasonable, the losses are coming in too frequently and could well put off a new trader. An entirely new approach is about to arrive!! (surpri se!!) The present work was to get you to be familiar with the workings of the CB L (which stays), and the operation of the 2 contract trading method for money ma nagement. The SR lines give practice on vigilance. We are about to embark on the use of any timeframe to give a risk that suits the particular trader. We are go ing to compare the abilities of the SR lines vs the Bollinger bands regarding th e price action analysis and setting of the CBL. Even in our naked trading, it lo oks as though we are going to need one indicator to guide us - not tell us what to do as in say a MACD or stochastic, but just a guide. We are looking to use th e Bollinger bands as a substitute for determining SR levels. The BB do an excell ent job at showing up extreme points, and they do this without all the subjectiv e feelings that we may put into our SR lines. So the BB will become our new SR l ines!! It is a little tricky to get the syllabus to be in logical sequence at th is point so I will start a chart for openers. Trading Without Indicators Page | 19

Here is a CBL with the SR lines in color and the BB overlaid. Without the BB, yo u would start to consider your TP1 exit at the yellow/white border. But with the BB, you can see the outer bands expanding at this point, going for a bubble or sausage. (see, we have not wasted our time learning this there is a sequence to my curriculum!!) So with the BB, you would not bother with this SR line at all. Instead you would wait until the black vertical line when the opposite BB begins to contract. This is the same point at which the yellow/blue SR line appears!! So, not knowing yet whether this is going to be a bubble (price retraces firmly) or a sausage (price regains strength downward), we could put a TP1 at this poin t. After this point, the price action retraces, but a few candles on, we see the price action re-testing the yellow/blue SR line for the 2nd time. The opposite BB also has a very pointy shape to it, unlike our familiar bubbles with their se xy round "behinds". Ah ha!! - a sausage!! Knowing that we have a sausage, allows us to ignore the test and re-test of the blue/grey SR line and go for a much be tter profit down in the grey zone. So this chart with BB overlay shows that the BB appear to do a better job of instilling confidence in where to exit. I now ne ed to deal with some troubling matters. The 1st is the case of getting an entry with the 1 hour timeframe using the CBL while the 4 hour misses out for very goo d reason. The CBL is really designed for only one timeframe, not going across ti meframes. We used the CBL on a 1 hour timeframe so that it would give a smaller stop loss. But in the process we also get unwanted entries and entries that do n ot co-ordinate with the higher timeframe. So what are we to do to get smaller st op losses? Well, one way is to keep the standard stop loss given in a 4 hour tim eframe but find a method that will give us a much better profit. So instead of m aking the risk in the risk/reward smaller, we can make the reward in the risk/re ward larger. But how are we to do that? The 2nd matter is that of looking at the risk/reward ratio more carefully. In forex trading, it is not good enough to ha ve a risk/reward = 1:2 or 1:3 or similar if we have a mediocre win/loss rate. Mo st win/loss rates are around 50% or less. Our 2 contract strategy improves that but still not enough for the above risk/reward ratios. It is these ratios that c ause forex traders to fail. A reward twice or three times the risk, with a basic win/loss rate does not let your profits run. You only need to have 3 or 4 loser s in a row and you are in real trouble. You are now behind, running at a loss an d this needs to be made back again before any real profit is made. That is a dif ficult ask and for this reason most methods out there fail in the hands of the g eneral trader. Assuming a mediocre win/loss rate, we need a method that has bite !! A method where you can let your profits go like there is no tomorrow!! A meth od where your profits run like the wind and, therefore, the risk is tiny in comp arison. It is then that you can afford to lose several trades in a row. Even aft er that you are still in profit. Now that is a method that works. So we will be looking at this idea. Trading Without Indicators Page | 20

A 3rd matter is that we want to be able to trade all timeframes, not just the da ily and 4 hour. These are attractive timeframes to trade, but another way to cut the risk is to operate the CBL on a shorter timeframe. In such a case, both the risk and reward will be smaller, but will appeal to those with less funding to execute a trade. So we need to look into this as well. Having experimented with the SR lines I think we can all agree that there is not much potential for major profit runs with these lines. One can be tempted to ignore close SR lines and g o for the ones further away, but this goes with the attendant risk that the pric e action could bounce and retrace. In any case, there appear to be severe limits on your profit potential with these lines. So lets look into this and see how w e can improve our risk/reward ratio while keeping the CBL in the same chart. Let s have a look at a trade. This is a 4 hour chart of USD/JPY with a whole lot of SR lines on it The BB have been overlaid on the chart. We start with a CBL which is taken from the low of a downtrend. The trend goes up after this and we get a n entry with 2 contracts at the squeeze of the Bollinger bands. Yes, trends are often born in BB squeezes - MUST KNOW!! We sit and do nothing while the BB expan d. The opposite BB contracts at the black vertical line and here the price actio n has retreated to the mid BB. No worries, the mid BB is going up and we are in the trade until EITHER the price action hits our TP OR hits our stoploss - which ever is first. Leave the trade to go - do not micro-manage it. The price action pleases us by going up. It then enters the area where we have drawn our many SR lines. Now we know exactly what to do, don t we? We do know what to do - yes?? H mmmmm. Which one tells us to exit? The fact is that all these SR lines have rend ered our chart meaningless. The Bollinger bands, on the other hand, clearly show us that we are in a BB sausage. We can make good use of that fact. I humbly sub mit that those who use SR lines only, face trading problems of their own. That i s, the SR line trading method is not some holy grail - it has its problems just like any other method. The great advantage of SR lines and CBL is that they are not lagging indicators. The Bollinger bands need not be a lagging hindrance to u s either, if we use it as a guide rather than a timing device for entries and ex its. Trading Without Indicators Page | 21

Lets now s before on price the BB.

look at exactly the same trade using the simple exit method. Same CBL a and the same waiting for the black line. The simple exit method relies action hitting the BB, then exit on the 1st candle that pulls away from The exits are shown.

Now we look at the same trade again using the other method of exit for the BB sa usages, the parabolic sar In this case I have used the parabolic sar dots. The e xits occur when the sar switches over and the dots are projected forwards as can be seen on the chart. The trade is a 2 contract entry, hence 2 exits - TP1 and TP2. Trading Without Indicators Page | 22

This is the same trade using the same parabolic sar but in line mode instead of dot mode. This is done in case readers have problems seeing the dots New and radical method of determining exits. I have not shown this method before. This method will indeed let our profits run . It involves use of the Fibonacci lines. Fibonacci lines are not an indicator a nd this approach does not lag. Stage 1 Lets look at the same chart again with an application of Fibonacci The Fibonacci tool should be in every trading platform including MT4. It is very easy to use - click one end point and drag to the 2nd end point. My 1st two points are labelled P and are the end points of the first upward trend. The blue line shows the lowest retracement line. We note that in the area A, there has been no close below this blue line. Therefore, the probabi lity that the price action will continue going upwards is greater than that of r etracing. We, therefore, do nothing, and let the trade run. Now to stage 2 We have had another nice run upwards, and tarts to retrace, we identify the extreme points and use n. The extreme points are labeled P again. Again we have there is no close below the blue line, so we do nothing (the probability rules apply again). Trading Without Indicators Page | 23 when the price action s the Fibonacci tool agai a blue line. At area B, and let the trade run.

<<Now to stage 3 Exactly the same thing again!! identified and labeled P. The ex treme points of the last upward trend The same blue line and retracement area C comes nowhere close to it. As a result , we do nothing and let the trade run as before. Stage 4 >> The same scenario again. Area D does not even come close to the blue line. Do nothing and let the trade run <<Stage 5 Ah ha!! Here we have a different scene!! After identifying the extreme points of the latest uptrend, the retracement crosses thro the Fibonacci blue l ine. At this crossing point we end our trade!! What a spectacular run!! Trading Without Indicators Page | 24

Now to compare the different exit methods to see which gave the best exit. The F ibonacci exit came out way in front!! The risk/reward ratio in the simple/parabo lic sar approach is approx 1:1. (the TP1 is an added extra). That is not good. T he Fibonacci is approx 1:2+ Not the best but a whole lot better than before. The re are problems with this approach of course. If the first retracement hits the blue line, we have an exit that would be far worse than using the other methods. We note also a very important point here. The Fibonacci exit method does not ne ed the Bollinger bands. The Bollinger bands would only be used to locate extreme points for drawing the CBL. We still have one major problem to overcome...... R egardless of what we do, picking the location of the CBL is tricky. Sure it is a t the extreme of a trend. But far too often, after correctly drawing the CBL, we enter only to see the price action reverse on us to hit the stop loss instead. It does not seem to matter whether we use the SR lines or an extreme on the Boll inger bands - the losses continue!! We need to do something about this. Our win/ loss ratio is absolutely shocking. If we can improve the win/loss ratio then we can get our confidence back and also the risk/reward ratio does not become so cr itical. We have started with the 2 contract strategy but we now need to do somet hing major. What will it be? Believe it or not, we are coming towards the last s tages of this thread. CBL Trade Rules Foundation Lets take stock........ We are trading trends. We want to avoid indicators. We w ant our method to be easy to understand/use. We want to have a high win/loss rat io. We want to have a high risk/reward ratio. We want our CBL to be on the home chart. We only want to use one chart. We want to use any timeframe that we choos e. We want our exit method to be user friendly. Are there any other requirements ? The work from here on gets quite tricky. Are you sure that you are up to the tas k? I am not driving you away, but I would have thought that you would have prefe rred a simpler thread with a simpler trading method. You must learn to walk befo re you can run. This is not a thread for beginners - there is enough of that stu ff already on this forum. I do give you fair warning that from here on you may f ind the material very difficult to understand. I make no apology for that. I am posting a choice system that works. This system (method) is for dedicated elite traders only, but it requires some years of trading experience to implement prop erly. So if you find it hard going, my advice to you is to bow out now and find something more within your grasp. If you fail to grasp the concepts and principl es described from here on, you will not be able to trade using this system to co me. You will fail badly and lose money in large amounts. Trading Without Indicators Page | 25

Finally, I make it clear that I refuse to accept blame for other people s losses if they use my systems or go by my recommendations. I simply do not have any co ntrol over how you trade, therefore, the consequences of your trading are yours alone. All of the above requirements that I stated can be met. We do need to hav e something on our chart - even naked trading uses SR lines. I believe that usin g the Bollinger bands for detecting our entries is a better way to go, since the BB detect extremes in the standard deviation function. The BB allow for excelle nt placement of the CBL if only we could win all the time. That is the one big p roblem we now have - the win/loss ratio. And it is to that problem that we now t urn our attention in another amazing unpredictable way!! EXERCISE You have 2 tra ding choices..... 1) 2) Opening a trade going for 100 pips with a risk of 10 pip s. (risk/reward = 1:10). But the win/loss ratio is 50:50. That is, the chances o f losing this trade are just as great as winning it. Opening a trade going for o nly 15 pips with a risk of 10 pips. (risk/reward = 1:1.5) But the win/loss ratio is 98% chance in favour of winning. (win/loss = 98/2). Which trade would you choose and why, [you only have one trade to do] ? TQ- Cord ite help me for remember to speak about fibo extensions , right TA- The Fibonacc i exit method does allow us to get greater pips by prolonging the exit point. It does this by allowing the trade to "breathe" during a retracement period. Howev er, there is one drama with it which I will describe below...... Here is a simpl e diagram of price action The trend is up and the red sections are retracements. The problem is that the retracements do not produce profit. They are stagnant a reas where we simply diminish what we have already. Imagine this being a daily c hart. You could be in retracement for 10 days or more!! What a waste of time!! W hat a waste of trading opportunity in another currency/timeframe!! Would it not be better if we traded the blue sections long and the red sections short? Yes, a few more spreads, but a whole lot more pips for us!! That way, the red sections are working for us and not against us. Trading Without Indicators Page | 26

Exercise Answer (A User Answer First) If I did 10 trades. 100/10 profit/loss, 50 /50 win/lose ratio, 5 wins at 100 pips=500 pips, 5 losses at 10 pips= 50 pips Ne t profit is 450 pips ( not counting the added gray hair from the 50/50 ) If I di d 100 trades = 5,000-500=4,500 If I did 100 trades. 98x15 pips = 1470-20=1450 pi ps profit Which method would I prefer? Method 1 would require deep pockets and l ots of confidence...and patience. Method 2 would probably require a lot more tim e at the computer. I think I would prefer method 2. One in the hand is worth 2 i n the bush...at least on the nerves anyway. Method 2 would also enable a trader to increase the value of each pip progressively as he went along. OK, back I am and to answer the whole matter in detail. The original question was meant to say that you had only ONE trade. A lot of readers assumed 2 trading methods and tha t is completely my fault - I did not make myself clear. My Analysis of the Answe rs I think it would be reasonably fair to assume that if you only had ONE trade, then, faced with these choices, you would choose option 2. With option 2, your pips, even being less, are at least guaranteed (almost) whereas in option 1, you are effectively gambling in the hope of a much greater gain. What is most inter esting, however, is the division between the two groups of answers assuming an o ngoing series of trades. The hardened mathematicians go quite correctly for opti on 1. The people who can see emotions coming into play prefer the safety of opti on 2. Lets look at some interesting points...... ................ Is the need fo r comfort so great that you would settle for a method which is more than three t imes less profitable? .............. To this I would say yes to those who are ne w traders who need every bit of confidence they can get and also those whose fun ds are very limited and would get very nervous at the sight of 3/4 losses in a r ow. When I first started trading I punched $600 losses into my account on a regu lar basis. But then I was a bit of a wild guy. I have always believed in going r ight out on a limb!! Back in my earlier days I used to go hang gliding and I mad e a habit of jumping off high sand dunes and regularly crashing my aircraft. Not so funny landing upside down all the time, especially when you are harnessed in !! My forex trading got the same treatment when I started!! Today I am much more polished and markedly more conservative!! We are on terrafirma - and the more f irma, the less terra!! I know the danger of losing your money and I fully unders tand the need to have a highly rated win/loss ratio. Maybe this post sums up the whole position best..... ................ #2 would be the better option because many would deal with emotions too. If we are robots it would work with #1, but reality would dictate for many #2. ................ This is what I am inclined t o think too!! Trading Without Indicators Page | 27

A start out would dictate the use of option 2. But when you are financially secu re, you could choose option 1 for greater profits while putting up with the frus trations of 3/4 or more losses in a row. But wait a minute!! If you had a system which had such a high win/loss ratio would you not work it at a much higher lot value? That is, would you not exploit that advantage for all that it is worth? What do readers and prospective new traders look for on this forum in the way of a trading system. Something that is complex - NO. Something full of indicators - maybe. Something with a high risk/reward ratio - most new traders do not under stand the term, let alone realize its significance. But what happens when a syst em with a high win/loss ratio comes along - people gravitate to it like bees to a honey pot!! I proved this conclusively some time ago when I scored 2000 posts. I then posted a hoax system as a joke and called it the greatest winning system ever. Now just about everyone on the forum jumped on the bandwagon - except a f ew experienced traders who did not want to be embarrassed!! So I think we can co nclude this exercise at this point by saying that a high win/loss ratio system i s the best confidence booster that there is!! If we have such a system, then we can trade larger amounts and compound our profits!! This is certainly the way to go, and with that final comment I now embark on continuing this thread by showi ng you how we develop our system to a win/loss ratio of about 90% or more!! PART 4 - THE D.N.A. OF THE BOLLINGER BANDS This topic is absolutely revolutionary and is at the heart of my trading method. I am extremely reluctant to post this material because I classify this as basic ally secret. So, most importantly, I do not want hangers-on going beyond this po int. If you have little trading experience, or are just being casual, stop here now. The stuff here will be beyond your ability to use!! At the outset I say tha t we will also try to improve our risk/reward ratio as well. But I think we shou ld realize that my above example was rather extreme - a risk/reward ratio of 1:1 0 is a very rare thing indeed. Much more common is a 1:2 or 1:3 ratio. With a wi n/loss ratio of about 50/50, such trades can get you into trouble very quickly w ithout astute money management. So we will work on the win/loss ratio now and lo ok again at the risk/reward with the Fibonacci method - the retracement value I used was the 38.2% level. It was some time ago that I was reading my copy of Joh n Bollinger s book "Bollinger on Bollinger Bands" that I happened on some sort o f discovery. I remembered what I had discovered and in the days afterward I look ed further into this and discovered even more and the outcome was quite startlin g!! Yes, I had made a discovery!! Whether it is new or others knew about it I do not know. What I do know is that this stuff has never before been made known an ywhere. And it is the stuff from which a 90% or more win/loss ratio is generated !! I put it to extensive tests and it passed with flying colours every time!! Th is amazing method was rock solid and did not fail. What is it? Trading Without Indicators Page | 28

It is the DNA of the Bollinger Bands!! Now I am going to firmly introduce you to the Bollinger DNA system.In order to do that I have to take care of knowledge a ssumed, that is, to make sure everyone is on the same footing. I am sure that mo st people know about DNA, but I will just revise the biological basics here so t hat no one misses out. Please understand that I am not trying to insult your int elligence. I just want to make sure that every reader here has the same backgrou nd knowledge. You never know when someone misses out. Tonymand and o990l6mh, bot h Honorary FX Members and medical people, will of course know much more about th is than I will ever know. I am only a school teacher!! Anyway, the background fo r starters........ This diagram, taken from an ancient secret text, shows the 2 strands of nucleotides making the "uprights" of the "ladder" The deoxyribose (pentagons) and phosphate groups (dots) make up these uprights w hile the ladder "rungs" are made up of 4 nitrogen bases. These bases are shown i n the next ancient manuscript . There are 4 bases linked in twin pairs - adenine , guanine, cytosine and thymine. Lets now look at how this is similar to the Bollinger DNA system....... The nucl eotide uprights of our ladder are two uprights. They are the two outer bands of the Bollinger bands. The rungs, the nitrogen bases, are the price action element s as the price oscillates between touching the BB. This idea may not be so origi nal, but the sheer power comes in when we use a 2 contract strategy to trade wit h. We have many trades, in any timeframe, with an extraordinary degree of reliab ility in making a profit. Lets go into the method in detail by looking at the 4 types of price action that are contained within the Bollinger bands. I will use diagrams to outline these and use colors to distinguish between the 4 types of p rice action. Trading Without Indicators Page | 29

This is a basic first diagram showing what we are trying to do. Ignoring the mid BB for the moment, we are trying to enter a trade at one of the outer BB and ex it when the trade reaches the other outer BB. Thus we are trading the rungs (the 4 bases) of the ladder (the outer BB which is the nucleotide chain). The princi ple is that simple. There will be lots of trades, they are short in duration (un less you are trading the daily) and with the method explained below, become very profitable. Here is the first of the 4 types of price actions. The trade is entered at the l ower BB and exited at the upper BB. Note that the mid BB is going in the same di rection as the price action when we are halfway thro the trade. The first type going the other way. Note again that the mid BB and price action are going in the same direction when halfway thro the trade. Trading Without Indicators Page | 30

Lets now have a look at something which generates the second and third types of trade In this case we see that the mid BB and the price action are going in oppo site directions. After entry we reach the halfway mark and note that the mid BB is going in the opposite direction. Therefore, we set our TP1 at the mid BB and the TP2 at the other outer band. With the mid BB in opposition, we will at least hit TP1 but it is unlikely that we will hit TP2 at the other outer band. After TP1 is hit, we set our stop loss to the entry point to break even. (Note that th e entries are done via a modified CBL) Sometimes we get lucky and the price acti on continues onward past the mid BB to hit the opposite outer band and give us a full trade profit of TP2 as well. But mostly it is not like that and we are con tent with TP1 only. Now examine further......I have shown the rest of the price action in red in its unsuccessful format. It does not go to the opposite outer b and but instead retraces to the break even point. Sometimes it goes right back t o where it started - the original outer BB. (point A). Sometimes it retraces to break even and then goes on to the opposite band (which we wanted in the first p lace), but it is too late then. (point B). The break even point has been hit and the trade is over. Note that the green price action is type 2 and gets a TP1 PR OFIT ONLY. The red price action is NOT TRADED. The red price action is type 3 an d is a LOSS price action. Here is the 2nd version of the red type trade that you will cme across. This one is responsible for any losses in this method!! The tr ade starts out but the price action fails to reach even the mid BB. It retraces before the mid BB, thus nullifying hopes of hitting even TP1 when placed on the mid BB. This price action could retrace right back to the original BB or do some retracing, then go on anyway to the opposite BB. When we see a price action fai lure to reach even the mid BB, we apply Fibonacci with the end points being entr y and point P. The blue line is 38.2%. If the price action goes thru this blue l ine, close and post a loss. It does not matter whether the price action returns to the original BB or the opposite BB - we have a loss and that s that!! However ............... If the price action fails to reach the mid BB and the price acti on does not go thro the Fibonacci 38.2% blue line, we then stay in the trade!! T he price action will most likely reach the mid BB (TP1 ONLY). (Shown in pink) So metimes it may even pass thro the mid BB (TP) and then reach the opposite BB (TP 2). (pink trade). I will now name these 3 price action types so far so that we c an refer to them. 1. O - O ..............Outer to outer BB. This is a simple tra de where the mid BB is in agreement with our trade direction. The TP1 and TP2 ar e both set on the opposite BB. (This price action is shown in pink). 2. O - M .. ..........Outer to mid BB. The TP1 is set at the mid BB because the mid BB is ag ainst our trade direction and there is a very high probability that the TP2 will not be met but break even instead. (This price action is shown in green). Tradi ng Without Indicators Page | 31

3. R - O .......... Retrace back to Outer.. In this case price action can do 2 t hings........ a. Starts from the mid BB and returns back either to the original BB or the opposite band, we do not know which. (untradeable). b. Starts out as a n innocent looking trade but fails to reach the mid BB. Trouble from hereon. The price action retraces and a Fibonacci test is applied. If th price action goes thro - we post a loss. If the price action does not goes thro - we stay in the t rade. This price action type is untradeable and this is where losses occur. (Thi s price action is shown in red). The 4th type of price action is very simple and will now be shown. The 4th type of price action is very simple again In this ca se the mid BB is very much in agreement with us and after entry the price action not only touches the opposite BB, but also walks the BB. The TP1 is set at the 1st touch and TP2 is set at the end of the walk. After that the price action wil l leave the BB and go off into another direction. This 4th type is named O - BB. ........Outer to Bollinger Band walk on the opposite BB. This price action is s hown in blue. Live Examples Here is a BB bubble We have seen this one before. But now it is so simple to trade!! Enter short using a CBL at the grey candle on the BB just in front of the blue square. Watch the price action. Note that the mid BB is agains t the trade direction and set TP1 at the mid BB. TP2 is set at point P, but we d o not expect to get it. We have a type OM trade.. After hitting TP1, we set the stop loss to break even. To our surprise and joy, the price action goes on to TP2 on the opposite BB and we close our trade there. Trading Without Indicators Page | 32

Another example of how the BB bubble is faithful to us We enter long using a CBL at the blue square (more details on this later). Watch the price action. Note t hat the mid BB is against the trade direction and set TP1 at the mid BB. TP2 is set at point P, but we do not expect to get it. We have a type OM trade.. After hitting TP1, we set the stop loss to break even. To our surprise and joy, the pr ice action goes on to TP2 on the opposite BB and we close our trade there. I wil l go into the details of our modified CBL shortly but first an exercise to becom e familiar with OM price action type trades....... EXERCISE Go to your favorite currency pair and choose your favorite timeframe. S croll thru all the price action on it from start to finish. Count how many BB bu bbles you can see (both long and short trades). Note in each one the point where the opposite BB contracts and the price action ceases walking the BB. This will be our approximate entry point. Follow the price action from there to the mid B B. Questions 1) 2) 3) 4) 5) 6) 7) In how many cases was the mid BB against the p rice direction. Calculate this as a percentage of the total you have observed. I n how many cases did the price action ignore the mid BB and go straight thro to the opposite BB. Calculate this as a percentage of the total you have observed. In how many cases did point P (the TP2 point) appear at the junction of the bubb le end and the squeeze beginning. Calculate this as a percentage of the total yo u have observed. Do you notice a consistency? Trading Without Indicators Page | 33

Exercise Answer User Answers 7) Do you notice a consistency? Obviously, trading the end of the bubble on it s own is a satisfactory system. It regularly goes to at least the mid BB and also regularly makes it to the opposite outer BB. 7) Do you notice a consistency? At the end of the bubble there was 92% chance that th e PA goes to at least the mid BB and there is a 50% chance that it makes it to t he opposite outer BB. Both Mystic and Paulmccarthy gave the most comprehensive a nswers and I will use those as a basis for comment. I think everyone noticed the very high probability of the price action hitting at least the mid BB and also the opposite outer BB. This means that at this section of a BB bubble you are al most guaranteed of a profit!! A TP1 at the very least and very often, a TP2 as w ell. How often did the price action not make it to the mid BB (red RO price acti on type).? - the loss trade. I suspect only rarely!! Thus the very high win/loss ratio in this area of the BB bubbles. TQ- Depending on placement of stop loss i think I could have been stopped out 2 times. TA- We need not worry about the st op loss at this stage. I will show you how this works as we go along. In the abo ve examples, if the price action did not reach the mid BB and retraced instead, the Fibonacci 38.2% line would decide whether to exit or not. TQ- One thing that worries me a little is that its easy to spot bubbles in hindsight. When trading in real time I have a fear of a my beautiful bubble turning into a ugly sausage ..................7) Do you notice a consistency? i might be doing this wrong... , but pls note following observations- a. it is difficult to discern wether a bu bble will become a sausage on the fly TA- Knowing in advance whether we are deal ing with a BB bubble or sausage is not really important. This method works with everything, even level BB. When the price action reaches the mid BB in a bubble you will usually know by then what you have got. If you see a bubble with the mi d BB against you, then set TP1 at the mid BB, then smile because you will probab ly see TP2 on the opposite BB hit as well. The aim of this exercise was not to g et you to recognize BB bubbles, although it would have given you good practice a t doing so. The aim was to get you to be familiar with one of the price action t ypes. The use of statistics is an excellent way to go into detail in the learnin g process. Remember that I have been dealing with this method for some time now and are familiar with the concepts. This exercise was aimed at getting the reade rs to understand the concepts too. If this exercise has increased your understan ding of the OM price action type in a real situation, then it was well worth the effort!! TQ- One thing I m noticing when looking at this is that not too seldom the entry point will occur pretty close to the mid BB, thus making for poor R:R . This subjectively seems more common on the higher time frame charts, but does occur on all time frames. Thoughts on this Tymen? TA- Yes, I noticed this too wh en I first developed the details of the method!! But the good news is that this happens in certain cases only. The answer to this lies in the modified CBL which does not swallow as many pips to get an entry. It still serves the purpose of k eeping us out of the worst retracements after entry. Further, we remember that t he mid BB is only relevant if it is going against the price action direction, in which case we are forced to place TP1 at the mid BB. We now need to go on from here as I have not yet finished explaining the method. We note that since we are trading the internal " rungs" of the Bollinger DNA ladder, we are generally tra ding the subtrends of major trends. These subtrends tend to be very efficient that is, a trend line place against them would show many contact points. Trading Without Indicators Page | 34

Modified CBL I must now show you the modified CBL. Then to show you the stop loss - pretty si mple really, the same as before? The modified CBL are of 2 types - they are easy to do!! I have noted that 3 candles in the CBL swallows a lot of pips and is no t really necessary in these DNA trades. We instead employ 1 or 2 candles. The ch art explains it best with the 2 cases of CBL Here we have two cases of extreme c andles on the BB indicating a trade. The CBL in each case is different, showing the 2 modified types........ In the first case, we use two candles if the previo us candle body is smaller than the extreme candle. In the second case, we use on ly one candle if the previous candle body is larger than the extreme candle. In both situations, if we have used the original 3 candle CBL, our entries would ha ve been so close to the mid BB so as to give very little, if any, TP1 profit. Special cases Sometimes candles do not fit neatly into the system. We cater for those as follows Error! Reference source not found., Here are 2 trades, the firs t being a trade operating in the contraction period of a BB bubble. These are th e ones where we gathered all those statistics. The first trade is outlined in fu ll......... A 2 candle CBL is used because the previous candle body is smaller t han the extreme candle. This CBL is drawn on the chart and hence the entry point is shown. The price action happily moves on to the mid BB which is against us a nd we set TP1 at that point. We smile as the price action (as expected) moves on to touch the opposite BB and here we set TP2 and close the trade for 2 profits! ! The second trade is outlined in full......... Our extreme candle goes right th ro the mid BB!! What do we do now? Well, we have 2 answers - firstly we cut the candle body in half and that becomes our entry point. Secondly, in some cases it is simply not worth entering at all when we see this scenario. You be the judge !! After the entry, we watch the price action retrace a small amount then touch the mid BB where we have set TP1. We are ERR ON THE SIDE OF CAUTION when we see level mid BB and set TP1 at the mid BB. We collect a TP1 and set the stop loss t o break even. Now we see retraces in the next 2 candles. We do not know the orde r of the price action in the following candles unless we went to a much lower ti meframe. So if the candle retraced after the break even Trading Without Indicato rs Page | 35

was set, then we have only TP1. If the candle retraced before the break even was set, then we have TP1 and TP2. Either way we have a profit. The purpose of this post is to show you how to enter when the entry candle is very long - passing t hro the mid BB. If the entry candle is very long and does not pass thro the mid BB, you may choose to cut it in half anyway. The idea is to get a decent entry p oint and avoid any major retracements after the entry. TQ- The "extreme" candle is a larger down candle that penetrates the lower BB? I m assuming that it must penetrate the BB. If the price does not trade higher than the modified cbl entry line...we have no entry, but would continue to follow the downward price action looking for another cbl signal? TA- Yes. If we get a lower candle still, we ope rate on the lowest candle, just like in the original CBL. It can happen sometime s that you get a premature entry with this modified version, but no real damage is done in such a case. Lets now look at some schematic charts showing the 4 pri ce action types. Note - the modified CBL is not the subject of these charts. The se charts are to get you familiar with the trade types with the 4 price actions. Here we go All 4 price action types are shown in this chart. In each case, the TP1 was set at the mid BB. Entry 1 (OM - green), goes only as far as the mid BB. We get TP1. TP2 is hoped for but the price action retraces back to point 2. (RO - red). Entry 2 (OM - green) does exactly the same thing. (TP1 profit). After t hat the price action (RO - red) carries on like a two bob watch and finally rest s at point 3. Entry 3 (OO - pink), manages to pass the mid BB and close at point 4. We get TP1 and TP2. Entry 4, a short entry, (OO - pink), does exactly the sa me thing. (TP1 + TP2). Entry 5 is another OM - green. (TP1 only). Entry 6 is a n ice OO - pink trade. (TP1 + TP2) Entry 7 is another OM - green. (TP1 only). The untradeable RO - red retraces back to point 8. Entry 8 is a OBB - blue trade. Th e price action goes on to walk the lower BB band. We get TP1 and TP2. Here we ha ve 8 trades in all. They are carefully managed according to our DNA rules. We ha ve 4 complete TP1 + TP2 profits. We have 4 TP1 profits only. We have ZERO losses !! Trading Without Indicators Page | 36

TQ- You showed us the example on a 20min chart GTF. How about keeping the origin al system with the 3 candles CBL but switch the chart to 5minutes? Now we switch to M5, use the 3 CBL approach and enter. Once entered just switch back to M20/M 15 and exit on the BB. TA- I can see your strategy in using the CBL in the 5 min ute chart to affect a better entry than say, the 20 minute chart. The problem wi th this is that you may get an unwanted entry in the 5 minute chart. The 5 minut e chart says enter and shows where to enter, but the 15/20 minute chart shows no such entry and price retrace instead. In such cases you make one whopping great loss!! If too frequent, you end up with a very poor win/loss ratio. This danger also exist with the naked traders using SR lines. Going down to the short timef rames means they could suddenly find their entries being short circuited!! I thi nk it is better to keep everything on one chart if at all possible. And it is po ssible with this Bollinger DNA method. However, feel free to go it alone and dev elop your approach if you wish. I will wish you well all the way!! TQ- You might want to use the fib tool to gauge any closes below the 38.2% retracement line, as shown: The third retracement candle closes below the 38.2% retracement line I take it that this would be a valid reason to close this trade? Any thoughts b y anyone else? TA- Yes, this is a valid reason to close. We could also consider the principle that a trade is not finished until either the stop loss or the Tak e Profit is hit. In that case, the price action gives the stop loss a close shav e but does not hit it. If you took this approach, then you would win not only TP 1, but TP2 as well. On the other hand, you will also lose more pips when you do indeed hit the stop loss. Its a case of "what you lose on the swings you win on the roundabouts." Whichever approach you take, it must be consistently applied. Maybe doing without the Fibonacci at these potential loss retracements is better . Maybe we should stick with Fibonacci only when we are in a winning trade and u se it in retracements to determine whether to continue the profit run. I am limi ted in this area because I do not have the ability to back test. TQ- Would anoth er definition of an "extreme candle" be the lowest extreme candle on a down move or the highest extreme candle on an up move before the price action moves insid e the BB? TA- NO!! The highest/lowest extreme candle on a BB bubble is OK. But i n a BB sausage, price action can move inside the BB after a high/low candle seve ral times before the sausage finally ends. Finding the highest/lowest candle on a BB sausage is easily the most difficult part of this method. I intend to resea rch this a little more to fine tune this, but I have already done quite extensiv e research to this end. Price action can do anything - and this keeps us on our toes!! Changing timeframes does not seem to help in this dilemma. One fact here is certain - not to act until the opposite BB starts to contract. But at this po int you still do not know whether the price action is going to retrace (bubble) or continue walking the BB (sausage). Trading Without Indicators Page | 37

At this point lets have another look at a chart to get an overview of how this me thod works. Note that the CBL entry method is not included. The idea here is to get a general picture of what we are doing. In this chart I am going to omit all those fancy colours in the typing. It took ages to do and was very labor intens ive. Here is the chart In all these trades, the TP1 was set at the mid BB. The T P2, if reached, was on the opposite BB. From trade 1 entry, we go past the mid B B (TP1) and hit TP2 at point 2. This is an OBB (blue) price action, and the tric k here is to exit at the end of the lower BB walk. Trade 2 hits only the mid BB. (OM price action, TP1 only). The price action does and RO action (red) in retur ning to point 3. Trade 3 is identical to trade 2. Trade 4 (OO price action, pink ) collects TP1 at the mid BB and TP2 at point 5. Trade 5 is identical to trade 4 , except shorted. (It looks like there could be another trade between 5 and 6, b eing an OM trade to the mid BB only). Trade 6 is identical to trade 4. Trade 7 i s a failed trade!! - we have a loss!! Trade 8 is an OM trade collecting TP1 only . The price action retraces to point 9. (RO price action - red. This is not trad ed). Not including the bit in the brackets, we have....... 4 cases of TP1 + TP2. 3 cases of TP1 only. 1 loss. (2 contracts) That is, 4 large profits + 7 small p rofits + 2 losses. The 2 losses are approximately = 2 small profits so in total we have....... Grand Total = 4 large profits + 5 small profits. So you can see that we have a very high win/loss ratio!! TQ- At the point where TP 2 was first touched there was no contraction of the opposite BB.............. .. Shortly after that the price action continued to go down...starting a new tre nd down (a bubble). Remember, Tymen cautioned about entering before a contractio n started. Contraction is a key signal factor. TA- This answer to PardyS is abso lutely correct. At this point I have not yet gone into detail about entries. The OBB needs special treatment on its own. Solving the matter of the BB walks and getting the correct CBL entries are the 2 most significant matters still to be t reated. Then our method is bullet proof!! TQ- Quick question on this one: Since the candle before your extreme candle was NOT bigger you should have included it into your drawing of the CBL, right? Am i wrong here? TA- Yes that is correct. I am trying to see if I can make an improvement to the modified CBL. The idea is to get as many pips as possible while still keeping you out of retracements. At present the modified CBL is being coordinate with the BB contractions. Trading Without Indicators Page | 38

TQ- Hi, Just wanted to clarify trade 2 in my mind. The extreme candle itself has crossed the mid bb. We then cut it in half - price at the moment is above the t p1 point of the mid bb. So, essentially we will enter if price retraces below th e marked blue entry line, and then crosses it upwards. Please correct me if my u nderstanding is wrong. TA- The cutting of long candles in half is to reduce them to the same operation as 2 normal candles. It is done for want of an entry poin t. We cannot work with those very long candles that go past the mid BB. Because we have such a long candle, price is naturally expected to retrace. In retracing , it will hit the new entry line (blue line). Whether it hits that line from abo ve or below is irrelevant. We just enter. TQ- I think there s one potential loss on the chart that you missed: However, there s also a beautiful winner right be fore the squeeze, so it evens out. TA- Again, this potential loss is given befor e the opposite BB contraction. In this case, the BB walk constitutes an OBB trad e. This trade would not be closed for a TP2 profit until at least we saw the BB contraction. As such, the loss shown on the chart would not occur and the price action at that point would be ignored. The closure of the trade then occurs when the price action hits the BB after the contraction of the opposite BB. Hope thi s helps. TQ- I been looking at the BB bubbles and sausages to try and define a c haracteristic that puts it in one of these categories after a BB walk. Not sure if Tymen has mentioned this specifically (I read the whole thread but I forget t hings too!), I think a bubble starts when both upper and lower bands have turned in very close in time to each other. However in a BB sausage, there is a longer period of time before both BBs have turned in, the opposite extreme BB will tur n 1st and then the BB that is being walked will turn in a bit later. The time be tween these 2 turns seems to determine whether it s a bubble or sausage. Am I co rrect in this observation? TA- You could very well be. Phillippe Cahen in his bo ok "Dynamic Technical Analysis" makes reference to these points. I will see if I can dig it up!! When the opposite BB starts to contract, you can never tell whe ther you are going to have a bubble or sausage. Price action can do anything - a nd it does!! If the price action retraces and goes in from that point - bubble. If the price action retraces and then restarts the BB walk - sausage. In that sense, you have to wait and see!! Trading Without Indicators Page | 39

Here is a very interesting chart to learn from. The price action at point 1 clea rly goes thro to point 2. This was an OO price action type. (pink). With the mid BB against us, the TP1 is set at the mid BB. We smile as the price action goes thro the mid BB to hit the upper BB at TP2. Then we get an OM price action (gree n) and a TP1 trade starting from point 2. After this, the price action fails to hit the lower BB for TP2 and retraces instead to the upper BB where it goes for a long BB walk. This walk is in a BB sausage. The trick is to find where this wa lk ends. It ends at point 4. We then enter at point 5 with the mid BB against us , thus setting TP1 at the mid BB. The price action goes thro the mid BB (collect TP1) and reaches point 6 (TP2). This is an OO price action type (pink). TQ- Hi all, tested again today. Mainly wins, but also some lost trades. Here are 2 examples: Question on the lost trade: Did i made a mistake or is this just one of those tr ades you just loose? Would you have taken this trade tymen? (or well: question g oes out to all) Oh yes and of course i missed the CBL-entry-signal right after i lost that one :P I feel the impact of those losses is high, since you get a ful l 2-contract-punch in the face ^-^ Trading Without Indicators Page | 40

TA- No I would not have taken that trade!! Have another look at that BB bubble. You were dealing with a very minor BB walk. Now look where you entered. Is it in the area of BB expansion or contraction? I think that answers your question ful ly!! I would have taken the 2nd entry opportunity because the 2nd one is in the area of contraction. TQ- I feel the impact of those losses is high, since you ge t a full 2-contract-punch in the face TA- You did ask for it thru your mistake!! But losses are losses - you have to live with them. Trust you did this on a dem o. However, your previous win was greater than your loss. On the good side of yo ur post - I just love your graphics and setting out!! Do that every time and you will have my attention always!! TQ- I think to make sure of the BB band contrac tion, look to the extreme band being walked to turn in as well as the opposite o ne TA- Sorry, I cannot agree with this. Have a look at this traditional chart >>> Notice the complete discrepancy between the BB contraction points. There is no looking here to see if both BB contract at the same time. It is a fact that all BB bubbles are basically asymetrical. Scroll thru any chart on any timeframe and you will see that what I say here is true. However, there are other methods of ascertaining the exact entry and exit points. Because I have only just explained the method, I have not yet gone thro all of this yet. The pressure of me moving also makes my post somewhat disjointed. But we are making progress - that s the good thing!! Remember this drawing? What is involved in the Bollinger band shapes? If you can see that, then you will understand what is essential to the success of this met hod. EXERCISE Just a test, to see if you are still on the ball. Is this a BB bubble o r sausage? Give the reason for your answer. Trading Without Indicators Page | 41

Exercise Answer User Input Its a bubble ,when the opposite bb contracts the PA r efuse to walk on the BB I would answer the same thing. - The opposite BB contrac ts - the PriceAction is leaving the BB and its not going back to touch it. (refu ses to walk the BB) User Input Man, i hope its not a sausage for some reason, then i understood some thing wrong i think. :-/ I still have a big problem to see if i m dealing with a bubble or a sausage when its still "under construction". Take a look: This is o bviously a sausage. Now when its still under construction its often like this: H a Ha Ha!! Well done, NForex!! You are clearly the King of Graphics on this threa d at the moment!! Trading Without Indicators Page | 42

User Input (Graviton) Excellent graphics NForex. You made me chuckle. Let s see what we can get from this: In the first pic on the left, the bbs are a little ro ugh, not pretty and smooth as we often see in a bubble. We will get a very few r ough edged bb bubbles, but it s a clue. The best indication though is the OBB pr ice action. PA goes all the way from the top band to the bottom, then proceeds t o walk down the bottom band 5 or 6 candles. Bubbles rarely have OBB PA that walk s 5 or more candles down down the opposite bb. Usually when that happens, it s a sausage. Another clue. Note that after PA touches the bottom bb, most of the PA is below and outside the bb. By definition, the bbs should contain most of the PA most of the time. This is acting in an unusual fashion, by definition. Bubble s are pretty and smooth and usual and predictable. Sausages are rough and unusua l and difficult to predict. This isn t acting like a good smooth pretty bubble. It s PA isn t contained as it should be. Another clue. The second and third pics are fake outs. In the second pic, the opposite bb contracts as PA pulls away fr om the lower bb. That meets one criterion of a bubble. But that can also happen very many times in a sausage, so if you were still short here you d probably wan t to TP2 and wait it out, looking at the doji candles and long wicks in TP2. Thi s seems like conflicting information, but it s really not since all info could p ossibly be consistent with a sausage, but all info is not consistent with a bubb le. Don t be faked out by a single contraction and bb bounce of a sausage. Since a sausage will usually have many of those, it means nothing by itself. We need to look deeper. More importantly, we need to balance having the courage of our c onvictions vs. keeping an open mind and considering the opposite case. Well, we ve considered the opposite case, but do we have the courage of our convictions? The temptation is always to over trade. The greater temptation, and the cause of missing many huge follow-on profits, is all of us have a "one bird in the hand is worth two in the bush" mentality hard wired into our brains. It s an evolved survival strategy that served the cavemen well for millions of years, but it wil l kill your trading profits. Work on erasing that mindset and process data like Mr. Spook on Star Trek. Just look at the cool clear logic of the situation. Don t over trade. Don feel you just "have to do something". Most of your profits wil l be made doing nothing, or letting your profits run. Most of your losses will b e avoided by doing nothing, or not entering a questionable trade. There is only one situation where you need to act fast and decisively and that is when you are cutting your losses short. When a trade isn t following the story you have laid out in your head for it, and you incur your first loss in it, then there is no room for hope. Abandon all hope ye who enter here into the Forex market. Cut you r losses fast and look for a trade that goes with your plan. But in the cool log ic of trading, this one is still working, you have profit, so the rule is, let y our profits run. The third pic looks bubbly, but we have already convinced ourse lves that PA is more sausage like. There is a Tymen system entry, but should we take it? Look at the long pin top on the last green candle in the third pic. It s a seed of doubt. I think Tymen will have more to say on this, but generally, b ubbles turn into sausages, sausages rarely if ever turn into bubbles. So I think if we had decided in pics 1 & 2 it was a sausage, it was a sausage, it is a sau sage, it will remain a sausage, unless it is conclusively prooved otherwise. I w ouldn t consider pic 3 conclusive proof, so it s still a sausage. Pic 4 just con firms that. Once a sausage, always a sausage. But bubbles can be turned. Of cour se, if you had traded the whole sequence per Tymen s method, you would have made major pips on the OBB PA in the first pic. And even if you didn t recognize it s unbubbly behavior and exited early, which now I hope you see would clearly be a mistake, and took the entry in the third pic, you would have a small stop out. So in the end you would be even or a little ahead. Tymen s system is very forgi ving, but you must think like a trader, not a caveman, to make the most of it. S o there are three good reasons to trade this as a sausage and stay in the trade to ride it to even more profits: One, to do so, you don t have to risk any of yo ur trading capital, only profit. Get ready, here comes a HUGE realization. Even though profits and trading capital look the same, they are WAY different. You ca n never blow out an account risking a part of your profit, no matter how many ba d decisions about doing that you make. You CAN blow out an account risking your

trading Trading Without Indicators Page | 43

capital if you make enough bad decisions. This difference is HUGE!!! Think about it, and then think about it some more. Trading profits and trading capital are NOT the same. They should be treated differently. Two, if you thought this was a sausage, then it will always be a sausage. It won t change back to a bubble lat er. After you have considered the opposite case completely, which you should alw ays do, have the courage of your convictions. Three, the trade has already moved a long way in your favor with much PA outside the lower bb. A short pull back i s now expected, so this trade is really following a very logical sequence, one t hat you can plan for, rehearse in your head so it isn t frightening. Don t be af raid. Don t be greedy. Fear and greed are the profit killers. Be cool, calm and logical and let this trade come to you. That s my analysis of your graphic. Take what you like and toss the rest. ANSWER TO EXERCISE Sorry to say, that most of you are incorrect - it is a sausage!! Well, as a consolation, it does have some features of a bubble. How on earth did I come to that conclusion? The rule is si mply this, and I have stated it several times on this thread......... A BB bubbl e - when the opposite BB contracts, the price action retraces and does not again reach the high it was at when still in contact with the BB. A BB sausage - when the opposite BB contracts, the price action partially retrac es but then regains its momentum and rises above the point where the candles wer e still in contact with the BB. The price action given by the green arrow is typ ical of the direction taken by a BB bubble. The end price at point P has not onl y made its way to the opposite BB, but also the price at point P is a very clear retracement from the price at point A. In this chart you can see that there is no retracement from point A. The price at point B is a further advancement of th e trend started earlier at the mid BB. This trend passes thro point A and goes o n to point B. Now it is true that the price action detached from the lower BB. But that is sec ondary to the definition!! The detachment without a return to the lower BB is the only feature in common with a BB bubble, but does not define it as a bubble. The timing of this exercise was very delibe rate!! I could see the problems with the interpretations of the price action in your posts, so I thought about a method of discerning what you were all thinking and I hence came up with the idea of an exercise. It had to be a good one so I carefully selected the one given above. That fact that most of you have answered the exercise incorrectly may be the reason why many of you are having problems setting up your trades. If the above chart were traded, the entry would have gon e into retracement, and, therefore, a loss would have been generated. because th e stop loss at point A would have been exceeded at point B. This kind of case te nds to be more rare. We need to set up some entry rules so that we can discern b etween an entry for a BB bubble and entry for a BB sausage. Trading Without Indi cators Page | 44

Here is another example of a BB sausage At first, the retracement from point A t o point B gives the impression that we have a BB bubble. But when the price acti on rises to point C, we reclassify our pattern as a BB sausage. CBL Rules I am now going to set the CBL rules. Figure 8 But before I do so lets look again at the 4 price action types (yes, I am a typi cal school teacher - always revising!! ) Figure 8, the OO (outer to outer) price action Figure 9, the OBB (outer to BB walk) price action Figure 10, the OM (out er to mid BB) price action Figure 11, the RO (retracement to outer, untradeable) price action Figure 10 Figure 9 Trading Without Indicators Page | 45

Figure 11 So 3 out of the 4 price action types will generate a profit. The OBB will genera te the greatest profits. These price action types come from entering a level BB, then seeing it develop into a BB bubble or BB sausage. Both of these patterns a llow a BB walk. The BB sausage allows the greatest BB walk and therefore, such t rade will generate the greatest profits. The least profit gainer is the OM price action type where the price action goes only to the mid BB before retracing. The retracement, if continued becomes usele ss to us and is, therefore, the 4th RO type of price action. Now that I have rev ised this, lets look at the CBL in detail. The Count Back Line rules...... After some investigation I have concluded that one candle for our CBL is all tha t we need!! Surprise!! The retracements after the entry do not seem so fierce th at we need a heap of candles to draw an entry line from. But added to this are 2 logical rules to set the entries. These 2 entry rules allow us to enter a BB bu bble at the right time as well as allowing us to enter a BB sausage at the right time (a big ask!!). This 1st rule you already know, because I have mentioned it before. 1) We do not enter on the CBL until there is a close either: above it w hen trading long. below it when trading short If you think about it, the close i s closer to the mid BB than the CBL entry is the reason for this rule is that wi th the close going thro the CBL entry, we are trading with the momentum of the p rice action. Darryl Guppy says that the price close is set by the "smart money" whereas the temporary highs/lows (the candle wicks) are set by more extremist tr aders. Next post is a schematic diagram of CBL rule 1. This schematic diagram sh ows both the long and short cases >>> In the diagrams, the extreme candle is num ber 2. From here we draw the CBL. Candle 3 does not qualify for anything. Candle 4 is intersected in the wick - not good enough. Candle 5 is intersected after t he close has gone thro - this is our signal to enter. We enter at the open of ca ndle 6 (not shown). The second rule appears to be very illogical until you think about it. Trading Without Indicators Page | 46

2) After the CBL, the entry signal candle must have a body that is smaller than the body of the extreme candle. What!!? This is a ridiculous rule!! NO, not really. Its logic is not obvious. Re member, we are trying to get entries at the very end of a BB bubble or BB sausage. When the price action is following a BB walk, the price really breaks out - and jumps by large leaps. The candles are long, te nding to be dominant candles. But when you come near the top/bottom of such a BB walk, the price action becomes much more undecided, resulting in frequent doji candles. That is why many a trend top is signaled with an evening star - the sma ll doji or "star" candle is at the very top. So that is our logic here. This sch ematic diagram shows both the entry rules in action (both long and short cases) As before, candle number 5 has the close intersecting the CBL. But the candle 5 body is bigger than the body of extreme candle number 2. It is, therefore, rejec ted. Candle 6 meets both requirements. Its close intersects the CBL. (rule 1). T he candle body is smaller than the body of the extreme candle 2. (rule 2). The e ntry candle would now be the open of candle 7 (not shown.) There are 2 other functions we must take into account when setting up a CBL. 1) Entries - when dealing with a suspected BB bubble or sausage, we do not enter un til the opposite BB has contracted. 2) The extreme candle can be found anytime b ut is not considered valid until there is a candle that breaks thro the outer BB . Up until this moment, no extreme candle is considered to be valid. Now that we have the rules, lets consider some real cases!! I will use some symbols to show the correct entry candle....... These symbols will make labeling of the charts e asier because there is limited space to write on the charts. OK, now for a real life example In this BB bubble, you can either enter at point A and desire to ex it somewhere near point B. Or you can enter somewhere near point B and exit at p oint C (mid BB). (This trade does not go thro to TP2). So how do we do this?? A stochastic? A parabolic sar? A starc band? Nah!! We use the CBL method!! Next po st shows how it works. Trading Without Indicators Page | 47

CBL Method In Detail Here we have our CBL method in detail Explanation Candle 1 is our 1st qualifier to find an extreme candle because it goes thro the outer BB. Candle 2 is more ex treme than candle 1. Candle 3 is the most extreme of that series - a CBL is set. Candle 4 has its close lower than the CBL (rule 1). Candle 5 has its close lowe r than the CBL (rule 1) plus its body is smaller than candle 3. However, none of the above qualifies because we have not yet seen an opposite BB contraction!! C andle 6 is the most extreme candle of the series - a CBL is set. Candle 7, 8 and 10 have their close lower than the CBL (rule 1). Candle 11 has its close lower than the CBL (rule 1) plus its body is smaller than extreme candle 6. (The body is smaller being a doji). We have passed the opposite BB contraction The red can dle following the doji becomes our entry candle. It is marked E. So this gives u s a great close if you were trading from the beginning from point A and gives us a good entry if you were going to trade from point B. Look now at another trade, the BB sausage from A to B. Or you could consider an entry somewhere near B and go thro to C. Both are OBB price action type trades g iving you the most possible pips. Trading Without Indicators Page | 48

The CBL in detail Explanation Candle 1 is our 1st qualifier to find an extreme c andle because it goes thro the outer BB. Candle 2, 3 and 4 are more extreme cand les that qualify for the opposite BB contraction, but their CBL go nowhere - rul e 1 is not obeyed anyway. Candle 5 is no Its CBL is lower than before - you NEVE R lower the CBL. better. Candle 6 is the most extreme candle of the series - a CBL is set. Candle 7 has i ts close lower than the CBL (rule 1). Candle 8 has its close lower than the CBL (rule 1) plus its body is smaller than candle 6. We have passed the opposite BB contraction. Candle 9 becomes the entry candle at the open. Lets have a look at another case, this time in another currency pair Explanation Candle 1 is our 1st qualifier to find an extreme candle because it goes thro the outer BB. Candle 2 , 3 and 4 are more extreme candles that qualify for the opposite BB contraction, but their CBL go nowhere - rule 1 is not obeyed anyway. Candle 5 is the first e xtreme candle that gives rise to a useful CBL. Candle 6 has its close lower than the CBL (rule 1) plus its body is smaller than candle 5 We have passed the oppo site BB contraction Candle 7 becomes the entry candle at the open. OK, one more post on this CBL entry method, then a much needed break from all this very tirin g work of posting. Trading Without Indicators Page | 49

Remember sausage? this BB Boy, what a banger!! Lets try and work out and exit for that one!! Here is the CBL logic for that long BB banger!! Explanation The candles at 1 do not pass thro the BB and do not start a qualifier. Candle 2 is a suitable extrem e candle and its following candle (blue), passes rule 1 but its body is larger t han candle 2 (fails rule 2). Candle 3 is a suitable extreme candle and its follo wing candle (blue), passes rule 1 but its body is larger than candle 3 (fails ru le 2). Candle 4 is a suitable extreme candle and its following candle (blue), pa sses rule 1 but its body is larger than candle 4 (fails rule 2). Nothing can get smaller than a rickshaw man doji. Candle 5 is a suitable extreme candle. Candle 6 is more extreme than candle 5 but its CBL extension is lower than that of can dle 5 - we NEVER lower the CBL and so the CBL extension of candle 5 holds true. The doji after candle 6 has its close lower than the CBL (rule 1) plus its body is smaller than candle 5 (of course!!). The entry candle is the yellow candle af ter the doji. It is marked E. It is an excellent exit point if you traded the OB B along the BB sausage and is an excellent entry point for trading short to the mid BB from here on. I did say that this method was not for beginners!! You were warned. Because this method is so finely tuned, it is only best for high lots. It may, therefore, not be suitable for everyone. However, I fear that we may be setting out on an origami exercise rather than a trading exercise. Trading Without Indicators Page | 50

THE ENTRY RULES 1) The CBL consists of one candle only. The entry line is drawn off the high/low. 2) Our CBL search starts when we find a candle that passes thr o the BB - an "extreme" candle. After that any extreme candle is good. It does n ot necessarily have to pass thro the BB. 3) Our "entry candle" search starts whe n the opposite BB contracts. Before this point, no candle can qualify as an entr y. This is done to protect against possible retracements. 4) As more extreme can dles appear, we set a new CBL. But ..... a. In a long trade - we NEVER raise our CBL. b. In a short trade - we NEVER lower our CBL. 5) An entry is finally made when: a. a candle close passes thro the CBL, and b. that same candle has a small er body than the extreme candle. FINAL NOTE These rules apply for BB bubble and BB sausages. When there is a level/near leve l case, or a squeeze area we only need the CBL. We have no need of the 2 special rules - close and smaller candle requirements. An oversize extreme candle is on e which passes thro the mid BB. If such a candle appears in the level/squeeze ca se, it is cut in half to effect a practical CBL entry. TQok, I took first chart under my hand. Its 30 min eur/gbp Candle #1 doesnt quali fy its before opposite BB contraction. Candle # 9 is go no where Candle # 2 is q ualified to be extreme candle. Candle #11 has close below candle #2 and its body smaller. Candle # 11 is qualified for entry. Candle # 14 is qualified for Exit of trade #1 as the body is smaller and close is above extreme candle. Trading Without Indicators Page | 51

s everything correct? The logic of your analysis is quite wrong here and I will explain why in detail. Firstly, and most importantly, the candles you refer to a re not in a BB bubble or a BB sausage. Instead, it is a BB squeeze area as per m y rules in post #2374, page 238. Candle #1 doesnt qualify its before opposite BB contraction. This rule does not apply here - no BB bubble or a BB sausage. Candl e # 9 is go no where From candle 9 you could do a quick OO trade to the lower BB . Candle # 2 is qualified to be extreme candle. It is indeed an extreme candle a nd from here you would do a trade into the mid BB for a TP1 profit at candle 5. (The price action retraces to candle 9 no TP2) Candle #11 has close below candle #2 and its body smaller. Candle # 11 is qualified for entry. Irrelevant in this case because of the above squeeze rules. Candle # 14 is qualified for Exit of t rade #1 as the body is smaller and close is above extreme candle.This is irrelev ant also. The correct way to trade this whole senario is this First, we discern that we are trading in a squeeze area and not in a BB bubble or sausage. Therefore, level BB rules apply. See rules, post #2374 page 238. We note extreme candle 2, enter at 3, exit at 5 for TP1. No TP2 break even instead. Candle 9 is again extr eme, enter candle 10, exit 1st contract at candle 10 for TP1, go on to the lower BB and exit 2nd contract for TP2. END OF TRADE. To enter at the lower BB and ex it at candle 12 makes no sense. In this system the very first principle of opera tion is that we seek to enter at one of the outer BB and trade thro to the other outer BB. Thats how this method works. In your case, you are entering at the low er BB and exiting candle 12 at the lower BB, thus contradicting the operation of the method. In summary, I again warn you RenaLa, that this method is not for be ginners. If you lose your money in live trading with this method, then dont blame me I have warned you beforehand!! This Bollinger DNA Method is designed to work with high lots. It does so because the win/loss ratio is very high, the drawdow ns are low, but the risk/reward ratio is often very small, even <1. I am thinkin g that most traders here cannot afford to trade such high lots. Let me paint a p icture for you.. We are going to build a powerful car racing engine. It will only be used for a short time but it must be able to power a light weight dragster th ro a 1km stretch and travel faster than a jet plane taking off at the end of the race. So what do we do? We take a V8 engine block, x-ray it to check for castin g flaws. Then we fill the water cooling jackets with concrete we do not need the cooling for the short stretch. The block is then fitted with domed pistons, fit ted to a high strength roller crankshaft to increase top revs. The crankshaft be aring housing is reinforced. The engine head is shaved to the max, then polished and ported with large size valves and double springs to prevent valve bounce at high revs. An overhead titanium camshaft chain is standard. The camshaft itself is machined in such a way that the timing is as advanced as the engine will tol erate and still run. Trading Without Indicators Page | 52

When assembled the engine is fitted with a supercharger to force the air/fuel mi xture in. The fuel is not petrol either it is nitrous oxide, something far more potent than petrol. Finally we finish with just enough exhaust pipe to keep the noise just below deafening. The exhaust is of course, tuned extraction. When run ning, this engine crackles like a fireworks display in full swing. And power wow !!. 1200 or more brake horsepower!! We will definitely beat that jet aircraft!! So what am I saying here? Well, this trading method we are looking at is like th at hotted up engine. It is super high performance, high win/loss, so much so tha t the risk/reward is very low indeed at times. Our trading method consumes high octane fuel large lots. Using just a minilot would give very poor performance. O ur trading method is designed to give very high output in a very short time. Now is this what we want? We could switch to a diesel engine. This engine is low po wer, but try to stop it. They are unstoppable when they are running. Hence they are used in heavy duty work machines such as bulldozers, locomotives and large t rucks. A 4wd vehicle with a high powered petrol engine will race up a tall sand dune, no problems. The same vehicle with a diesel will get bogged just after sta rting off. But now we are on a steep rocky hill and we need to tow a series of b roken down vehicles up this steep hill. The diesel 4wd will do that all day and very successfully. The petrol 4wd will overheat after just two attempts. In anot her example, imagine a tug of war, if possible, with a large jet airliner chaine d to a locomotive. The high powered jet engines will roar, but the diesel locomo tive with 3 V8 diesel engines will easily tow the airliner backwards and win the tug of war!! Its horses for courses. The diesel engine is like a forex trading system that has an average win/loss ratio but a much better than average risk/re ward ratio. It has pulling power the pips are pulled in but the performance rating is not so great. This trading system will pull pips in all day, but at an avera ge pace. We have already started to look at such a method using SR lines and a F ibonacci retracement method to increase our gains. The SR lines were not so good , but what if we switched to using the Bollinger bands as SR lines? What I am as king is this............. Are you finding this trading method too complicated? T oo difficult to learn and/or implement? Would you prefer if we retreated back to our original idea of macro trading with the 3 line CBL and the Fibonacci ratios . We would use the Bollinger Bands as a replacement for the SR line. By using a higher timeframe and knowledge gained from this DNA system, we could cut out a l ot of the losing trades and develop a reasonable win/loss ratio. The risk/reward ratio is already good as proven by the Fibonacci retracement approach. Now, I a m happy to continue with the Bollinger DNA method if you like. But if you prefer a retreat to macro trading using the BB, a 3 line CBL and Fibonacci, then I am happy to switch over. The job of a teacher is to be flexible. So, think about it , and I would like to know everyone s thoughts on the matter. Please let me know - I can continue with your preferred direction after I have moved and return to this forum. Trading Without Indicators Page | 53

I am now going to list what I see as good potential trades and bad potential tra des. Here are the good ones >>> Level BB trades or squeeze BB trades. However, be aware that these may produce f ew pips unless you are in a higher timeframe such as 4 hour upwards. More good t rades >>> These are OBB trades starting from the level/squeeze area to the left, then goin g on to a breakout in either a BB bubble or sausage format. TP1 is set at either the mid BB if the mid BB is against us or the first touch of the BB if the mid BB is for us. TP2 is set at the first BB disconnected candle in the bubble and a t your discretion in the sausage. Trading Without Indicators Page | 54

Bad trades (for now) !! In both these cases, one a BB bubble, the other a BB sau sage, the trades shown have very little room to move to generate a TP1. Sometime s TP1 is a loss. We are then forced to depend on TP2 to give us a profit and we cannot guarantee that TP2 will be reached. Further, although the entry CBL on th e BB bubble is reasonably easy to draw, the same CBL on the BB sausage may well be the wrong one with price action just ignoring the direction change. In the sa usage case, we would sustain losses and these would mitigate against any future profits!! The safest cases here is to trade on higher timeframes - at least with the bubble you have some kind of chance to get TP1. I am going to do more resea rch on this trade type. At present, the best way that I see to discern the turnaround point is to use a higher timeframe (x4 approx). Figure 12 Figure 13 TQ- I hadn t thought about the slope of the mid line. Good to have your experien ce here with us. The slope of the mid BB is critical to determine whether the price action is goi ng to cause a trade to succeed or fail. TAJust as I thought, the price action has reversed back to the mid BB >>> This just goes to show how critical that mid BB is. However, the trade is not fi nished yet, so we will see. Trading Without Indicators Page | 55

User Input (Graviton) Greetings Tymen, I ve been having very good results with t he BB DNA in demo so today I decided to try to fold it into my usual method of m ultiple TF trend following and money management. The results have been astoundin g. Took the squeeze and down move from EURUSD for over 100+ pips and took a bubb le down on GPBUSD FOR ANOTHER 100+ PIPS. Using multiple TFs with the lower to mi nimize entry SL risk and moving up to the higher to ride profits to the moon is working well for me. Just wanted to check in and give my two cents to complaints about trading against the trend. There are multiple trends at any one time in d ifferent time frames. What looks like trading against the trend in a lower TF ca n actually be a great retracement entry with low stop loss in a higher time fram e. Just my observation. I m keeping up with posts, but have to make a living als o. Thanks for the great addition to my live trading system. All I can say is, WO W! OK, glad to hear you are doing well. I could not edit your post - it is too e ncouraging!! My comment is this....... You are using more than one timeframe - g reat!! It appears that you are trading the retreats that I am now counseling aga inst trading - interesting!! Your present post is a nice contrast to the complai nts from the lesser experienced traders. For this reason I ask you to post such charts so that these readers can learn what to do correctly and where they are g oing wrong. When I return, I can analyze everything and hopefully provide a bett er way to enter into the retreat trades. Trade Types Here I am going to show the trades that...... a) You should take. b) You should not take. Bubble Trades You Should/Should Not Take Figure 14. By all means take the BB walk trade in the GREEN area.This trade starts with a CBL in a level/sque eze area beforehand. (see entry rules for level/squeeze areas #2374 page 238). D o not take the trade in the BLUE area. Figure 15. By all means take the BB walk trade in the yellow area. Do not take the trade in the grey area. Going back and checking. Yes, the 5M mid BB was against me on entry as Tymen guessed, but the higher time frame 15M, 30M & 1H mid BB s that I was actually trading were trendi ng well in the direction of the trade (down). I didn t even check the 5M trend s ince it jumps all over. I don t trade the 5M, I just slipped down to the 5M to g et the best entry for a trade I had already decided to do. I had to wait about o ne and a half hours for the down BB DNA entry, but it was well worth the wait. I know, lots of words, no charts. I ll work on that. The above trades were BB bub bles, Figure 14 Figure 15 Trading Without Indicators Page | 56

BB Sausage Trades You Should/Should Not Take Figure 16. By all means take the BB walk trade in the GREEN area. This trade starts with a CBL in a level/squeeze a rea beforehand. (see entry rules for level/squeeze areas #2374 page 238). Do not take the trade in the BLUE area. Figure 16 Figure 17. By all means take the BB walk trade in the yellow area. Do not take the trade in the grey area. Figure 17 Trading Without Indicators Page | 57

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Because I am coming to the end of my time here before I move, I will give an ove rview........ Some pointers 1) Trade the higher timeframes only - for example, a 5 minute char t is only noise, there is no trend here and you will only lose. 2) If you think you can handle the retracement areas I said not to trade, then go ahead, but sto p if you continue failing. If your losses are greatest in these areas, then stay out of them and restrict yourself to the OO and OBB price action types. 3) use a "think outside the box" mentality. 4) if you are going live, DO NOT trade unde rcapitalized. 5) experiment with the 2 CBL methods given - the current one and t he earlier one where we used 2 candles and no other rules. (I personally prefer the earlier rules but I modified then to suit the ongoing complaints). 6) Decide in the end whether this method is going to work for you - be prepared for the l ow risk/reward ratios. When I return, I will want to know what the verdict is. I think I know already - lack of trading experience will cause this DNA method to be a failure for you. (I do not have trouble myself at all). If I am wrong, the n I will post live trades as they happen (on demo account of course). This is th e best way for you to learn and I did this on my candlestick thread, part one. B ut being pressed for time, I cannot do it now (I have to set my keyboard up to d o 2 things at once - edit screen prints and trade at the same time!!). When I am relaxed after moving I can do this!! If I am correct, then I will start to post the alternative method of macro trading which is relatively simple to understan d. It will involve knowing the major trend (how to discern it from the subtrends ), selecting the correct entry points on the Bollinger bands, using the 3 candle CBL, setting a TP1, then shooting for the moon with a TP2 using Fibonacci. This macro method can be used with any timeframe because it is governed by the major trend in the high (daily/4h) timeframe. It does, however, come with an average win/loss ratio, but the complaining readers here will state that the DNA method already has that too!! For some of you, this macro method will definitely be the way to go. Once we establish which way to go, I will then construct the PDF whi ch is the final act on this thread. Here are some real trends!! >>> Trading Without Indicators Page | 59

Now time to answer this one because I have seen a lot of discussion about it I h ave removed all of the lines and entered the correct ones. There are 2 trades, b oth successful. The first one starts from a level BB, standard entry, goes to TP 1+TP2 no problems. The second one sees an extreme candle drawn as shown. It look s like we are entering a BB bubble or sausage (the bands are expanding), and the re is an opposite (upper) band contraction at the black line. The mid BB is goin g down so we are careful - any long trade would most likely finish at TP1, givin g an OM trade. We set the CBL, the next candle (green) has its close pass thro t he CBL and is also a trifle smaller than the extreme candle. We enter on the ope n of the next candle as shown. We are in for a long profit ride. If you want you r trading to be a success, then you will have to be fluent in discerning the pri ce action. (just like I did here). That covers everything just now, I think. Rem ember, when I return from moving I will post live trades of either the DNA or ma cro methods, depending on the consensus. I will take a short break now, then loo k again shortly to see if we run into further problems and help again. If you wa nt to be more certain of success....... Trade in the trend direction of the Daily and 4 hour timeframes. User Input (Graviton) Saw your post gezza10 and thought it was good advice. Obvi ously you have watched the markets a while. I never hold day or swing trades ove r the weekend, due to the unlimited opening gap risk. I do hold position trades for months on end, but that is another subject. Perhaps I ll start a thread on i t someday, but first I ll have to learn to post charts! Oh well, we all have our strong and week areas. It s now 10:00 AM EST. I ve made 12 trades in my live ac count for the day. After spreads I have , 10 wins for +147 pips, one loss for -3 4 pips, and one trade near BE in the hopper that I m still managing toward the c lose for the weekend. The loss was a stupid mistake that I won t go into unless you are interested. I will close my remaining open trade, win or lose before the weekend, but I Trading Without Indicators Page | 60

suspect it will close BE or for a small profit. Just an average Friday. Since Fr iday is a short trading day I start closing out my trades early so I don t get c aught having open trades over the weekend. The following is for new traders havi ng trouble. Senior traders will already know all this stuff. I see all the pain and frustration of the new traders, trying so hard to make this work. Believe me , I feel your pain with every fiber of my heart, mind and body. When I first sta rted trading I had close trusted friends tell me I was wasting my time and money . I was not a very good trader. If I won a trade I felt like superman. If I lost a trade I would get a terrible sick feeling. I won like crazy on paper trades, but when I started trading real money, it was 6 months before I had one winning week. It was another 3 months before I had my second winning week. I made every mistake that is possible, some three, four or five times before I learned from t hem. I wish I could save every new trader all that pain and anguish, but I can t . I m just not the natural teacher that Tymen is. I m not a natural trader eithe r. I had to learn everything the hardest possible way. One thing I have learned is when you get to the top of the mountain, keep climbing. Following this thread is part of my continuing climb, and I have learned things here that I ve never seen or even thought of. I can t possibly explain Tymen s system better than he can, and probably not as well as some other senior traders in this forum. But I m not totally without talent. If I can save even one new trader one moment of th e pain I had to go through when I first started, then perhaps I will have evened the scales a bit. To that end, I ll post a few things to keep in mind while tra ding Tymen s system. As always, take what you like and toss the rest. I ll start with gezza10 s advice to watch out for the big gaps on the opening Sunday/Monda y. In Forex you have an unlimited opening gap risk. For instance, suppose you we re trading short USDJPY this week and were well ahead and decided to hold over t he weekend. Now suppose, God forbid, North Korea drops a nuke on Seoul, South Ko rea, what would happen? The pair would open thousands of pips up. Depending on y our capitalization you would take a huge drawdown, or be wiped out. Now you d th ink this kind of event would be very rare, but don t kid yourself. The markets c an and will do anything and everything over a long enough period of time. Protec t yourself at all times. Another thing about gaps is there is an old traders say ing. Gaps usually close. I ve made good money trading that old saying. There is good logic behind it relating to order imbalances, but I won t go into it here. If you are interested though, I ll discuss it in more detail. There must be 100 or more of these old traders sayings. You need to know them if you are going to be successful. You can learn them the hard way like I did, or you can find someo ne to give you a clue. Today, I m here to give you a clue. Like I said, senior t raders might want to skip this post, as it will all be old hat to them. Of cours e, senior traders are welcome to chime in, or correct any mistakes I make, but t his post is for new traders who are having a hard time. Here s a quick list of o ld timey traders rules, sayings and folklore you should be familiar with. The li st comes with a warning that in the markets, every rule has an exception, and ev ery exception has an exception. Take what you like and toss the rest. We can dis cuss exceptions if you like. These aren t in very good order, but you can order them yourself. Ask any questions you like: Always trade with a stop loss. Never move a stop to stay in a trade that s going against you. Never average down. Alw ays trade with the long term trend. Cut losses short, but give your trade room t o breathe. Let profits run, but if you don t take SOME profit, you won t make an y money. Stay the course so you are around for the big moves. Don t blame the ma rket for your losses. You are the reason for your losses. Do not concentrate on just making break even levels when you are losing. Break even levels do not impa ct the future success of a position. Don t liquidate a winner to keep a loser. P age | 61 Trading Without Indicators

 The first loss is the easiest to take. Don t trade a dead or thin market. Be pat ient. Let the market tell you which way it is going to go. Never take a flyer. N o fooling around. Every pip counts. Don t trade tired, sick, angry, or depressed . Don t let losers languish or winners turn into losers. Minimize risk to capita l with in initial tight stops and small size. Maximize profits by taking bigger risks only with profits. Consider trading capital sacred, but profits are for ma king more profits. If a trade goes unusually in your favor, take the risk out fi rst, then take some winnings off the table. Like I said, if you are bored by thi s, just skip it. There will be some repetition. Continuing with old traders sayi ngs: There will be a few repetitions or just saying the same thing different way s. Use a system and don t deviate from it. Use money management at all times. re ward ratios. Develop and maintain an exit plan. Follow this plan with rigid discipline. Remem ber that greed kills. Never add to a losing position. A losing position means yo u were wrong. Sustain your patience. Big moves take time to develop. Remind your self that there is nothing new in the markets. Don t predetermine your profits. Avoid techniques you don t understand. Don t be overly curious about the why of a big move. The key to wealth in trading is simplicity, Bulls make money, bears make money, but pigs get slaughtered. Like I said, if this post bores you, you p robably don t need it, so just skip it. Establish your trading plan before enter ing the market. Have a plan for each trade. Develop a worst case exit plan for e ach trade. Establish entry and exit points and understand risk Accept small loss es as part of the game if you want to win. Stand aside from a position, knowing you have taken a position.

Just a few more of these old timers sayings. I really wanted to discuss managing trades, but I realized we d be on entirely different planes unless you knew at least some of what senior traders know. They really do trade this way, most of t he time. Beware the King Kong effect after a big win. Most money on your hands. Never guess what the market will do. This is not a guessing game . Have an open mind. Consider the opposite case. What is the trader on the other side of your trade thinking? Have the courage of your convictions. The correct position size seems too small to be worth the time and effort. Concentrate on pr eserving capital and minimizing risk and profits will come effortlessly. Respect but don t fear the markets. They are more powerful than any individual trader. You aren t as good as you think you are. You are only as good as you really are. Check the economic calender first thing each day. The trend is your friend. Loo k for multiple reasons to enter a trade. Don t trade a thin or dead market. If y ou doubt an entry, just wait to see if you were right If you don t have ade later. The markets aren t going anywhere. You probably miss 1,000 good trade s a day somewhere. If you worry about missing a good trade, that s a lot of worr y. Take care of your health. You can t trade if you are dead. After a big win. T ake a break and reward yourself. After a big loss, take a break until you are co mpletely over it. Be cautious trading during major news. Always allow enough tim e to execute your exit plan. Buy low, sell high. Winning traders exit their trad es according to a plan. They don t wait until their stop is hit. When a trade is going against you even a little ask yourself, knowing what you know now would y ou still have entered this rade? If no, exit immediately. If you are confused ab out what the market is doing or why it is doing it, sit this one out. OK, that s out of the way. It wasn t the point of my post, but I needed to get i t out there. If I missed any important ones, I hope a senior trader will pipe up . Trading Without Indicators Page | 62

There are 3 groups of people on this forum.... 1) live traders 2) demo traders 3 ) lurkers. Just lurking is an acceptable practice if you do not wish to demo tra de. As far as those NO NO BB bubble + sausage retracement trades go, by all mean s practice trading them if you think you can handle it. But too many demo losses and this area should be out of bounds for now. That leaves us with level/squeez e trades OO and OBB if they go on to walk a BB. It is the OBB price actions that make the most pips. I have recently downloaded a program that is a radio contro l model aircraft simulator. It is a lot of fun learning to fly the aircraft in r eal scenery. The computer is amazing in how it shows the plane smashing to bits when you crash. In fact the whole thing is so real, it is an amazing program. In the beginning, all you do is crash the plane (you have a choice of planes and s cenery!!). This goes on for ages until you get some control and manage to stay i n the air seconds longer before you crash again. I have got to the point now whe re I can land the plane in a very rough fashion. This is just like forex trading . Every time you crash, you are reminded of your forex failings. So close are th e parallels that I found that after some flying, I was able to trade forex with more confidence than before. For those interested in some motivation to do well in forex, google..... "clearview flight simulator - download." You can have a lo t of fun and with the adrenalin flowing, you will do better at your trades!! Goo dnight - back for the last time tomorrow. User Input (Graviton) An Old Traders Pe rspective for New Traders Just closed my last trade for today with 10 pips profi t. 11 wins, 1 loss today. I ll take it. My theory is that every single trader is just a little different. So what works well for one may not work as well for an other. Some have full time jobs, families to care for, or school exams coming up . Each must find her or his own path. If your path is to follow another in their s, perhaps you are lucky. For most of us, it will take months or years to find o ur path. I worked for others for over 20 years, selling my life one hour at a ti me before I retired and became self employed. After 22 years of trading, I woke up this morning an hour earlier than usual at 4:30 AM wondering what the London open was. I was so excited that I couldn t get back to sleep, so I got up, made my coffee and started my daily routine. I settle into a chair so comfortable I m embarrassed to say what I paid for it, and fire up the three screens and the be st PC I could find. I replace the PC with the best every year. I get a tax deduc tion on it. First I open the economic calender and see what news could ruin my d ay (or make it). I turn on Bloomberg news and let it play in the background. Som etimes I turn the sound down and just listen to some nice music. Then I start my pair analysis. Since I have analyzed the same 10 pairs every morning for years, I have them mostly memorized and really all I have to do is catch up on what ha ppened while I slept. I start with the longest TF chart, monthly, and look at it in a quick flash. It s pretty well imprinted on my retina by now. I do the same with the weekly, just a quick flash to refresh my mental image and remind mysel f of the direction of the very long term trend. Then the real analysis starts. I go to the daily chart. Tymen s thread is about trend trading, which is the reas on I opened it since I m a trend trader. So I will stay with that trend theme, b ut I m looking at lots more than just trends. I m looking at individual candle p atterns, multiple candle patterns, trend lines I have marked over time, Bollinge r bands, pivot points, high lows, S/R, major moving averages, and yes, indicator s. I have three charts designed for each pair so I can always have one that is f airly clean with a minimum of junk on it. If other traders are looking at Tradin g Without Indicators Page | 63

this stuff, I want to know what they are seeing. If they were looking at astrolo gical signs, I would want to know what they were seeing. I use just about everyt hing except Elliot waves. I never could make sense of those. This works for me b ecause I have trained my eye to it. I wouldn t really recommend it as it could l ead to analysis paralysis. But I m mainly looking at two things, what does today s candle look like, and of course, reminding myself of the daily chart trend. I encourage everyone to make a careful study of candle formations. But as always, take what you like and leave the rest. My loss today was a stupid one. I got on the wrong side of USDJPY and didn t get off quickly enough. The good news is I reversed my position when I realized my mistake and made more on that pair than I lost earlier. I guess I need to re-read my own rules, eh? I think you can trad e for 50 years and still make boneheaded mistakes. Larry Tisch (once owned CBS) was very successful and built up the multi-billion dollar Lowes Investment Bank from scratch. Near the end of the dot com bubble, he was sure stocks were overva lued, so he sold S&P 500 short. He was right, but early. The S&P 500 kept climbi ng to outrageous levels, far beyond any reasonable evaluations. He thought he wa s so well capitalized he could ride it out. When he finally gave up on the trade , he had lost one billion dollars on that one trade. That reminds me of another saying. The market can remain illogical longer than you can remain solvent. Oh w ell, water under the bridge now. Let s move on. So I m looking at the daily char t in my morning pair review. I always look at my favorite pair first, then work down the line to my least favorite. I look at today s candle. It tells me a lot. What direction did the market move overnight, did it form a long wick, how far has it moved, is it forming part of a possible multi-candle formation like a sta r or engulfing pattern or a head and shoulders, etc. And of course, I remind mys elf of the direction and strength of the daily trend. Then I work my way down th rough the charts, spending more time on the 4H, since it has formed 2 candles wh ile I slept. I examine each chart and carefully observe the trend on each chart, 4H, 1H, 30M, 15M, 5M, 1M. The whole process takes 5 to 10 minutes a pair. When I m finished with a pair, I have a decision to make. Is the trend clear enough o n this pair to trade? Sometimes the decision is obvious. The trend is clear, the movement is steady and predictable and all I need is a good entry. I make a men tal note of what I m looking for before I enter and wait and watch until my best entry point occurs. I can go over this analysis and selection process more if s omeone is interested, but I want to get to trade management as soon as I can. So I go through each of my favorite 10 pairs, looking for trend following trades. I m looking for about 4 or 5 pairs to trade. I can usually find them, but I ll t ake what the market gives me, not more than 5, but 1 is OK. If it s zero, I just keep studying. What I want to do here is diversify my trades. I may lose a litt le on one pair in a particular day, but if I win in 3 or 4 others, I still have a good day. Diversification of risk is an important and rarely discussed money m anagement tool. If you can t afford to diversify by trading multiple pairs, you are trading too large a position for your capitalization. Think that over carefu lly. We can discuss it more if anyone wants. Tymen s BB DNA entries have greatly improved my entries. I m probably entering with a 5 pip advantage now over the systems I was using before. With 5 trades, that s at least 25 pips a day in my p ocket. Very cool! So I keep putting on small positions, 1/5 th of a full positio n, until I have my 5 trades on, or whatever I can find for the day. Of course, e ach pair has a spread, so I start out losing 10 to 15 pips and my profit line al ways starts out negative. But not to worry, my system will have it positive very quickly. That s because my system is to only take trades where the long term es tablished trend is in my favor. Essentially, I m taking trade entries that are s hort term retracements against a longer term trend. Now you can see why Tymen s BB DNA entries work so well for me. I ve been practicing identifying and trading long term trends for years. Tymen s system identifies the best possible retrace ment entries for those long term trends. But there s another trick. ctually, the re are lots of tricks. Tymen advised that if you were going to do live trading, do not trade under-capitalized. If you get nothing else out of this post, please consider your position sizing. Trading under-capitalized is the greenest of gre enhorn mistakes you can make. Say you have missed meals and lived like a monk to

save up enough capital to open an account, please do not waste your time and mo ney trying to trade under-capitalized. If you have saved $1,000 and think you ca n trade minis and make a couple hundred in extra capital each week, please be re alistic. That would be 20% a week. Do you have any idea what 20% compounding per week at 52 weeks turns out to be in annual return? Find a compound interest cal culator on-line and figure it out. Trading Without Indicators Page | 64

The best traders in the world make a small fraction of that, and they have years of experience and resources that are out of this world. If you have scraped up your life savings to open a $1,000 account, you should be trading micros. Yes, t hat s right, 10 cents per pip. So you think, gee, I busted my buttocks all week to make 200 pips after spread and now all I have to show for it is a lousy $20? Be reasonable, calculate that return per year when compounded each week for 52 w eeks. If you can do a small fraction of that, week in and week out, with minimal drawdowns, that would rank you among the top traders in the world. Show that re cord to a hiring manager at any trading house and you will be hired on the spot. The hire in is about $200,000 base per year, but in 6 months with a good tradin g record you can negotiate twice that in commission. And do you know what the to p traders in the world make? About $1,000,000 to $50,000,000. So, if you want to turn $1000 into say, $1,000,000, I can tell you the best way to do that. It can be done and in a lot smarter ways and a lot shorter time than you think. But do n t blow the whole thing trying to get there trading under-capitalized. Look at it this way, when I started trading, they didn t have micros. I had to trade min i contracts and odd lots. I wasn t very good at it. I budgeted myself $500 a wee k in allowable losses and I was losing it every week. Many weeks I would hit my loss limit before Friday and just have to quit trading and study and paper trade the rest of the week. I had saved money from working hard for decades, but I wa s bleeding cash at a rate I couldn t sustain. I had children still at home (I ma rried late in life). I was scared. I was studying and trading 80+ hours a week a nd losing everything. Then I found my path, just before I had to start selling b ody parts to put food on the table. You are getting this same education for free , or at a very low cost. Don t screw this up. OK, I got a bit off track. I was g oing to tell you some tricks. Sorry. OK, back to tricks. I ve given you one of t he best. If you are trading with $1,000 trading capital, diversify your trade in to 3 to 5 pairs at 1 micro each. At least until you get the hang of this. The ri sk is actually much less over the long haul than just trading 3 to 5 micros on o ne pair. It s a bit more complex, but you ll get the hang of it with practice. S ome other tricks are scaling in and scaling out, which is part trade management, which I finally got to. The first step in trade management is to enter trades y ou can manage. Forget scalping the 1M and 5M time frames. Those trades put you u p against the trading desks at Goldman and Citi. They have real time order flow information, multiple live news feeds, the latest in computers and software, a t eam of the best traders working together being charged super low spreads. This g ame is hard enough, that just makes it impossible. So you say you can t find eno ugh trades to make any pips on the longer time frames? That s like saying you ar e driving your car faster so you can get to your destination before you run out of gas. You need to at least trade the 15 minute charts, 20 or 30 minute are eve n better. I ve already told you how to find 5 trades a day with pair trend analy sis, so let s assume you have gotten up early right after the London open, I gue ss that s after work for those down under, and been very patient and waited for 3 to 5 trading pairs to come to you and took the trades for 1 micros each. Now w hat? Now you let the market work. Say your average spread is 4 pips, and you too k 4 trading pairs, now you are starting out 16 pips negative, but be patient. So me will go positive and some will go negative. If they go negative more than 10 pips from entry (+4 pips spread, so you have lost 14 pips), close the trade. So say one of your trades go bad, close it and you have three still running, your a ccount balance has dropped by the 14 pips on the closed trades, but what s this? The negative profit on the three remaining is turning positive. They will keep turning positive, unless you made all very very bad choices. If any hit your 14 pip loss limit, on a trade, close it. Tymen puts two lots on and takes profit fr om one at TP1 and the rest at TP2. I trade both more conservatively, and more ag gressively. I put one lot on, and when I get about 15 pips ahead, I put a second lot on, when the first is 30 pips up I take it as profit and put a third on and so on. On the first I took 30 pips profit, the second is now 15 pips up so I ca n move it s SL to BE, and the third is risking 14 pips on it s SL. If it goes up another 15 pips, I throw another lot on and ride it for a bit. If it goes bad I grab up all my pips quickly and finish with about 30 to 80 pips per good trade.

In the best trades I ll wind up with five lots on and a guaranteed profit never risking more than an initial one lot SL. Trading Without Indicators Page | 65

Some I ride to the moon with a 100 pip move. But that s rare, like once every on e or two weeks. But if I m too aggressive, I can lose back what I ve made. So it takes a bit of practice, but you d be surprised how quickly you can get the han g of it if you ve traded before. This is more conservative on the front end than Tymen s TP method, because it risks less on the initial SL (one lot instead of two), it is more aggressive on the back end because it s putting more lots on ju st when Tymen is taking his profit. The logic of it depends depends on the fat t ail of the markets, or their tendency to trend, or in Tymen s system, you are lo ts more likely to see a BB walk when trading with the major trend, than against it. I haven t tested both systems head to head in an honest test, so I can t say which would work better. It s just the way I learned to trade and it would be h ard to change now. A test would be very difficult because my system is much less mechanical than Tymen s. In reality it probably depends on the individual. In t he end, you have to find your own path, I m just pointing out a few sign posts. They may not lead to where you want to go. One thing is for sure, putting the st op just below the extreme candle rather than using my old system of a fixed stop plus spread saves lots of pips. And using the CBL for entries yields better ent ries than any other method I ve found. It s a bit early to say, but it looks lik e his system is making or saving me about 5 pips a trade. That more than offsets the spread. In trading terms, that s HUGE! But managing good trades is easy and trading three or four good trades at a time you pick it up fast. The next trick is managing a bad trade , and that starts by only trading with the trend. Just to clarify, are the retracements you trade with or against the long term/short t erm trend? I understand. I only trade with the longer term trend, usually the da ily and 4H. The retracement that I m entering could be on the 15M, 30M or 1H cha rt. The 15M gives lots of good entries, and I ve caught some good long trades of f it in the direction of the major trend. Though for the 15M & 30M,I would also want to see the 1H trending in the same direction of the trade. I never trade co untertrend. But that s just me. I think Tymen has made it very clear he recomend s trading with the trend also. He has probably tested that. Most people seem to be having better results with that also. Well people......................... I am about to close. My life is pressing in another direction now (moving). I hope to be back before May 19, but I have given that date, just in case the telephon e company and/or ISP are slow at making the relocation. In the meantime, I give the charge of the thread to Kockneerebel, Master Tang and Graviton. These 3 expe rienced traders will not steer anyone wrong. I strongly recommend the chat room - different sessions to cater for everyone here, considering the different time zones. From the chat room i recommend that you all do some live trades (on demo) together. You can even risk going live. I hope that you all learn much and retur n to me a definite decision on whether the BB DNA method is something that you l ike. In any case, I shall also proceed with the macro BB/CBL/Fibonacci trend tra ding method with makes full use of 2 or more timeframes. Goodbye for now till I return.T ymen. Trading Without Indicators Page | 66

Bollinger Band DNA Chat Room OK, guys, I had worked on this last week but it looked like it wouldn t be neede d, as everyone was happy to use the BP chat rooms. However, today we discovered that upwards of 30 people into these rooms closes them off to other entrants. So I am unveiling... This chat room has no user limit and also features the ability for any user to c reate sub-rooms for private chats, start a forex blog, message others outside th e chat room, post whiteboard features like charts and screenshots - even upload music to listen to (I got us started with AC/DCs Rock N Roll Train, which is as good a song for forex trading as any)! I have to give credit to Shr1k, who was t he first to work with me on creating chat rooms and whiteboards for our Forex tr ading. The Ning network I ve set up for BB DNA is very similar to the one Shr1k set up for another strategy (MMTT). The network is free to register with and the homepage is here: Bollinger Band DNA - FOREX Trading using the Tymen Bollinger Band Strategy The direct link for the chat room (which you can bookmark) is: Bol linger Band DNA ChatYou can feel free to join us (many are already there) and st art your own whiteboards, if you like. Happy Trading! Trading Without Indicators Page | 67

Tymens Return Tymens return o the thread. am back!! Ready to teach new stuff. First of all, I w ish to know the answer to the question I asked before leaving.........Is the Bol linger DNA method successful for you? That is, are you getting a very high win/l oss ratio? This is a very important matter, and will determine where I move on f rom here. I am also going to deal in depth with the 5 stage entry method develop ed by Graviton using the GFT platform where the entries are averaged. I like thi s entry method (with a few slight modifications). It definitely give a better st op loss execution with the potential loss of only one contract whereas the 2 con tract approach that I have used here (first explained by Boris Schlossberg) resu lts in a potential loss of 2 contracts. Now I see that there has been a huge amo unt of discussion about trends, both on this thread, and Graviton s thread. We s ee that as you go thro the time frames, sometimes the trend is up, and sometimes the trend is down. This can be confusing!! Which timeframe do we use? I have ad vocated the use of a triptych - 3 timeframes where one timeframe informs another . Looking at the logic of the trends, and the danger of making a false entry on a short timeframe (where the higher one says you should stay out), I would like to reduce it to 2 timeframes - one about x4/x6 of the other. So what I am trying to do is to attempt a simplification of the multiple timeframes approach to as to remove all the confusion. Diagrams are needed to explain this and that is wha t I do in the next posts. No start a close look at the effects of different time frames and how we should interpret them. I will take an example from the seaside , since that is where I grew up, and that is what I understand best. We will loo k at and analogy with the waves of the sea in 3 parts, each representing a highe r timeframe. The 1st timeframe is very short - it is the little waves that trave l about 1 metre or so back an forth on the shoreline. They do this every 15 seco nds or so, depending on where you are. The 2nd timeframe is longer - it is the l arge waves, the largest being every 7th wave. These waves propel the water in la rge sweeps back and forth upon the beach. Finally, there is the 3rd timeframe wh ich is very much longer - 6 hours in fact. It is the tide, which is generated by the gravity of the moon first, and also by the sun. The tide sweeps the water b ack and forth a very long way. I will now use these extremes in a diagram in the next post to try to analyze wh at we are looking at. Trading Without Indicators Page | 68

Here is my first diagram The drawing shows a beach and the sea. The blue strip shows the sweep of the water - the little waves of about 1 metre in c ycle from lowest to highest (peak to peak). The white area in the blue strip sho ws the sweep from maximum (high water) to minimum (low water). Now lets elaborat e on this diagram by introducing the next higher timeframe, the large waves peak ing at the 7th wave >>> The large waves have a trend of their own, going up the beach. This trend culminates in the 7th wave which sweeps highest up the beach. However, while these large waves are in progress, the small 1 metre waves are st ill active, going every 15 seconds or so. The large waves may take several minut es between them. So each large wave has a lot of little 1 metre waves superimpos ed on top of it. The little waves are shown in the diagram by the white areas in each blue strip. The white area shows the maximum and minimum height of these l ittle waves. The blue strips represent the large waves - there are 7 in this dia gram. The 7th wave sweeps highest up the beach as shown in the diagram. Therefor e, there is a "trend" in the large waves. After the 7th wave, the cycle starts a gain, the 1st wave being very low. Now if we were to ENTER on this trend, we wou ld do so at the MINIMUM of the FIRST WAVE. We would exit on the MAXIMUM of the S EVENTH WAVE. In doing so, we would be correctly following a trend. If the time b etween the 1st and 7th wave is, say 20 minutes, then we would stay in that trend for NO LONGER then 20 minutes. (if we stayed longer, we would revert back to th e 1st wave and destroy our trend). I will now show the final long trend diagram >>> Trading Without Indicators Page | 69

Explanation This diagram appears complex but it is really very simple. To save s pace, I have shown every major wave as a single dark blue line. The red sections are the little waves superimposed on the major waves. There are 7 major waves f orming a trend of going up the beach. After that there is a retracement and the cycle starts again. Here we see many cycles because the tide is going out and he nce the cycles form a trend of going out. So........... The red little waves are the very short timeframe. (15 second trend) The blue major waves are the medium timeframe. (20 minute trend) The cycles (tide) is the long timeframe. (6 hour t rend). The blue major waves are showing a trend up the beach (7th wave is highes t). This represents going LONG. The blue major wave cycles (tide) is going out. This represents going SHORT. Analysis If you traded the major wave timeframe (20 min), you would be guided by the tide timeframe (6 hour). Then you could enter at point B or if you are clever, enter at point C. Then as the water goes out, p oint R becomes a retracement point which is expected to happen. You would then e xit at either points D or E or any of the waves after that. You would be trading SHORT and you would make a profit. You would stay in the trend for 6 hours. Now if you traded the little wave timeframe (15 seconds), you would be guided by th e major wave timeframe (20 min). Then you could enter at point B or if you are c lever, enter at point A. You would then exit at point C. You would be trading LO NG and you would make a profit. You would stay in the trend for 20 minutes. Fina lly (not recommended), you could trade the little wave timeframe (15 second) and be guided by the tide timeframe (6 hour). In that case, you could enter at poin ts A or B, stay in the trade for 6 hours and exit at points D or E. You would ex pect strong retracements along the way (point R). You would be trading SHORT and make a profit. From this set of diagrams we can set some rules for trading tren ds.......... When choosing a home timeframe to trade with, always choose a timeframe 4X-6X gr eater to tell you which way to trade. Stay in the trade for a time equal to the length of the higher timeframe. To do this we are depending upon the axiom - the trend is your friend. We assume that the probability of the trend reversing dur ing our trade is low. If, however, upon entering, the trend in the higher timefr ame suddenly reverses, we can expect our stoploss to be hit. Trading Without Indicators Page | 70

Hopefully, these rules help to remove the confusion when looking at all the time frames and seeing conflicting trends. Remember, in theory, there are an infinite number of timeframes!! Now to the task of developing a 5 stage entry method for the GFT and similar platforms where the entries are averaged. I am going to do this tomorrow because I am feeling quite sick right now. I have already develope d the approach on paper so it should not be difficult to post it as a method her e. Here are some important points to note for now....... As regards the Bollinge r DNA method, I say to only trade with the trend. DO NOT counter trade the trend . This means you must wait for a BB squeeze area, then wait for an extreme candl e. The CBL entry method I prefer is to use 2 candles (except when the 2nd CBL ca ndle is bigger than the extreme candle - then use only one). I usually enter whe n the price action crosses the CBL - I do not wait for a close. Waiting for the close could result in the price action too close to the mid BB to be of any use. However, if you do prefer waiting for the close (recommended by Darryl Guppy), then be consistent and do that all the time. Going to a timeframe lower than you r home timeframe to effect an entry is fraught with danger. You may get an entry on the lower timeframe but on your home timeframe no such entry is indicated. T hus you could end up hitting a stop loss instead. All of the 4 types of price ac tion - OO, OBB, OM and the untradeable RO, can occur on the BB squeezes. So..... ........... it is possible for the price action to hit the mid BB only, then ret race. (OM, then RO). Or it can just hit the opposite outer band. (OO). Or it can walk the opposite outer band. (OBB). These are the trades to take. The trades t o avoid are the ones where you wait for an entry as the price action walks the B B in what appears to be a bubble. It may be a bubble or it may not......and turn out to be a sausage instead - in which case you lose. I developed the single ca ndle CBL using a close and smaller candle to try to discriminate between a BB bu bble and a BB sausage. A lot of the time this works. But you only need a few tim es when it does not work to ruin your trading, and the resulting losses will set you well back. So, therefore, avoid, trading from these BB walks - this is coun ter trend trading and gives poor results. With 4 majors and other favourite pair s to trade, and umpteen timeframes to trade those pairs, there is sure to be a s queeze happening somewhere anytime you open your charts. So trade those squeezes and nothing else. In addition, use the rules given in blue above to determine t he trend. DO NOT set a CBL and enter in a squeeze where the CBL causes you to tr ade against the trend set in the higher timeframe. This should just about wrap u p the rules for trading the Bollinger DNA method. Tomorrow I will try to set up the GFT 5 contract entry method as per Graviton s inspirations. This will cater for the averaging of the entries which the GFT and other platforms do. This meth od is very subject to you trading with the trend. It should, therefore, work ver y well with the macro method to be explained fully later. TQ- when you trade on the daily charts do you use 2 CBL method to enter? how do you set SL TA- I don t trade the daily as such but rather use it as a higher timeframe to d etermine trend. In any case, yes, you would use the 2 CBL method to enter. The s top loss is set at the extreme wick point away from the CBL of the extreme candl e. The number of pips in the stop loss, therefore, varies. Trading Without Indicators Page | 71

Thank you for the posts since last night for me. I am to anwer a number of quest ions regarding the squeeze............. The best way to anwer the questions is t o point out what not to trade. Then all else is ok - as long as you are going wi th the trend in the higher timeframe. Here is what not to trade - given as a red line >>> In both these cases the part of the line shown in RED should not be tr aded!! By avoiding this, you automatically keep out of a BB sausage also because a bubble turns into a sausage. So what is a squeeze? It is any area that does n ot consist of a BB bubble or sausage. Some of these areas may stay squeezed for a long time but you do not know that. If this is the case, then you trade anyway and collect small profits along the way. Or, alternatively, you could stay out of this area until you see the BB widen somewhat but NOT a bubble or sausage. To be sure I will give an example in the next post. Trading Without Indicators Page | 72

Here is a chart with green and red areas >>> The green areas - good trading areas A GREEN - all in a squeeze area. Trade top to bottom, bottom to top, then top to bottom again ending in a bubble. C GREEN E ntry in a squeeze - price drops in a gap and ends in a nice BB walk. The red ones - keep out B RED The finish of a bubble walk - do not trade. The se cond part of (B) is the same - the end of a bubble walk, do not trade. D RED End of bubble walk - do not trade. The price action then walks the upper BB in a sq ueeze area and you would attempt and entry and lose. This loss would put you off and cause you to wait until the walk was over. You do not know when it is going to be over so the down price action resulting in a walk of the lower BB is also no trading. A bubble is then formed - no trading and price goes on to area E. F RED We are at the end of a bubble walk - no trading. Price moves to area G. E GREEN We are in a squeeze area here. Two entry attempts result in a loss each, then a third entry results in a travel to the upper BB. G GREEN Squeeze area. E ntry from the upper BB results in a walk of the lower BB - good trade. After the above chart, many traders may be considering the macro method. The mac ro method requires that you judge the trend direction from a higher timeframe fi rst, then enter by setting a CBL in the direction of the trend. The CBL can be s et from any area but it is a 3 candle set up as was shown originally when I intr oduced the count back line concept. The macro method will use Fibonacci measurem ents on the retracements to determine whether to exit or continue. I am now to d evise a 5 contract scale in method for the GFT program. Trading Without Indicators Page | 73

Trade any area except the ones shown. This is true not only for Rachel, pictured here, but also for her inverse, namely Denise. It follows that avoiding these a reas for a BB bubble will automatically exclude the BB sausages because to get a sausage you must first start with a bubble. Now everything else can be traded let me pick you a random example in the next post. Let me now give a very rando m example for Xelnar, and also for others who appear slightly confused. For no p articular reason I chose the following........ This is the very latest from EUR/USD This chart is somewhat scaled out so that w e can see a "squeeze" developing into a BB bubble, then another squeeze developi ng into a BB sausage, then a further squeeze. The orange areas are the retraceme nts from the BB walks and these orange areas are the NO TRADE areas. The blue ar ea is where the 2nd pattern (a bubble), turns into a sausage with the price acti on leaving the upper BB, but instead of going down, it reverses and goes up agai n. The fact that the price action does not touch the upper BB again is irrelevan t. Lets now look at the trades in detail. Trading Without Indicators Page | 74

We first go to trade A by looking in detail at the squeeze area at the entry. OK , here it is >>> The 1st extreme candle (2 candle CBL) entry is a waste of time (too close to mid BB). The 2nd entry is much better. It is a short entry resulti ng in an OBB price action with a BB walk on the lower band. Lets have a look at that BB walk >>> The exit for this BB walk is given by the s imple exit method where we exit on the first candle away from the BB. The orange area in the oval is the retracement from this BB bubble and is a NO TRADE area. We avoid this area!! Trading Without Indicators Page | 75

We now go to the squeeze in between the bubble and sausage >>> The extreme candl e A is useless to us but extreme candle B gives a long entry. Note the 2 candle CBL entry method. It takes a while before the entry is taken.You see here the po wer of the CBL method in avoiding retracements and getting an entry only when th e price action shows momentum. Now lets go to the final part of this trade on the chart. The trade goes long fr om the doji where it entered. We exit at the first candle that is away from the BB as shown. Up until this point the pattern is a BB bubble. However, the price action soon goes above the exit candle and continues upwards thus converting to a BB sausage. As mentioned before, the lack of touching the BB is irrelevant. Th e BB walk then ends properly and a retracement starts. This is the NO TRADE area shown in the orange square. After that, all is well to trade again. Trading Without Indicators Page | 76

I see what I believe to be an important error here!! Lets look at these 2 lots carefully >>> Assume we are trading LONG. In the first picture the 1st entry is shown in green. The stop loss below it is in red. (mar ked S). The price goes UP (blue) and after 25 pips we enter the 2nd lot. Now in the second picture we have moved our stoploss to BE (as shown). Then suddenly th e price (blue) goes DOWN back to where it started to the 1st entry. So what are our profits/losses? The 1st entry has gone nowhere - it went back to where it started. Therefore, the 1st entry scores ZERO. The 2nd entry went DOWN - and hence it made a 25 pip loss!! The TOTAL is a LOSS OF 25 PIPS. Therefore t he following statement is not correct (repeated from above)...... you probably d on t really want to let price go all the way back down to Break Even and stop ou t on both lots with no pips for your effort. ............................unless there is something you are doing that I have not taken into account!! But what w ould that be?? Multi Contract Entry Trading Here is my considered approach to multiple contract entry trading. It combines m any features >>> Overview This approach has very much a war zone mentality about it. A profit is established as soon as possible and is held onto I have conside red the establishment of an early profit to be mandatory because a retracement c ould come at any time. Also with the DNA method, the trade distance is relativel y short. A slight delay is made before more contracts are added. After much cons ideration, I have stuck with the 2 contract entry............. I find that it si mply cannot be beaten. (obviously designed by experts). Instead we shorten the i nitial stoploss to 20 pips. This should be enough to trade your belief - that th e trade is going forward. A loss here would generate a 40 pip loss which is not too bad considering the reward potential is very great. The extra contracts are added on every 20 pips. These short distances allow for a maximum profit before a retracement occurs. This setup aims to generate many pips and do so as quickly as practicable. The whole thing is carefully designed to allow for the averagin g of the entries. Explanation The blue lines are the levels of price action. The red lines are the trailing stoplosses. The pink lines are the averaged entries with the entry number listed alongside. The trading steps are given large black numbers and the corresponding numbers are also given to the trailing stoploss. T rading Without Indicators Page | 77

The trading steps and their maximum possible losses are now considered.......... ... 1) At price action = 0 we enter 2 contracts and set the stoploss at -20. If the price action drops to the stoploss we have................ 2 contracts = -20 x 2 TOTAL = -40 pips. 2) 2) At price action = 20 we exit and bank 1 contract fo r a profit = 20 pips. We immediately reset the stoploss to zero. If the price ac tion drops back to zero, we have................. 1st contract = 0 Bank = +20 TO TAL = +20 pips. 3) 3) At price action = 40 a new 2nd contract is added. The stop loss is immediately moved to price = 20 (trailing).If the price action drops bac k to 20, we have............... 1st contract = +20 2nd contract = -20 Bank = +20 TOTAL = +20 pips. (averaged entry in pink = 20). 4) 4) At price action = 60 a n ew 3rd contract is added. The stoploss is immediately moved to price = 40 (trail ing). If the price action drops back to 40, we have .................. 1st contr act = +40 2nd contract = 0 3rd contract = -20 Bank = +20 TOTAL = +40 pips. (aver aged entry in pink = 33). 5) 5) At price action = 80 a new 4th contract is added . The stoploss is immediately moved to price = 60 (trailing). If the price actio n drops back to 20, we have.................. 1st contract = +60 2nd contract = +20 3rd contract = 0 4th contract = -20 Bank = +20 TOTAL = +80 pips. (averaged e ntry in pink = 45). It is possible to keep adding contracts if you wish. (checke d and corrected for accuracy, 25 May, 2010). BBDNA WhiteBoard A link to our whit eboard can be found on the BB DNA chat home page Trading Without Indicators Page | 78

I do not know who posted the chart below but it was on the whiteboard.I will go thro it to show how to trade the multiple contracts >>> The CBL is correct (the 2nd candle body is larger than the extreme candle so use only 1 candle). At line 2 enter 2 contracts. Set stoploss at line 1. Wait. At line 3 exit 1 contract = +20 pips. Move stoploss to line 2. Wait. At line 4 enter a new 2nd contract. sto ploss to line 3. Wait. Move The price action drops back to line 3 - hits stoploss. 1st contract = +20, 2nd c ontract = -20, Bank = +20, TOTAL = +20 Keep going - we have not hit the upper BB yet. At line 4 RESTART - enter 2 contracts. Set stoploss at line 3. Wait. At li ne 5 exit 1 contract = +20 pips. Move stoploss to line 4. Wait. At line 6 enter a new 2nd contract. stoploss to line 5. Wait. Figure 18 Move At line 7 enter a new 3rd contract. stoploss to line 6. Wait. Move Candle pulls away from BB so exit for an extra 5 pips on all contracts. Profit A nalysis. From 1st Trade = +20 (Bank). From 2nd Trade...........Bank = +20, 1st c ontract = +65, 2nd contract = +25, 3rd contract = +5, TOTAL FOR 2ND TRADE = +95 GRAND TOTAL FOR TRADE = +115 pips. I have accomplished my first task - to provid e a multiple entry method. I am still to do a demo on the whiteboard - that is n ext. Then.............the macro method which will include the Fibonacci retracem ent approach together with multiple entries. Trading Without Indicators Page | 79

I always liked my DNA method but now with complaints about losses I have modifie d it thus..... 1) A second form of CBL with just one candle and followed by a sm aller candle with a close below CBL. 2) The final decision to detail NO TRADE AR EAS. This 2nd modification renders the 1st modification obsolete. So from here o n use the original CBL method .............. 2 candles if the extreme candle is the larger of the 2. 1 candle if the extreme candle is the smaller of the 2. cut the extreme candle in half if it is excessively large (touches or goes thro the mid BB). TQ- I ve got the SHI Channel loaded and it works great but how are you getting m ore than one set of trend lines to show up on your charts? I can only get one ch annel at a time TA- Certain people are starting to add indicators to my DNA meth od. I am disappointed. We are trying to trade here without indicators - and the Bollinger bands are merely a substitute for support/resistance lines. I should m ake it clear once again that the Bollinger DNA method as I invented it, is a sta nd alone method that requires no additional charts or indicators. I am referring here to the orthodox method which is the one from which I will construct the of ficial PDF. This PDF will not detail the NO TRADING AREAS - these were added on because some readers were testing short timeframes and getting poor results. The orthodox method will contain some CBL details that I have not used on this thre ad, because I have entertained simplicity. But it is this orthodox method that g ives the high win/loss ratio. Using a higher timeframe to determine trend really does little to improve the efficiency of the method - the counter trading is at its best with this method. Adding indicators will do little to improve the gain in pips, and at best, will give no greater gains with added complexity. So when I post the PDF, I encourage all readers to use it as it is, and not modify it. On the other hand, the MACRO METHOD which will soon be posted, derives its stren gth from knowing the trend - which is got from a higher timeframe. But again, he re, adding indicators will only complicate matters. I really thought that I had put the use of indicators firmly to bed when I spent pages on this thread promot ing the GMMA, then suddenly dumping the whole affair without warning!! Indicator s do not assist in trading well. The use of price action is very much the correc t way to go!! And that is now very much the thrust of this thread!! Trading Without Indicators Page | 80

I will post a number of charts showing the trades, first in the 4 hour charts, t hen second, in the 1 hour charts. Here is your USD/JPY 4 hour chart, divided int o colors There are 4 colours, because there are 4 separate trades in this chart. I will take each color, and analyse it in detail....... Here is the first trade (light blue section) Everything is explained on the char t. The Total profit is as follows...... TP1 = 9 pips after spread. TP2 = 9+66 = 75 pips after spread. TOTAL PROFIT = 84 pips after spread. The trade is a standa rd OO trade. Here is now the 2nd trade (yellow section) Error! Reference source not found.. T his chart is full of labels and needs careful explanation........... We are usin g the orthodox CBL entry - in this case, long entries. That is, we are looking t o trade from the lower BB to the upper BB. Taking the chart from Figure 111, the candles at A are not considered for a CBL because the BB are expanding and the opposite BB (upper) has not contracted yet. So the next batch of candles are con sidered and the extreme yellow candle body is smaller than the second candle bad y (red), so we draw the CBL from the yellow candle only as shown. The PCI stop l oss is also drawn as shown. (in reality, if the price action goes against you, i t is best to close the trade at about half of the stop loss instead of letting t he price go all the way down to the red line.). At this point, the upper BB has contracted so we can enter. The trade hits TP1 with 2 contracts for 41 pips each after spread. The PCI stoploss is then moved to break even at the blue entry li ne. However, the price action is not favourable and retraces to the break even l ine and continues as shown by the long red arrow to return to the lower BB. Trad ing Without Indicators Page | 81

Hence we only get one profit of 41 pips. This trade is an OM (outer BB to middle BB) price action trade to the mid BB, and the continuing price action shown by the red arrow is an RO (retracement to outer BB) price action. RO price actions are the 4th type of price action (OO, OBB, OM + RO), and is the only type of pri ce action that is untradeable by this method. Now that is not the end of the mat ter!! With the price action on the lower BB, we look for a trade back to the upp er BB. The yellow candle at the end of the long red RO arrow is an extreme candl e and the second candle is a larger body red candle. Because of the larger body of the red candle, we ignore it and set the CBL from the yellow candle as shown. A 2nd PCI is also shown. A 2nd long entry with 2 contracts is made but.......al as, it goes against us and we exit at half the stoploss distance = 28 pips each contract. A loss = 57 pips. Taking the 2 trades here = 41-57 = -16 pips. The tot al so far (from previous post as well) = 84-16 = 68 pips. We have 68 pips TOTAL SO FAR. At this point, the 3rd chart (light green) is considered. Here is now th e 3rd chart (green section) In this chart, the 2nd long entry from the previous section is shown in order for you to get your bearings. Now the rest of the CBL are shown in black. As the price action falls, the new CBL are drawn, paying res pect to the 2 or 1 candle entry rules. The 4th CBL is the last one and no entry is made at all. The price action finally hits the lower BB where it is time for a brand new trade. The last trade is now considered (grey area) >>> Again, this chart is full of labels and needs careful explanation......... The CBL is drawn in black from the extreme candle + 2nd candle. This line is above the mid BB - w e cut it in half (shown in blue). The entry is made in the yellow candle and hit s TP1 for 2 contracts of 32 pips each after spread. The stoploss is moved to bre ak even. The trade moves on to TP2=56 pips after spread. Profit = (2x32)+56 = 12 0 pips. We now look for a trade back to the lower BB. Our extreme candle is the TP2 candle - it is too big. We cut it in half and make that our CBL entry - show n with the blue dashed line. We enter the next red candle at the OPEN (90.28) an d hit TP1 with 2 contracts with a profit of 14 pips each after spread. That is a TOTAL of 28 pips. We move the stoploss to break even and this trade backfires i nto an RO price action type which is untradeable. OK, that finishes the whole 4 hour chart senario. In the next post I will add up all the profits. Trading With out Indicators Page | 82

Here is the full chart again with the total pips gained from each section shown The GRAND TOTAL then, is +216 pips profit. This profit is gained using the 2 con tract entry method and, is stress free. TQ- Just to confirm ...........we now make the PCI SL 50% of the last swing hi/l ow then? TA- NO!! Give yourself some room for price action to move. But if you c an definitely see that the price action is not going to go in your favour, then it would be useful to close the trade at half of the stoploss. The CBL in this c hart is incorrect, I have placed the correct CBL on it in pink followed by 3 whi te squares. We use only 1 candle here because the 2nd candle (the long red one) is at least twice the size of the extreme candle. Here is the correction I am no w going to return to the charts given by fartist, this time, the 1 hour charts. Going from 0400 on the 13th to 1600 on the 31st was relatively easy with the 4 h our charts. But it will be a long exercise with the 1 hour charts!! I will see h ow far I can go. This will definitely be the last of the presentations of the DN A method. I will be using the orthodox method as I did in the 4 hour sessions. H ere go the 1 hour charts in absolute detail. Blue lines=entry, red lines=stoplos s, green lines = TP1 Other notes are added. The CBL rules are as follows..... 1) Use 2 candles normally. 2) If the 2nd candle body is twice as big (or larger) t han the extreme candle, we then use the extreme candle only. 3) 2 candle sets (o r 1 large extreme candle) that go near or pass the mid BB are cut in half. Detai led explanations and the total pips are underneath the charts. I have limited th e chart detail because it takes ages to edit these charts. Trading Without Indicators Page | 83

1st chart The 1st trade is self explanatory using the simple exit method at TP2. The 2nd trade at B cuts the yellow extreme candle in half. TP1 and TP2 follow. The 3rd trade is more complex. The first extreme candle C is used alone because the 2nd candle is the long red candle. It gives a nice entry (pink) but cannot b e used because the opposite BB has not yet contracted for this bubble. We then s ee a second (yellow) extreme candle and use that because we must always use the most recent one. It is not until candle E that we can enter according to the opp osite BB contraction. After that, we get TP1 only. TOTAL PIPS FOR THIS CHART = + 105 PIPS. Here is the 2nd chart Both trades on this chart are simple and require no explanation. TOTAL PIPS FOR THIS CHART = +90 Trading Without Indicators Page | 84

Here is the 3rd chart, The first two trades are self explanatory and only get to TP1. The 3rd trade uses 2 candles for the CBL but this gets very close to the m id BB. So we cut the total in half and set the CBL that way. Again only TP1. The 4th and last trade is a loss and needs close attention. A single CBL and the tr ade goes against us with the BB expanding. Now we can see that the BB are expand ing and we can see that the candles are going to do a BB walk on the lower band. So we get smart and exit early before our stoploss. TOTAL PIPS FOR THIS CHART = +4 pips. Here is the 4th chart in Error! Reference source not found. We wait a long time for the 1st CBL which never gives an entry. Then we get a straightforw ard entry from the lower BB and a self explanatory trade. TOTAL PIPS FOR THIS CH ART = +119 PIPS Here is the 5th chart (Figure 19) and my last one for the evenin g (the work required to annotate these charts is enormous). >>> This chart shows 5 trades and needs a good deal of explanation.......... 1st trade : This involv es an extreme yellow candle and its 2nd candle marked A. The pair go way past th e mid BB, therefore, cut in half (blue lines). Entry at the next red candle and goes to TP1 at the next yellow candle marked B. The candle B retraces and we Figure 19 get TP1 only. 2nd trade : Candle B retraces way past the stoploss of candle A, t hus forming a new extreme candle. It is also a very long candle and is cut in ha lf. (blue line). TP1 and TP2 follow. Trading Without Indicators Page | 85

3rd trade ; This trade entry and stoploss are simple but the entry is made after the opposite BB contracts. After this the trade backfires and we see that happe ning with a dropping mid BB and a lower BB walk coming up. We get smart and exit the trade before the stoploss line. 4th trade : This long trade is self explana tory and is an excellent trade. 5th trade : This short trade is self explanatory with TP1 showing only. It does not hit TP2 - instead the price action goes back to the upper BB. TOTAL PIPS FOR THIS CHART = +113 PIPS. I will do one more chart because there is something I wish to point out here. Ch art 6 Our first trade is a short trade and the 2 candles combined go well past t he mid BB - so cut in half then enter on the next candle (red). This candle hits TP1 AND TP2 all in one go fast profit!! Our next trade is a long trade the red extreme candle gives no entries. By waiting we find a new extreme candle and ent er when the opposite BB contracts (we are entering a slight bubble). TP1 and TP2 are self explanatory .......but........... Look what we miss out on!! A whole w alk of the upper BB. (sigh) We MUST stick to our trading rules. At the exit of T P2 shown on the chart, there is no way of knowing that a BB walk was coming. Had we known, we would have held on to the trade. But we did not know. So we exit. We must be content with what we get out of the trade. Next time will be better. Remember - this DNA method is a high win/loss method, not a high risk/reward met hod. The way to prosper with this method is to put on high lots, since the trade s are short and sweet...............and very reliable!! Final Conclusion. I have not come anywhere near finishing the trade sequence compared to the 4 hour sect ion. But we have already made more pips than the whole of the 4 hour timeframe s ection. We speculate that as you go down in timeframes, more and more pips can b e made. However, the lower the timeframe, the less the pips between the upper/lo wer BB. So I conclude that there is a happy median timeframe which produces the most pips with the Bollinger DNA method. Since I know nothing about backtesting, I do not know what that timeframe is. But I suspect that it is shorter than the 1 hour timeframe we are possibly looking at a 20/30 minute timeframe. Others ma y venture on this as an exercise!! User Input- We speculate that as you go down in timeframes, more and more pips can be made. That s not what I ve been finding in back test. H4 gives reliable profits on pretty much all pairs. Trading Witho ut Indicators Page | 86

Go to the Daily chart and it s virtually impossible to lose on any pair, using o rthodox CBL, 1xCBL, 2xCBL, 100% PCI stop, 50% PCI stop and various levels of pro fit taking at TP1 - any combination. Some work better, some worse, all profitabl e. You might only get 10-20 trades a year on the Daily chart, but that s per pai r. Trade 10 pairs and that s 2-4 trades per week, enough to keep you busy. I can not get a backtest to show profit at M30 over a 12 month period, on any pair. Ty men- Thank you for this much needed data, NorwegianBlue!! This is a great encour agement. I especially like your term...."virtually impossible to lose". This cla rifies and reinforces what I have always said - that this DNA method has a high win/loss ratio. Beginners at trading this method should then really go to the da ily charts. User- Thanks for the feedback NB! I ve attended trading training cla sses where after several days of training on the same system a group of 20 trade rs are released to trade for a day. At the end of the day, all 20 traders had sl ightly different results depending on pair selection, timeframes traded, and sma ll differences in the implementation of the system. I also have had very good re sults with the 4 hour and daily time frames, but I know others have had good res ults with time frames all the way down to 2 minutes. I think this system has gre at potential, but I encourage any new traders to trade it in demo until they are comfortable with it and are obtaining consistent results. Thanks again for repo rting your findings. I m sure this is helpful to many. TQ- Tymen, in some of you r charts above, you get out at TP2 on the outer BB and on some charts you get ou t at TP2 after a BB walk. Can you explain how you determine a walk is coming? Fo r example, here on your "1st chart" I assumed it was based on the expansion of t he outer bands, but I see no expansion here. If you were trading this live, how would you have known? TA- The idea is to smell out the BB walk, much like a snif fer dog!! What we do is watch the mid BB closely. Even the slightest hint of the mid BB going up or down together with even the slightest hint of the outer band s expanding gives us reason to delay the exit for just one more candle or even p art of a candle. If the evidence for a BB walk then increases, we delay our exit even longer..... until it becomes rather obvious that we are on a walk. There i s nothing wrong with closing the trade early even if we miss out on the walk - i t just means we forfeit those extra pips. Trading Without Indicators Page | 87

TA- I do not understand the terms EA and PCI. Sorry to display my ignorance in m y very first post, but then as to the meaning of these two terms, I am. Could so meone please inform me as to the meaning of these two terms. User Response: Belo w is a response from Tyman on another thread concerning PCI. EA stands for Exper t Advisior which allows for automated trading possibilities. PCI = power, comput er, internet. Any of these can fail. A power failure can be catered for with a p ower back up. Of course, a laptop is a great solution to this. A computer failur e requires a second computer. 2 laptops will stop the power/computer failures. H owever, the 3rd problem, the internet, is not so easily solved. You can have 2 I SP s but I have known the server from the broker to fail. Then you can do nothin g but use the phone. In my case, my mobile and landline phones are on hotline st andby to my broker dealing desk, should anything break down. During a severe thu nderstorm, the best solution would be not to trade and disconnect power and inte rnet lines from a desktop system. Laptops with wireless internet, could of cours e, keep going. An expensive ultimate solution would be to use 2 laptops (one on standby), both with wireless internet to 2 different ISP s. A PCI stop loss is o n all your trades. A mobile phone is on hotline standby to the dealing desk if t he whole show packs in. In summary then, use a PCI stop loss on your trades to p rotect them from a margin call. If the system breaks down, you then have peace, and can use the telephone in the meantime until you get things up and running ag ain. TQ- However, I now find myself with a new quandry. Having relegated myself to trading the 4H and daily time frames, I now want to know if it is possible to compile a sort of definition of the Bollinger Band Squeeze region. TA- A squeez e area is any area that is not...... 1) a BB walk. 2) a NO TRADE area. A NO TRAD E AREA is the region of price action that occurs after the finish of a BB walk i n a bubble or sausage. The price action runs counter to the mid BB and finishes when the bubble/sausage has contracted again. The squeeze areas tend to be chara cterised by a level mid BB. You can score all 4 types of trades from a squeeze a rea......... 1) a simple OO price action in which the trade ends by touching the opposite BB. 2) an OBB price action in which the mid BB shows signs of going up /down during the trade and hence proceeding on in a grand way by going on a BB w alk. 3) an OM price action in which mid BB is reached for a TP1 but after that t he price action retraces and contact with the opposite BB (TP2) is not reached. 4) an RO price action in which the price action does not even reach the mid BB b efore retracing Trades 1,2 + 3 are profit trades while 4 is a loss trade. Trading Without Indicators Page | 88

CBL Back Test Results Hi all, Over the past few week, I ve been back testing var ious pairs with Dodge s wonderful EA. I have back tested both the multi-lot and the 2 lot strategy on 4 hour charts from 02/03/2010 until 02/06/2010. You may fi nd the Back Test Results attached (Error! Reference source not found.). Notes: I used a 2CBL approach and cut candles if they were too close to the mid-BB. Trades were not only taken in squeezes but also in bubbles and sausages, but a t rade with more than 90pips of SL (for a single lot) was never taken. - The multi -lot strategy used increments of 50 pips and took profits as soon as the trade w as 180 pips in profit (total profit from all contracts at this point is 340 pips ). This figure seemed like a sweet spot, as many trades began reversing after hi tting 180-200 pips profit. Sometimes this worked favorably and sometimes it didn t. Problems I encountered: - Most of the drawdowns occurred in sausages with man y fake CBLs. - The squeeze zones were not perfect for the multi-lot strategy - t his is where the multi-lot strategy kept failing. Price would go in my favor for 100-120 pips, causing 1 lot to be exit at 50pips and 1 to be bought at 100 pips ...then PA would retrace back to 50, causing a premature exit from the trade and only a 50 pip profit. More often than not, this occurred when taking trades in squeeze zones and hitting the opposite BB, causing price to retrace a little bef ore continuing the move in the favored direction. It s impossible to predict jus t how much its going to retrace - but I can definitely say that the 2contract st rategy yielded more on these occasions than the multi-lot. - A general issue wit h the 2-contract strategy is that TP1 is taken and the break even point is set t oo quickly. It would be silly to just take TP1 and not move your SL to break eve n. However, the mid-BB acted as support/resistance on many occasions, causing ve ry premature exists from trades with only small TP1 profits. On these occasions, the multi-lot strategy was more resilient and yielded more. My proposed solutio n: If you normally trade with 2% risk to your capital with either the 2-contract or the multi-lot strategies - halve your risk to 1% and take the same trade wit h both money management strategies. That way, you will be risking 1% using the 2 -contract strategy and 1% using the multi-lot strategy. The reason I propose thi s is because it will average out the performance of both strategies and for the reason that we don t know how well each strategy will perform in the future. It seems like a good "money-management diversification" plan. Trading Without Indicators Page | 89

User Discussion Tymen I have a question regarding CBL entries and when is it too late to enter the trade. This is a 4 hr chart. At point A there is a CBL drawn with the red line. If we miss entering at the red line is there a rule on how lo ng do you have to enter the trade before you have to declare the trade missed? F or instance, in this trade I could have entered at any time before TP2 and made pips, but that trade scenario is not always the case. There have been many trade s where the PA already crossed below the CBL but PA is on the 2nd or 3rd candle after CBL and heading in the right direction but still above TP1 or TP2. So is t here a rule we should incorporate about entering a trade too late after the CBL or can it be considered safe to enter a CBL trade at least before TP1 is reached ? User Response- Generally a CBL entry should remain valid until a more extreme candle is set, or until the opposite BB is touched. So you could have entered th is trade a little late and made very good pips. In my opinion though, the highes t probability of a good trade is a return to mean trade, where the trade is take n before the price touches the Mid BB 20SMA average. Others may have a different opinion on this and I welcome any differing opinions Tymen- Yes, there is a rul e if you can call it that. It is called a maximum chase price. This level is exa ctly twice the distance of your CBL candle/candles. After this, you are too late to enter. Personally I would not use such a procedure. If you are too late, tha ts just tough - find another trade!! Trend Trading Review At the risk of bogging the thread down more, I ll repost so me info because it relates to the whole discussion of moving stops too early and getting stopped out. I know this has been discussed before, in detail, but I do n t think it s clear to everyone. So here it is again, the (not so) top secret t rick to make all this stuff work. The market doesn t move in nice steady 15 or 2 0 or 30 pip moves. We have to adapt to the market as it is. The market may be up 7, 12, 32, pips on an upswing, then make a breath taking 40 pip downswing clear ing out stops, followed by more jagged moves up again, but that s a correct uptr end by definition. To trend trade, you want your stop to follow an up trend alwa ys below a previous higher low, and in a downtrend stop should follow above a pr evious lower high. Whether it s 1, 2, or 3 lows back behind price depends on how much stop you want to run. So, to keep from getting stopped out and stay in the trend, don t move to BE, take profits, or put on more lots exactly at your chos en even interval. Say it s 30 pips in a downtrend, wait until the price establis hes a lower high, in the neighborhood of 30 pips, Trading Without Indicators Page | 90

then stair step your stop down and put another lot on, move to BE or take profit . It may be 17 pips one time and 43 the next time, but that s the way the market moves. If I m trading the 1H chart, I ll usually drop down to the 15M or even 5 M chart to clearly see the new highs or lows forming. When starting in a trade, I want my stop on the other side of at least the last high or low. The CBL entry allows you to do that from the beginning of the trade. As the trade develops, I will put more new highs or lows between my stop and the price to give it more r oom to breathe. Note that when I m trading the 1H chart, I m just looking for a cheap entry to a longer term trade. If I don t get that cheap entry, I settle fo r small pips and try again. But that just suits me. Others will trade differentl y. My point is, move your stops and put new lots on with the market s new lows o r highs to keep from being stopped out. That might be 20 pips on one lot and 45 on the next, but that s the way the market works. Tymen went through all this be fore, but it s so important I m repeating it. An uptrend is defined by a series of higher lows. As long as price stays above that series of higher lows, that is price doesn t form a new lower low, it is still in an uptrend, no matter what h ead fakes it gives you. As long as your stop is positioned below that latest hig her low, it is still properly positioned to stay in the uptrend. Reverse for a d own trend. That s what makes this all work, for me at least. Try it, it s great fun Hope this helps someone. Happy trading. IMPROVING THE WIN/LOSS RATIO OF THE BOLLINGER DNA METHOD. The NO TRADE areas previously discussed are risky to trade. Once entered, these areas often see a TP1 profit but a TP2 profit is much more difficult to obtain. Very frequently the price action retraces so that TP2 is never attained and, on lower timeframes, TP1 may not be attained either. I propose a solution to the pr oblems here........ 1) In all the NO TRADE areas, we encounter a trade against t he direction of the mid BB. The first step is to look for this and confirm that this is so. 2) Once confirmed, we load a 2nd Bollinger band with the standard de viation set to just one deviation instead of the usual two. 3) We now use a 2 co ntract strategy with the usual CBL entry. 4) The TP1 is set at the 1st standard deviation. Once gained, the stoploss is moved (slowly) to the entry point. 5) Th e TP2 is set to the mid BB. 6) A possible 3rd contract could be risked (I do not recommend it), to go all the way to the opposite outer BB with the stoploss now at the mid BB. Special modifications. 1) Because of the very short distance to TP1, many extreme candles will simply be too long for a useful entry. In that ca se we set an entry point exactly half way between the outer BB and the 1st stand ard deviation band. 2) To cater for strong retracements that could easily cause a loss trade, we set the stoploss (PCI stoploss), at least 10/15 pips further ou t from the extreme candle. (A third 2.5 deviation BB could be used as a guide fo r the stoploss). 3) It is important that this approach should be used on longer timeframes only - 1 hour upwards, so as to allow for sufficient pips to make it worthwhile. This approach will go a long way towards restoring the win/loss rati o for these NO TRADE areas. Trading Without Indicators Page | 91

THE MACRO METHOD Here we have the much awaited macro method. The trading is simple and is a true trend trading method. However, note a few differences from the BB DNA method.... .... The win/loss ratio is ordinary. So if you have been spoilt by the high win/ loss ratio of the DNA method, then you might be in for a shock here. Do not comp lain if you see more losing trades - it is a product of the average win/loss rat io. We need to know the direction of the trend in the higher timeframe. This is unlike the DNA method which is a stand alone method. Once we know the direction of the higher timeframe, we trade in the direction of that timeframe. As long as the trend continues, you should make a profit. It is rare that you would just e nter at a major trend reversal. We use a 3 candle countback line. This is the or iginal method and tries to ensure that the trend is indeed underway when you ent rer. Using 3 candles may well cause you to enter above the mid BB. Since we are envisaging a long trend, this does not matter. It may also generate a long waiti ng period before entry. The exit is generated by use of the fibonacci tool inste ad of the opposite BB. Retracements are measured using the Fibonacci tool in you r charting program. It is the size of the retracement that determines whether yo u exit. As such very long trades are possible as we stay in a long trend. In the next post, I will look again at the higher timeframes. The win/loss ratio needs no explanation. The determination of trade direction with regard to timeframes needs good explanation. Now I have been thro this before but we have new people on board, and revision is a good thing. So I am going to repeat some very releva nt posts here......... I will take an example from the seaside, since that is wh ere I grew up, and that is what I understand best. We will look at and analogy w ith the waves of the sea in 3 parts, each representing a higher timeframe. The 1 st timeframe is very short - it is the little waves that travel about 1 metre or so back and forth on the shoreline. They do this every 15 seconds or so, depend ing on where you are. The 2nd timeframe is longer - it is the large waves, the l argest being every 7th wave. These waves propel the water in large sweeps back a nd forth upon the beach. Finally, there is the 3rd timeframe which is very much longer - 6 hours in fact. It is the tide, which is generated by the gravity of t he moon first, and also by the sun. The tide sweeps the water back and forth a v ery long way. Have a look at the photos of Derby, Western Australia. Look at the extremes of the tide (the longest timeframe) >>> Trading Without Indicators Page | 92

I will now use these extremes in a diagram in the next post to try to analyse wh at we are looking at. Here is my first diagram >>> The drawing shows a beach and the sea. The blue strip shows the sweep of the water - the little waves of abou t 1 metre in cycle from lowest to highest (peak to peak). The white area in the blue strip shows the sweep from maximum (high water) to minimum (low water). Trading Without Indicators Page | 93

Now lets elaborate on this diagram by introducing the next higher timeframe, the large waves peaking at the 7th wave >>> The large waves have a trend of their o wn, going up the beach. This trend culminates in the 7th wave which sweeps highe st up the beach. However, while these large waves are in progress, the small 1 m etre waves are still active, going every 15 seconds or so. The large waves may t ake several minutes between them. So each large wave has a lot of little 1 metre waves superimposed on top of it. The little waves are shown in the diagram by t he white areas in each blue strip. The white area shows the maximum and minimum height of these little waves. The blue strips represent the large waves - there are 7 in this diagram. The 7th wave sweeps highest up the beach as shown in the diagram. Therefore, there is a "trend" in the large waves. After the 7th wave, t he cycle starts again, the 1st wave being very low. Now if we were to ENTER on t his trend, we would do so at the MINIMUM of the FIRST WAVE. We would exit on the MAXIMUM of the SEVENTH WAVE. In doing so, we would be correctly following a tre nd. If the time between the 1st and 7th wave is, say 20 minutes, then we would s tay in that trend for NO LONGER then 20 minutes. (if we stayed longer, we would revert back to the 1st wave and destroy our trend). I will now show the final lo ng trend diagram >>> Explanation This diagram appears complex but it is really v ery simple. To save space, I have shown every major wave as a single dark blue l ine. The red sections are the little waves superimposed on the major waves. Ther e are 7 major waves forming a trend of going up the beach. After that there is a retracement Trading Without Indicators Page | 94

and the cycle starts again. Here we see many cycles because the tide is going ou t and hence the cycles form a trend of going out. So........... The red little w aves are the very short timeframe. (15 second trend) The blue major waves are th e medium timeframe. (20 minute trend) The cycles (tide) is the long timeframe. ( 6 hour trend). The blue major waves are showing a trend up the beach (7th wave i s highest). This represents going LONG. The blue major wave cycles (tide) is goi ng out. This represents going SHORT. Analysis If you traded the major wave timef rame (20 min), you would be guided by the tide timeframe (6 hour). Then you coul d enter at point B or if you are clever, enter at point C. Then as the water goe s out, point R becomes a retracement point which is expected to happen. You woul d then exit at either points D or E or any of the waves after that. You would be trading SHORT and you would make a profit. You would stay in the trend for 6 ho urs. Now if you traded the little wave timeframe (15 seconds), you would be guid ed by the major wave timeframe (20 min). Then you could enter at point B or if y ou are clever, enter at point A. You would then exit at point C. You would be tr ading LONG and you would make a profit. You would stay in the trend for 20 minut es. Finally (not recommended), you could trade the little wave timeframe (15 sec ond) and be guided by the tide timeframe (6 hour). In that case, you could enter at points A or B, stay in the trade for 6 hours and exit at points D or E. You would expect strong retracements along the way (point R). You would be trading S HORT and make a profit. From this set of diagrams we can set some rules for trad ing trends.......... When choosing a home timeframe to trade with, always choose a timeframe 4X-6X greater to tell you which way to trade. Stay in the trade for a time equal to the length of the higher timeframe. To do this we are depending upon the axiom - the trend is your friend. We assume that the probability of th e trend reversing during our trade is low. If, however, upon entering, the trend in the higher timeframe suddenly reverses, we can expect our stoploss to be hit . Every candle is used The use of the 3 candle countback line needs no explanation. Note that we do not discriminate here. there are no smaller candle bodies to consider. doji candles are also used. We now turn to the biggest difference in the method compared to the DNA method the Fibonacci tool. We use the Fibonacci tool to measure retracements. However, we do not use this tool until our price action is clear of the entry line. Afte r entry, the price action may retrace for a time, before it regains momentum and goes back in our favour away from the entry line. We do not use the F tool unti l the retracements after our entry line are over. Then one end of the F tool is placed on the stoploss point. The other end will be placed at the most extreme p ositive price action we have reached. This example will explain >>> Trading Without Indicators Page | 95

In this chart we have already found that a 4x/6x higher timeframe shows upward d irection so we want to trade long. We look for an extreme candle on the lower BB . Upon finding the right one, we go back 3 candles and set the entry line on the chart as shown in blue. The red dashed line is the stop loss line. When the pri ce action starts trending upwards, we place the F tool at the points A and B as shown. The point A remains constant but point B moves along with the price actio n. When the price action starts to retrace, we watch to see if there is a breach of any of the Fibonacci lines. You can choose whichever you like or even set yo ur own line by modifying the tool in your charting program. Note that we are loo king for retracement trends, not individual candle spikes that may breach the F lines. When the price action retraces and breaches your chosen F line, it is tim e to exit. It may be a good tactic to choose the 50% line at first so that you m anage to get past the first retracements without too much fuss. After that you c ould choose smaller and smaller Fibonacci lines so that upon exit time, you do n ot lose too much. Since we are going LONG in the above chart, we always place Fi bonacci point B at the highest price action point. DO NOT LOWER IT. That is, do not put point B on the retracement candles. In the example above, the point B wo uld not be shifted again until we reach the high green candle in the squeeze are a at the end of the bubble. In this way, you will consistently measure the size of each retracement, and hence determine whether to exit or stay in the trade. F or the 2 contract strategy, placement of TP1 and TP2 is a subjective matter. Sug gestions............ TP1 at the opposite outer BB. TP2 is the final exit. TP1 at the end of a BB walk (simple exit method). TP2 is the final exit. Graviton: Great work Tymen! I m sure there will be much discussion over this met hod. I ll kick off some of the discussion by pointing out, as your diagram shows , that any good long trend will have many small retracements. Only one of those retracements (the last one) will prove to be a true reversal of the higher Time Frame trend. So a one big question in my mind at least is, which retracements sh ould we ride out, and which should we exit out of with our remaining profit? Tha t is a discussion I would like to open if you don t mind Tymen. From one point o f view, the best odds are to consider any retracement temporary and always ride through it as long as the higher TF trend is still in place. That will be the ri ght decision about 4 out of 5 times. Trading Without Indicators Page | 96

Unfortunately, some retracements are so deep that a trader will wind up giving b ack 80 or 90% of profit, and some retracements will actually take all profit and the stop loss too! To avoid this, I agree with you that a limit must be imposed somewhere in a retracement to exit and to take profit, and 50% is a good starti ng point. A simple rule is, if we never take profit, we can never win. Sometimes we may want to risk less than 50% and sometimes more. I ll discuss when I choos e to risk less than 50% and when I choose to risk more than 50% and I d be inter ested in hearing others opinions on this specific point. I actually start out ri sking very little in a trade. If the trade moves against me right away, I exit i mmediately. I then stop to consider if I am really meeting all my trading criter ia. If not I abandon the trade there. If I am meeting all my trade criteria, the n my goal is to get a better entry in that same trade. It doesn t matter if the entry point is higher or lower than the previous entry point, as the market does n t know where my previous entry point was. It only matters that price goes in m y direction shortly after my entry. I take some small losses on bad entries, but I never take a large loss anymore. Those days are behind me forever, thank heav ens. If the trade goes in my direction right away, or after a couple tries at ge tting a good entry, I start to widen the amount I will risk in it. After a coupl e tries with bad entries, I give up and go to another pair to prevent repeated w hipsaw entry losses. Note that as I widen the amount I am risking, most of that additional amount is profit, not my own trading capital. Near the center of the trade I will be risking the maximum amount, and willing to take a 50% retracemen t, and sometimes even a maximum of 61.8% of total profit near the center of a tr ade. I plot trendlines and channels of the trade as it progresses and as long as the trade is inside the trendline I m willing to risk more, but if it breaks th e trendline, I m going to quickly tighten my stop and take my profit. Since I tr ade longer time frames, I have plenty of time to do this detailed analysis. But exiting with half or more of my profit isn t necessarily the end of the trade. R emember that most good long trades have many retracements, but only one (the las t one) really signals a true reversal of the longer time frame trend. If the ret racement ends, and the main trend resumes, as will happen most of the time, I wi ll try to gain another good entry, starting all over from the beginning to try f or a good entry and follow the trade some more. Once again, two bad entry attemp ts and I m done with this trade and move to another pair. Then near the end of t he trade, when the price is losing momentum, I start tightening up the stop. I c ontinue tightening up the stop until the trade stops out, or price returns back to following the longer time frame major trend and profit starts increasing well again. If that happens, I consider it the same as a new good entry to a new tra de and allow the stop to widen again, repeating the whole process over again. I have on occasion, traded the same pair in the same direction for months like thi s. So when looking at this, my risk in pips is shaped like a bell curve. In the beginning I risk very little, near the center I risk more, and at the end I risk very little again. This process takes some practice since the important part is to identify how fast to increase the stop in the first half of the trade and ho w fast to tighten up the stop nearer the end of the trade. Note that I will tigh ten up the stop very fast at the end if news comes out that makes a big change i n the fundamentals. The piece of information we can never know with certainty in advance is how long the trade will run. If we knew that information, it would b e easy to adjust our stops optimally, increasing them in the first half of the t rade and decreasing them in the second half of the trade according to a bell cur ve. I use two methods to approximate a solution to this critical question. First I analyze all my trades and determine how long the average winning trade lasts and how far it moves for a particular pair for a 1H, 4H, daily and weekly home c hart trade. While there is a wide variation, my analysis shows that on average t rades are moving faster for most pairs over the past few years than they were pr eviously, but the size of the moves has remained fairly constant. I also watch t he momentum of the price movement. I do this by observing the size of the candle s over many time frames, but some others might use indicators like ATR or ADX to assist with this. Trading Without Indicators Page | 97

That s all my comments on determining where on the fib line to exit with profit on a retracement. I would be interested in hearing your review of this subject a nd that of any other experienced traders. I believe the MACRO method has great p otential and I m looking forward to seeing testing results by Dodge and Iron Hea rt or any others that can help with this task. Thanks for all your good work on this Tymen Parabolic Sar Exit Here is my strategy for dealing with powerful price action re tracements. We have found that hitting the stoploss with 2 contracts really caus es a substancial loss and hence a great deal of pain. Yet the full width of the entry to stoploss is required for the trade to be successful because many times, the price action goes against us for a while before reaching either TP1 or TP2. We cannot, therefore, skimp on stoploss room, so what are we to do? My proposal is to use either the parabolic sar or the starc bands. In doing so, however, we no longer shift the stoploss to break even. This is not so bad, considering tha t TP1 is collected anyway, and we expect to close the trade when we see fit. The prima facia purpose of the stoploss is to protect us against a computer failure - then we cannot close the trade. We call the stoploss a PCI stoploss - power, computer, internet. A power failure can be addressed with a spare laptop or batt ery backup. Computer failure - 2nd computer (laptop). An internet failure is not so easy but is addressed with a quick hotline call to your broker to close the trade. A quick summary here before I reveal the strategy.......... 1) No stoplos s - PCI failure leads to margin call. 2) PCI stoploss present - PCI failure lead s to hitting stoploss, not as bad as a margin call. 3) PCI stoploss + telephone hotline on standby - PCI failure leads to hotline telephone call closing trade I n this chart I have entered a long trade in a NO TRADE AREA. (We have just finis hed the lower BB walk of a bubble) >>> By using the parabolic sar to set our sto ploss, we avoid that terrible grey candle retracement between TP1 (candle A) and TP2 (candle B). Instead, the stoploss is kept where it starts until candle A, t hen goes up with the parabolic sar as the sar goes up. In this case, the entry c andle consists only of one candle, being a doji (look at the chart). If you look carefully, you will see that the stoploss only gets near the entry line when yo u reach TP2. The parabolic sar/starc bands stoploss strategy act as a kind of tr ailing stoploss. The fact is that a trailing stoploss, if hit, will always give you the worst possible exit for a profit. To get the best exit for a profit, we need a specialised exit strategy. So far in this thread I have shown you the sim ple exit method for a BB walk. This involves the exit on the first candle that d isconnects from the BB in a BB walk. However, a BB walk may be long (nice profit !!) and yet have several disconnected candles along the line. A later exit is ca lled for. A stochastic is almost useless. Exiting at the crossover of a paraboli c sar may also give very premature exits. Trading Without Indicators Page | 98

Finding the ideal exit method for a BB walk is an exploration that has pre-occup ied me since the very beginning of this thread. I am none the wiser just now. Bu t with the thread coming to completion, I can now devote myself almost totally t o this one task. Finding this "holy grail" will be a real winner for both the DN A and MACRO methods. Many Singaporians on this thread!! You are a clever and har d working people!! The next big ticket in my research is to find a method for ge tting the very best exits on a BB walk. The simple exit method is great for BB b ubbles but leaves you way from the best exit on a BB sausage. The parabolic sar does little better and keeps you in the trade longer than necessary. Exiting on the mid BB after a long BB walk seems satisfactory but is hardly the best exit y ou could get. So I am looking further - at the relationships between timeframes, as they are linked by the square root function. A BB sausage always becomes a B B bubble in a higher timeframe. The trick is to find the correct higher timefram e. In answer to Robk and IronHeart.........I see the 15 min timeframe as ok as l ong as you do 2 things....... 1) When entering at a squeeze and the BB expand th ereafter indicating a BB walk pending, make sure you delay your entry until the opposite BB shows signs of or actually contracts. This is very important. 2) Use a parabolic sar for the stop loss. The PSAR will never get hit - unless it is a n extreme case. This demo trade, taken last night on the chatroom, was a failure at first, then became a success >>> The initial trade (long) was taken at candle A, a doji, in a squeeze. The entry marked blue, stoploss in red. The entry was in candle B. It failed, hitting the stoploss in candle C. Candle C, however, became a new extreme candle and formed a CBL with candle D. The entry does not occur until it hits the mid BB, making t he trade redundant. But the trade does make it to TP2 at candle E, where there i s a new squeeze and a potential new extreme candle for going short. Part 5 EXCELLENT EXITS ON BOLLINGER BAND WALKS I devote this section to a very important persuit - that of quality exits on BB walks when we deal with both bubble and sausages. The BB walk is the most powerf ul form of rapid profit trading there is besides a news release. It is, therefor e, very important that we pay close attention to good exits on these bands as ou r greatest profit potential lies here. The exit on a BB bubble is reasonably str aightforward - the opposite BB contracts, the candles start developing on the in side of the bands, and the stochastic crosses over. The general trend here is ni ce and smooth. Trading Without Indicators Page | 99

It is different, however, with the BB sausage. There are many opposite BB contra ctions with their attendant candles going inwards and the stochastic goes crazy. This can leave you either utterly confused or with an exit that is way less tha n what you could have got. So here, we are going to try to standardise some of t he best exit methods that work uniformly for both BB bubbles and sausages. Then you will not have to worry about which BB pattern is forming. In my classificati on work on the bubbles/sausages I find the following...... Candles that break aw ay from the BB walk.... 1) Just before the opposite BB contraction. 2) At the op posite BB contraction. 3) Just after the opposite BB contraction. I also find th at the parabolic sar crosses the mid BB....... 1) 2) 3) 4) 5) 6) Well before the opposite BB contraction. Just before the opposite BB contraction. At the opposi te BB contraction. Just after the opposite BB contraction. Well after the opposi te BB contraction. NO crossing of the parabolic sar at all. Each case seems to have its own special variation on the resulting price action afterwards. So I am going to classify these situations very carefully and see if we can come up with a top quality exit formula. As far as I know, this has neve r before been done with the BB. One classification is already complete....... Wh en the price action extends very greatly outside the BB, we place on our chart a new outer BB with standard deviation set at 3.3 This is exceptionally high, and if the price action actually reaches that, then we exit. We are almost guarante ed that such an exit will give the best possible exit for that BB pattern!! MAND ATORY READING - read the second article in this hyperlink, entitled ..... "Tate on Trading - LTCM and the Quest for the Holy Grail." If you have read this artic le before - then read it again. As a school teacher, I say that revison is a ver y good thing >>> Trading Game Newsletter ************************** Having the o riginal article in my possession, I have found that the above version has been e dited. Below is the material that has been edited out of the original........... . "It is undoubtedly true that we need entry signals or setups to enter the mark et but their importance in trading is vastly overrated. Tomes have been written about signal generation, indicators move in and out of vogue, the current trendy indicator appears to be the moving average ribbon. Charts of price action are n ow being buried beneath layer upon layer of coloured lines. It is as if by obscu ring raw price action traders somehow hope to divine its intent. Yet Charles LeB eau author of The Technical Traders Guide to Computer Analysis of Futures Market s claims to have tested every possible combination of moving average conceivable and found their performance to be little better than random probability. In any serious testing trend following indicators struggle to have a reliability of ab ove Trading Without Indicators Page | 100

50%. The MACD histogram, which is thought to be among the best of all indicators , often has a reliability of below 50%. I have personally run a test trading the SPI on an intraday basis by tossing a coin in the morning and found it to be pr ofitable. It is extremely difficult for traders to accept that the tools they us e may not be as effective as they thought, or that their methodology may have re liability below that of simply tossing a coin." The retracements need not be a p roblem at all if you....... 1) trade the squeeze areas only. 2) use a parabolic sar as your stop loss indicator as I have shown in previous posts on this thread . Finally I use the DNA method myself (a refined version of it that I am keeping secret for now). I recommend that you forget the candlestick method and update to the DNA method for immediate profits!! My own research into the best BB walk exits has not shown anything that is useful so far. So I will keep researching!! I have looked at Donchian channels, Keltner channels, TEMA/DEMA crossovers, mov ing averages of various kinds and variations on the parabolic sar. All these are indicators and hence are very limited. We can see, with reasonable accuracy, a good exit point on a BB bubble - the 1st candle to disengage from contact with t he outer BB. But with a sausage, it is different. The price action restarts its BB walk (sometimes no actual contact with the outer band). To do a bubble exit a nd re-enter when price resumes its BB walk is frought with danger. The resumed w alk could be only very temporary and turn out to be a retracement in disguise. I f trading a multiple entry, then you could be in for a big lose with such an app roach. So........................ I will soldier on and continue research >> My last po st for this evening. Still searching for those quality exits on the BB walks. I have now looked at many sma, ema and wma settings, written a heap of computer in dicator programs to test. Also built as series of sma BB, ema BB and wma BB with the standard settings and overlaid them with the same BB with settings of perio d 10 and 40. Examined and tested various crossover points. Still nothing good. B ut now I have found what I see working best of all - not the extremely best exit (you would need to be clairvoyant to get that), but a very high quality one for every intent and purpose. The method is unexpected and simple........ Just load a MACD with settings......short = 6, long = 19 and signal = 9. 99% of the time, there is only one crossover - and that is your exit signal. Of the rare times w hen there are 2 signals (one premature), Gerald Appel gives simple rules to nega te the first exit and take the second one instead. I shall give them in another post - tomorrow (diagram included). After this is sorted, we now need to see the very best way to add on the mulltiple contracts!! I am now going to attempt to integrate the business of setting a retracement proof stoploss and top quality e xit all in one package. To do so I am going to show 3 exit strategies...... 1) u se of the MACD. 2) use of the parabolic sar/mid BB. 3) use of Heikin Ashi candle s. Trading Without Indicators Page | 101

The 3rd option, which I am very familiar with, has not been shown on this thread to date, and little of Heikin Ashi theory of any real quality come on this foru m. I will change that. Each of the exit strategies uses the parabolic sar/mid BB as a stoploss line in a special way to be outlined in the following posts. In t he following charts, I need to point out a definition for future reference >>> I n each of these charts the price action is going long. The parabolic sar is henc e moving upwards but inverts itself when price retraces. Note that the sar is in standard form when the price is going up in a long trade. Note that the sar is inverted when we encounter retraces. As such, the parabolic sar NEVER touches th e price action. This is what makes it so powerful as a PCI stoploss. First I mus t establish an important criterion to go on..... As a stoploss, the parabolic sa r is not acted on unless there is a close on the wrong side of the sar - for exa mple, in a long trade, we have a close below the sar. This will NEVER happen whi le the sar is in standard form because of the nature of its mathematical derivat ion. It only happens when the sar is in the inverted form - and at that point we simply pause the shifting of the stoploss and wait until the sar returns to sta ndard form. So the parabolic sar as a stoploss makes us feel secure because we k now beforehand that the price action will NEVER touch it. And when it inverts we simply wait for it to return to standard. But the price action may retrace very greatly while the sar is inverted!! What do we do then? The final word in the s toploss comes from the mid BB. If at any time, the live price action (not just t he close) hits the mid BB, we exit the trade, even if the close give us a better exit. We will now see how this outworks itself in the following posts. I now lo ok at a long trade and see how the 3 exit methods stack up against each other. W e will first examine a BB sausage >>> Trading Without Indicators Page | 102

In this case, a Di Napoli MACD and a parabolic sar have been added. You can use this MACD which has the values.. FastEMA=8.3896; SlowEMA=17.5185; SignalEMA=9.050 3; or the standard MACD which has the values. FastEMA=6 SlowEMA=19 SignalEMA=9 Here you can please yourself whether you want to use the parabolic sar or the mi d BB as your stoploss. In the case of using the MACD as your exit method, it doe s not really matter which one becomes your stoploss. That is why I have put both the sar and the mid BB on the chart. There are 2 exit points given by the MACD, the second being superior to first. How do we know which to use? Gerald Appel, the inventor of the MACD, gives the following exit rules on page 177 in his book , "Technical Analysis, Power Tools for Active Investors.".......... 1) if there are no divergences, 2) price above (in this case) mid BB moving average. ....... then ignore 1st signal but definitely take 2nd signal. These factors are both tr ue in the above chart so we take the 2nd exit signal for a great profit!! This i s a quality exit. We now look at the same chart, this time using the parabolic s ar/mid BB combination to do both jobs, that is, to give us a quality exit while operating as a stoploss at the same time. Here is the chart again, this time wit h letters >>> At point A, we spot and extreme candle and set up our CBL and ente r. We load a parabolic sar and set our stoploss at the low of the extreme candle . The stoploss stays there right thro getting TP1 and does not move until it mak es contact with the parabolic sar in standard form. The stoploss makes contact w ith the sar just after hitting TP1, when the price action starts to rise upwards past the mid BB. The stoploss is then moved along the parabolic sar line. The p rice action reaches B, where we suspect a BB walk because the outer bands are st arting to expand and the mid BB is going up. The stoploss has moved in accordanc e with the PSAR. Trading Without Indicators Page | 103

At C, the parabolic sar, and hence the stoploss, cross the mid BB. Remember, tha t the mid BB acts as our ultimate stoploss. At D, the parabolic sar inverts - th e stoploss is put on pause. The close does not cross the sar - there is no exit. We wait. Then the sar returns to standard, and price action graduates to E wher e it crosses the upper BB. This makes an excellent exit point. If, after an inve rsion and restoration of the parabolic sar, the price action hits the outer BB, exit at that point. This point usually makes the very best exit, and it is rare for the price action to improve much later after this. Should we be careless and not exit at E, then we will see the price action retrace very rapidly and we th en take the compulsory stoploss exit at point F, which is the mid BB. PLEASE STU DY THIS POST CAREFULLY - THERE IS A LOT IN IT. Point D will now be examined in g reater detail. Here we have point D greatly magnified >>> Remember that the para bolic sar became inverted at this point. The paused stoploss is shown extended a s a red dashed line. Note how the close of both the red candle (down) and the ye llow candle (up) are both above the dashed stoploss. Therefore, there is no exit at this point. However, had the yellow candle hit the mid BB while under develo pment, then that would have been an immediate exit. This is my last post for the evening - it is getting very late. Here we have a bubble + sausage combination >>> We will see how, amazingly, we enter long with a CBL at point A, and exit at the very high quality point E. Our stoploss is set at the low of the extreme ca ndle and follows the parabolic sar. We feel secure because we know that the pric e action will never hit the sar!! After the entry at point A, we get TP1 at the mid BB, then hit the upper band but wait for a possible expansion of the BB (whi ch happens) in hope for a BB walk. Our hopes are granted - the BB walk commences . Normally we would use the simple exit method and exit at point B. But we do no t exit at point B, because we are using a superior method!! At point C, the para bolic sar, and hence the stoploss, crossover the mid BB. At point D, the parabol ic sar inverts, and the stoploss is put on pause. The following candle closes ar e above the extension of the stoploss. So no exit. We wait. The parabolic sar re turns to standard. The price action then hits the upper BB signalling an exit bu t......+ We have entered a squeeze (the end of the bubble) + The mid BB is risin g steeply + The parabolic sar is in standard configuration. Trading Without Indi cators Page | 104

We take the trouble to wait one more candle and this pays off becaue the BB expa nd again for another BB walk!! The stoploss follows the sar and finally at point E the sar inverts again. This time the paused stoploss extension cuts thro a re d candle and the close is below this extended stoploss. We exit - a quality exit !! NOTE - this trade was not cherry picked. Let us now start out with our first trade - here it is >>> Remember this one? Here is the HA version >>> Explanation . We have not included the parabolic sar, since on the HA chart it would be fals e. If you want the PSAR, then put it on a standard candle chart underneath. In a ny case, the mid BB serves as our ultimate stoploss. Very Important!! Up to TP1, the standard candle chart applies. The HA only applies when we have a BB walk. After TP1 we are already in the trade looking for TP2 and suspecting a BB walk. We exit on the change of colour at X1. We watch and wait. We see the trend start ing again and candle A, which crosses the upper BB, is our cue to re-enter. We r e-enter at E2. We exit on the colour change of X2. Our next cue it candle candle B which touches the upper BB and we enter at E3. We exit on the colour change o f X3. Then candle C, and E4/X4 follow the same proceedure. After X4, the candles are red and hit the mid BB = end of trade. In the Heikin Ashi exit method, seve ral re-entries and exits occur, making it different from other exit methods. Let us now join the standard chart and HA chart together to see our entries and exi ts in real time >>> If you had followed the method above exactly you would have made a loss on the last 3 entries/exits. However.......... Assuming we have a st rong trend indicated by the mid BB, then we could enter every time at the first green HA candle instead of the one that passes thro the upper BB. If you had don e that, then you would have made a good profit on all of the trades, except the very last one, in which you would have sustained a loss. Of the 3 exit methods, I definitely prefer the Parabolic Sar/mid BB method. The Di Napoli MACD method d oes not always give a great exit, although many times it does. Trading Without Indicators Page | 105

This can be a great exit method as long as it gives one signal crossover. Howeve r, it suffers from the fact that it can give 2 signal crossovers, and certain ru les have to be applied to see if the first early crossover can be ignored. Most of the time, the first crossover can indeed be ignored but how can you tell if t here are 1 or 2 crossovers? Ths can only be seen in hindsight. So if you ignore a crossover, thinking that a 2nd crossover is to come, then what do you do if a 2nd crossover does not come? The answer is that you are faced with exiting as th e price action hits the mid BB - and that may turn out to be a very poor exit in deed. In summary then, with the MACD, you have a certain lack of control over wh ere your exit is destined to be. The Heikin Ashi exit method looks very attracti ve with all those green candles lined up so nicely side by side. It gives a real feeling of strength to your trade. But that is where the illusion ends!! The ca ndles do not indicate real price, and, therefore, what looks to be an up candle in HA, is really a down candle in real price!! Beware of false encouragements!! Furthermore, even if entry is made on the very first HA candle in your favour, t he trade is nevertheless broken up into pieces by the HA method. You enter, exit and re-enter again. Extra pip spreads are involved here. And finally, even with the most astute entries, there is still potential for a loss!! In the end, the fact that losses can still occur, nails this method as unsatisfactory. So, in sp ite of the wonderful and beautiful candle arrays enticing you to use the HA meth od, all is not what it seems, and the potential for loss, the breakup of the tra de and the false price action make this method a last choice for quality exits. The MACD exit method requires you to know the future, to know in advance whether you are going to have one or two exits. You cannot know this. If you assume 2 e xits when there is only one, then very poor exits can result. Therefore, this is not a preferred exit method. The Heikin Ashi exit method breaks up the trade in to several entries and exits, each with an extra spread of its own. There is a d istinct possibility of loss on one or more of these trades. Therefore, this is n ot a preferred exit method. The Parabolic Sar/mid Bollinger Band exit method inc orporates the parabolic sar as a stoploss guide knowing that the price action wi ll never cross this line. Even when inverted, the close must cross the line - so mething that happens only when the price action reaches its best profit level. T he PSAR acts as a psychological encourager, something unique in a trailing stopl oss. The mid Bollinger Band acts as the secure ultimate stoploss and is rarely h it because the BB walk is a powerful trend. Therefore, the Parabolic Sar/mid Bol linger Band exit method is the preferred quality exit method. OK, last post for the night - have a gander at this beautiful trade!! >>> Lets go thro the letters to see the stages in this LONG trade....... Candles A/B are the CBL pair with a blue line extending as the entry line. A red dashed line extends from the botto m of the extreme candle - this is our stoploss. Candle C is the entry candle. We take TP1 at the mid BB, then we look to take TP2 at candle D but...... At candl e D, we see that the outer BB are expanding powerfully and the mid BB is going u p - sure signs of a BB walk coming up. So we delay TP2 to get the benefit of the BB walk. Trading Without Indicators Page | 106

At point E, the PSAR crosses the mid BB and hence the mid BB takes over as the u ltimate stoploss. A touch of the mid BB from hereon means immediate exit. We now smile, smile, smile as we wait, wait, wait and watch the price action go up, up ,up. We follow the parabolic sar with our stoploss - shown by the little red lin es across the sar. At point F, we have a parabolic sar inversion with a long wic ked, red candle. The trailing of the stoploss along the sar is halted, and the r ed line extension, (shown), touches the lower wick of the red candle. However, w e only exit if the CLOSE is below the parabolic sar, which is not the case with the red candle, nor with the next 2 green candles under the inversion. At point G, the parabolic sar reverts to standard form, and we restart the trailing of th e stoploss along the sar. At point H, the special trading rule from post #3887 o n page 389 which says......... If, after an inversion and restoration of the par abolic sar, the price action hits the outer BB, exit at that point. ........appl ies!! Point H is a very excellent exit indeed!! If you look carefully, you will see that this is a BB sausage with 3 false retracements before the final geniune retracement after H. After the 2nd false retracement, the trade appeared to be a BB bubble. Note that at no time did we concern ourselves with whether this was a bubble or a sausage. We just traded!! And so we gain the most from a trade and that we did with an air of mastery and complete confidence!! Taking Profits I see the situation a little differently. My approach is the time honored one a trade is not finished until the price action either hits the stoploss or hits the take profit. This is called macro-managing a trade and allows you to leave t he computer and return later. If you lose, you move on to the next trade. If you lose, the number of pips you lose = 2% of your total funds by calculation befor ehand. I believe that the advantage of this macro method is that you are allowin g for breathing room in your newly started trade, so that any retracement can re gain momentum and go on in your favour. If your are wrong in bailing out quickly , then you miss out on the entire trade. If you did not bail out early when you should have, then you hit the stoploss. But then you should only lose 2% of your funds. I believe this to be the correct use of a stoploss - otherwise, why have it. It comes down to the theory of a stoploss and why you have them in the firs t place. In stocktrading, there is no leverage and hence no margin. A drawdown i s, therefore, easily handled. A stock will never lose its entire value unless it is delisted - you are then careless for selecting that stock!! So a stock can g o down in value, but with no leverage and no margin, your equity can absorb the drawdown until the stock goes up again. In stocktrading, with no leverage or mar gin, a stoploss is not really necessary. In forex, we have leverage, and, theref ore, a margin. Without a stoploss, our margin would become our unwilling stoplos s!! Therefore, a stoploss becomes essential. We then allow for the possibility o f price action hitting this stoploss but in doing so, we have already allocated no more than 2% of our account to do this. Again I say, this is the correct usag e of this tool. We live to trade another day. As you can see in my examples, not only is the win/loss ratio high, but the risk/reward ratio is also extremely fa vourable!! You must always move the stoploss along with the parabolic sar only. This may sound all strange to you but it works!! The exitence of the PSAR on our chart give us encouragement (because price action will never hit it) and so we need not worry about bailing out of a trade early. The only time when there is a possibility of price action hitting the stoploss without our control is the per iod between the entry and PSAR reverting to standard form. In the chart above, t he PSAR reverts to standard form at the green candle just before candle D. I hop e these answers help you. Trading Without Indicators Page | 107

To be sure, I think the Graviton and I would both agree that you should set a st oploss at the point where you believe that if the price action goes there, then the price action will no longer go back in your favour. In other words, the poin t of no return. I have set the stoploss position at the end of the wick of an ex treme candle because that is candlestick theory. However, for you, the point of no return, (the stoploss), may come a lot sooner. If so, you should set your sto ploss line at the position that you believe is the no-return point. This point m ay be well before the wick end of an extreme candle. Of course, if you set your stoploss too soon, you will suffer from what a lot of newbies suffer............ .....the premature stopping out of trades. Many a thread on this forum has been devoted to just that subject!! Being an experienced trader, it would not do my r eputation any good if I fell into that trap. So that is what I seek to avoid her e and hence I set the stoploss where it is in this DNA method - at the wick end of the extreme candle. Exits Now I am going to set the rules for the quality exit once and for all - and inde x the posts. We start here >>> In any BB bubble or sausage, long or short, there are 4 types of price action. They are : a) Initial breakout - diagram A. b) Con tinuing price action - diagram B. c) Level price action - diagram C. d) Retracem ent price action - diagram D. Condition A exit is delt with by way of an Extreme Bollinger Band with standard dev = 3.3. Conditions B, C + D exits are delt with by way of the parabolic sar/mid Bollinger band method. In the following diagram we assume a LONG trade. The exit rules are the same for a SHORT trade but the p icture is upside down. In this diagram, the price action is shown by the green a rrow >>> The Bollinger Bands are in pink, the Parabolic sar in blue and an extem e Bollinger Band (standard dev = 3.3) is also shown in black. Stoploss lines are in red. Labels are also color coded. Trading Without Indicators Page | 108

EXIT RULES : A Parabolic Sar is loaded onto the chart. o The stoploss trails along the PSAR. The stoploss always trails along the PSAR from the very beginning. It never trai ls along the mid Bollinger band. When the PSAR has not yet crossed the mid Bolli nger band, (grey section), the PSAR is the only and ultimate stoploss. After the PSAR has crossed the mid Bollinger band, (yellow section), the mid Bollinger ba nd becomes the ultimate stoploss. o Because of its mathematical construction, th e price action will never touch the PSAR. Therefore, it is impossible to get a s toploss exit while the PSAR is in standard form. Knowing this, the PSAR acts as an encourager as the price trends. When the PSAR inverts, the trailing of the st oploss is halted and the stoploss line is extended to the right for the duration of the inversion. When the PSAR returns to standard form, the stoploss continue s to trail the PSAR once again. An exit can only be obtained when... a) The price action hits the Extreme 3.3 Bo llinger band after several candles, (Condition A). b) When there is an inversion (Conditions B, C +D) : a. An exit is made if the CLOSE passes thro the extensio n line of the stoploss during the inversion. b. An exit is made if the live pric e action hits the mid Bollinger band at any time during the inversion. c) An exi t is made at the outer Bollinger band after an inversion, should the price actio n get there. (Assuming the trade is still underway). (Conditions B, C + D). Here is a recent trade with a BB walk on EUR/USD 15min The area traded is the grey B B sausage. The yellow bubble is a BB bubble mounted on top of the sausage. The e ntry, made in the grey sausage, also exits in the grey sausage. There is no poss ibility of reentry into the yellow bubble. The exit in the grey BB sausage is ex cellent. We now look in detail. Trading Without Indicators Page | 109

Here is the entry to the grey sausage in detail, a long trade. By the time the p rice action touches the upper BB, it is obvious that we are in for a BB walk so we delay the exit The entry is made in a squeeze area. The CBL of Candle 1, an e xtreme candle, does not enter into candle 2. However, the CBL of candle 2 does m ake an entry into the green candle 3. The PCI is made at the low of the extreme candle 2. L Lets look at the exit using the PSAR/mid BB method >>> While the PSAR is in stan dard mode, and exit is impossible. This makes us feel good as we see the price a ction going up and we are counting the pips!! When the candle marked INV has fin ished developing, the PSAR inverts. The climb of the stoploss line is halted and extended to the right. We see that the close of candle X is below the extended stoploss line. According to the rules, this means EXIT!! We do exit at a very go od profit. Entry = 761 TP1 Exit = 770 TP2 Exit = 851 Profit on trade in 15 minut e chart = TP1 + TP2. Profit = 9 + 110 = 119 pips. Wow!! Time taken = 5.5 hours. Profit Rate = 21 pips/hour (1 pip every 3 minutes). Stoploss = 21 pips. Risk/rew ard ratio = 21/119 = 5.7 Trading Without Indicators Page | 110

We now look at the shortcut method where we enter on a BB walk only. Here we see [7] of the entry rules clearly shown at the point of the black, vertical line > >> BB Breakout Entry Rules RULE 1 - a BB walk is considered when there is a candle that passes thro the upper/lower BB with its wick or body. RULE 2 - this candle must develop from a squeeze area. RULE 3 - at the time of t his candle appearing, the outer BB must be expanding together, and the mid BB ei ther rising or falling depending on whether there is a long or short BB walk. RU LE 4 - the candles must develop in stepwise function to the upper/lower BB. The rise must not consist of one only candle rising to the outer BB. RULE 5 - After the signal candle (Rule 1), entry is made on the next candle if and only if the price action on this candle passes inwards to touch/go thro the 1. standard dev. BB. Entry is made upon the touch/pass thro or better. A 2 contract entry allows the 1st entry to be improved upon with the 2nd contract. RULE 6 - If the BB doe s not expand again with the entry candle, then no entry is made. RULE 7 - If, af ter making entry, the next candle (signal candle, entry candle, next candle) doe s not show both BB expanding, then a quick exit is made for safety. TQ- I m leaning towards just touching the 3.3 [Bollinger band] rather than closi ng above it at the moment. TA- Touching is fine. The principle of operation here needs to be understood clearly. This 3.3 BB approach deals with BB walks where the price action rises/falls very strongly during the walk, then collapses stron gly afterwards. The aim of the extreme BB is to capture the price action while i t is still running hot. So it is not so much the figure 3.3 that is important, i t is the fact that this is an extreme BB and, when hit, signifies an extreme pri ce - which is what we are looking for. Afterwards, the price action nearly alway s collapses in these cases, so exits afterwards are no good. Trading Without Indicators Page | 111

Example Entry BB Breakout The Rules We are coming from a squeeze area (Rule 2). At the black vertical line, the candle clearly passes thro the upper BB (Rule 1) . At the black vertical line, the outer BB are expanding and the mid BB is risin g (Rule 3). The candles have developed in a nice stepwise manner up to the signa l candle (Rule 4). The BB continue to expand at the entry candle (shown) (Rule 6 ). The entry is made when the price action touches or passes inwards thro the BB of standard deviation = 1.5. (shown) (Rule 5). The next candle after the entry shows the BB still expanding so we stay in the trade (Rule 7). Now the PSAR/mid BB stoploss method can be used to effect a quality exit but this is really inten ded for full DNA trades. I am working on a shorter stoploss that gives quality e xits just tailored for this shortcut method. You can see that by entering at the inward 1.5 BB point we set ourselves up for an immediate profit as the price ac tion expands to the outer BB and beyond. This should inspire a real confidence. Furthermore, an extra contract can be added at the opening of the next candle. T his should only be done twice, giving 3 contracts in all unless you made a doubl e contract entry in the first place. Here are the possibilities....... entry - 1 contract. open of next candle - add a contract. open of next candle - add anoth er contract. 3 contracts in all. entry - 2 contracts. open of next candle - add a contract. open of next candle - add another contract. 4 contracts in all. OR Do NOT go above these limits - there will be a certain amount of retracement bef ore the exit and you do not want to be caught out. Trading Without Indicators Page | 112

EXERCISE 1 The above 7 shortcut entry rules are not in the best logical order. T ake the above 7 entry rules and put them in the best order to work out if an ent ry should be made. Another example Here we have a BB bubble with a BB walk on th e lower band with excellent profit potential. The area in the square is the entr y area and will be magnified in the next post. Assuming we are in the trade, not e how the PSAR follows the price action down. When the PSAR inverts, the trailin g stoploss is halted, and an extension line is drawn from the last standard poin t. The closes of the candles do not cross the stoploss extension line, so we sta y in the trade. The PSAR then reverts back to standard. The rules state that if there is an outer BB hit after the PSAR reverts to standard, then we exit at the hit point. This exit is shown. It is truely excellent. Now the magnified area to show the entry This chart shows 4 things..... line). t he outer BB, the mid BB, the PSAR and the 1.5 standard deviation BB (thin At the completion of candle A (black vertical line) we can see that both outer B B are starting to expand and the mid BB is starting to go down. At candle B, we note that the upper BB is no longer expanding and we cancel entry (Rule 6). At c andle C, (blue vertical line) both BB are expanding again so an entry is again p ossible. This entry is made at the 1.5 standard deviation BB as shown on the cha rt. At candle D, the outer BB continue to expand so we stay in the trade. Trading Without Indicators Page | 113

EXERCISE 2 Spot the entry on the first chart and note the very long distance fro m the entry to the exit. The total profit was 59 pips on this 15 min chart. Calc ulate the pip rates...... 1) how many pips/hour. 2) how many pips/minute. To all those who did the 2 exercises...... The sequence order has no hard and fast cor rect order. The purpose of this exercise was to get you to think logically about the rules so that you could make sense of the entry. This you have accomplished very well. As for the 2nd exercise, the answers are correct, it was a simple ar ithmetic matter. User Answer for exercises 1 and 2: Exercise 1 - Order of rules: RULE 1 - this candle (signal candle) must develop from a squeeze area. RULE 2 the candles must develop in stepwise function to the upper/lower BB. The rise m ust not consist of one only candle rising to the outer BB. RULE 3 - a BB walk is considered when there is a candle that passes thro the upper/lower BB with its wick or body. RULE 4 - at the time of this candle appearing, the outer BB must b e expanding together, and the mid BB either rising or falling depending on wheth er there is a long or short BB walk. RULE 5 - If the BB does not expand again wi th the entry candle, then no entry is made. RULE 6 - After the signal candle (Ru le 1), entry is made on the next candle if and only if the price action on this candle passes inwards to touch/go thro the 1.5 standard dev. BB. Entry is made u pon the touch/pass thro or better. A 2 contract entry allows the 1st entry to be improved upon with the 2nd contract. RULE 7 - If, after making entry, the next candle (signal candle, entry candle, next candle) does not show both BB expandin g, then a quick exit is made for safety. Exercise 2 - Pip rate calculation: 1) ( 26 bars * 15 mins) = 390 mins 59 pips total / 390 mins = 0.15 pips per minute 2) (26 bars * 15 mins)/60 = 6.5 Hours 59 pips total / 6.5 hours = 9.07 pips per ho ur Trading Without Indicators Page | 114

Here is a lovely EUR/USD 15 min trade using the shortcut BB DNA method. This tra de is developing as I post Candle A is the signal candle. Here the first BB expa nsions start, the mid BB is going up and candle A has passed thro the upper BB. We cannot enter, however, until candle B, further up the track. This is because Candle B is the first candle where the price action passes thro the 1.5 dev. BB. (shown on the chart). The price action then goes up nicely and we smile. After entry, it seems safe to add an extra lot at candle C and another one at candle D . After that we had better leave it alone. This method seems to offer 2 extra op portunities to add an extra lot. The parabolic sar tracks the price action nicel y and there is an inversion further up where we extend the stoploss line - line E. Lets look at an update of this chart.............. Here we have the conclusio n >>> The close of candle E has passed thro the stoploss extension line. Hence we exit at this close. If no extra lots were added then we make 53 pips in 2 hours 45 m inutes. One extra lot would have added 27 more pips but a 2nd extra lot would br ing a loss on that lot of -1 pip. Therefore a full trade would have netted us a total of 79 pips. I have now incorporated Ken DoubleU s modifications into my fi nal slopemeter code. I had to re-insert the zeroline code because the computer w ould not draw the zeroline at all. The final code in CTL format for GFT is given below........ OK, I have finalised the new Slopemeter code. The new input pipdiff = 1.5. This is now the default value for all 15 min pairs, and is changed from the original value of 3 All the credit for designing this new version goes to Ken DoubleU. He is becoming a giant here in a very short time. Thanks heaps for the help Ken!! Trading Without Indicators Page | 115

Slopmeter Code ************************************************** ******** indic ator AA_BB_slope_meter ; input pipdiff = 1.5; draw zeroline("zeroline", solid_li ne, black,2), entry_long("long", solid_line, green,2), entry_short("short", soli d_line, red,2), res("slopemeter", solid_line, blue,2); vars i(number), avg(serie s), pip_fctr(number); begin if close[back(close)] <10 then pip_fctr := 0.0001 el se pip_fctr := 0.01; zeroline := makeseries (front(close), back(close), 0); entr y_long := makeseries (front(close), back(close), pip_fctr * pipdiff ); entry_sho rt := makeseries (front(close), back(close), -1*pip_fctr * pipdiff ); avg := sma (close,20); for i := front(close) + 20 + 1 to back(close) do res[i] := avg[i] avg[i-1]; end. ************************************************** ******** Here is a pre-built slopemeter using Tyemens method for MT4 http://forums.babypips.com /attachment.php?attachmentid=13138&d=1280974506 Please read the following post c arefully - it is important!! Now what is the purpose of this indicator in the Ul timate BB Profit grabber? Well, when a BB bubble/sausage occurs, the mid BB chan ges slope sharply. At the same time, the price action develops candles that pass thro the outer BB. We have used this as an entry signal. But this as a signal t o enter is not always reliable and at these points the mid BB slope is not steep enough. Furthermore, there are times when all of the 3 BB start to go up or dow n at the same time. That is, they stay parallel. In these cases, the price actio n walks the BB, giving a great trade - but we cannot enter because there is no B B expansion (BB expanding outwards in opposite directions.). Remember that one o f the 7 entry rules is that we see the outer BB expanding. Such trades have grea t profit potential and we miss out on these with the present 7 rules. So the slo pemeter comes to the rescue!! I have measured the required slope of the mid BB o f being at least 3 pips/candle and preferably 4 pips/candle for a 15 min chart. I will still have to check what it is for other timeframes. I suspect that they are connected by a "squares" or "square root" formula. If that is the case, I wi ll need to use some semilogarithmic graph paper (which I have), to plot the corr ect values and establish the equation joining the timeframes. When this is done, we can fill in the needed values for every timeframe. To sum up.....The slopeme ter provides an accurate signal as to when to enter a bubble/sausage. Trading Wi thout Indicators Page | 116

Now here is an example of how (yes I do hate indicators and if you can do this b y eye, so much the better). Lets look at a BB bubble >>> the Slopemeter indicator works.... This bubble shows a beautiful price action walk on the upper band. The PSAR is s hown. The close of Candle B is the exit candle (stoploss extension on inverted P SAR). However, if you can see that the price action is clearly depicting a bubbl e and not a sausage, then the close of the first disconnected candle (candle A) is often the best exit. Lets now look at the slopemeter in action........... Here is the slopemeter on the same chart >>> The slopemeter line is in blue and there is a green horizontal line at 3 pips difference between the BB at candle i ntervals. The line is very jagged and is meant to be that way. Under no circumst ances do we smooth it for convenience - it would then lag and will be effectivel y useless. If we look at where the blue line crosses this green line, we see the entry signal at candle S. It is 2 candles earlier than the entry signal given b y the 7 entry rules in the DNA shortcut method. But our entry is still at candle E because here the price action drops down thro the 1.5 BB as you can see. The exits A (simple exit method) and B (PSAR/mid BB) are shown. But now we also have a new exit lining up with the slopemeter dropping back thro the green 3 pips li ne. This exit is candle C. Now candle A is the best exit, followed by........... ...candle C!! not candle B as expected!! The slopemeter can also give exit signals as well as safer entry signals. Trading Without Indicators Page | 117

We now look at a case where the slopemeter saves us a lot of heartaches!! >>> He re we appear to have a good BB walk trade. The BB expand after the blue line, gi ving the signal to enter short. There is heaps of good potential for a short ent ry as shown by E, the entry point when the price action passes thro the 1.5 BB. A 2nd contract entered here would improve on this entry. And so the trade moves on into profit. I have not loaded the PSAR for clarity. Now where is this trade going? We need an exit point. Lets look at the next post. Oh - horror of horrors!! >>> What a mess!! No clarity at all. Look at that horro r candle with the price action going nearly to the upper BB. Just where do we pu t a stop loss in this mess? This is a price action area that is a dogs breakfast and one which we should avoid!! So how do we avoid it? Next post. Trading Without Indicators Page | 118

Here is the slopemeter in action on that trade >>> The blue line is the slopemet er line. The black line is the zero line - no slope here at all. The green line is the sufficient line for entering long. The red line is the sufficient line fo r entering short. Note how the blue line has not come anywhere near the red hori zontal line. There is no sign of a crossing whatsoever. The slope of the mid BB is simply too shallow to indicate a good rolling BB walk trade!! The slopemeter tells you this!! So we do not enter or even entertain the idea of a trade in thi s area!! I have now to discover what the pip differences are for the mid BB in o ther timeframes. This will take a bit of experimentation and graphical work invo lving mathematics. We will see how it goes. It is impossible to tell early on in a BB walk whether you are going to have a BB sausage or bubble. The two are qui te different but the difference is simple......... Bubble - when the price actio n pulls away from the BB and retraces, it continues to retrace and does not reco ver. Sausage - when the price action pulls away from the BB and retraces, it doe s so for a while but then the price action recovers and restarts the climb of th e BB. Sometimes this new climb is a little distance away from the outer BB line. USING THE SLOPEMETER The default value of 1.5 for the inputs should cover all t he currency pairs in the 15 min charts. I have yet to setup the default value fo r other timeframes. A chart of the values for every timeframe will be needed. Th e Slopemeter basically comprises Rule 8 in addition to the 7 entry rules already given for the DNA Shortcut method. It is meant to be used as a guide only - not a hard and fast yes/no to entries. If the slopemeter line (in blue) approaches the green horizontal line, then it is generally safe to enter LONG. If the slope meter line (in blue) approaches the red horizontal line, then it is generally sa fe to enter SHORT. The Slopemeter helps rule out unsafe entries. The whole metho d of 8 rules is probably better named as the Ultimate BB DNA Pip grabber. It spe cialises in the very best of the juicy profits to be gained on the forex market - the price action walks of the BB bubble/sausage. The fastest profit/unit time is made here - that is your trading efficiency is at its highest in these areas. The most profit is made in the shortest possible time. Only news releases can d o better!! There are a few more details I am looking at, then we can set this wh ole method in concrete and even construct the PDF before time!! This method must be clearly differentiated from the standard BB DNA method which uses CBL taken from extreme candles in the BB squeeze areas. Trading Without Indicators Page | 119

The standard DNA method covers 4 types of price action, any of which can occur i n a trade taken from an extreme candle CBL. The OBB price action includes a BB w alk of a bubble/sausage. The DNA ultimate profit grabber is a method used to tra de the BB bubbles/sausages only so as to maximize profit in a given amount of ti me. These are the two methods for which a PDF will be constructed. I have now wo rked out a stoploss line that gives excellent exits on the BB bubble/sausage pro fit grabber method. (I am thinking of renaming this to the BB Expansion method comments welcome.) The exit line operates very simply - you draw an extension l ine from every completed candle. Should the live price action cross the extensio n line you then exit. There are 2 lines - Stoploss LONG and Stoploss SHORT. Each is a separate program and you load the correct one on your chart according to w hether you are going long or short. Before I give the programs I will show how i t works on some charts...... Here is the first example of how this method works. We have a LONG example. The signal candle = S. At this point we see the outer B B expanding, the mid BB going up. We are ready to enter. So we load the Stoploss LONG indicator that I am going to publish next. Entry candle = E. We dispense w ith the 1.5 BB rule and enter at the OPEN. If you are using more than one contra ct you can improve on the entry with a better one as the price action goes inwar ds. As each candle closes, a stoploss extension line is drawn as shown. The stop loss is placed at these extension lines and hence trails the price action. The p rice action does not cross the extension lines until much later. Exit Candle = X . Here the stoploss extension line from the previous candle is crossed by the pr ice action. That is the signal to exit. This method then, is a very SEXy method! ! Another example - overall, this method give superior exits to the PSAR method. In this chart the signal candle is really too sudden - we are looking for a nic e stepwise increase to the upper BB. Nevertheless, the method works. Signal = S. Entry = E. EXit = X. Yes, its the SEX method. Trading Without Indicators Page | 120

Another example - again the signal candle is really too sudden without a stepwis e increase The same procedure as before. The top wick of the exit candle is cros sed by the stoploss extension line. Another example In this case, candle A is not a signal candle because the lower BB is not showin g any real signs of expansion. Here we have the case going short >>> Same rules as above. I could post more of these examples but it gets laborious. I think it is simple enough to understand!! Now its time to post the programs fo r the 2 exit methods for which the examples were given above. The method (former ly called the BB profit grabber) is now newly named as The BB Profit Walk Method Trading Without Indicators Page | 121

Pointers on Trading CBL: 1) Your want correct CBL 2) You should have entered as soon as the price action crosses the CBL. That is, trade live price action - do not wait for a close. 3) If the mid BB was going well against you - a warning. 4) If the price action goe s against you on the very first candle, then exit at the half way point of the e xtreme candle. 5) It is of great assistance to get the trend direction in the hi gher timeframe if the mid BB is showing such a slope against you. The higher tim eframe trend would have kept you out of the trade. 6) There is absolutely no poi nt in taking trades outside of squeeze areas. Not only are they prone to failure , but you are missing out on vital practice in detecting squeeze area trades. Be ing able to detect a squeeze is a skill that you need for this method. 7) So for get about taking every trade and concentrate on squeeze area trades from now on! ! Exitmeter Here is the latest exit indicator - the Exitmeter. Before I post the Exitmeter, I want to explain how the squeeze indicator designed by Ken DoubleU works: The p rogram notes when the Starc bands go outside of the Bollinger bands. The indicat or blips at this point to show that the area in yellow is a squeeze area. A good squeeze is about 25% of the width of the bubble/sausage at its widest poi nt Now for a chart of the Exitmeter at work >>> Here is a bubble showing the exitmeter at work. When the red line crosses zero, we exit at the close of the earliest candle. Trading Without Indicators Page | 122

Here is the Exitmeter at work on a very complex BB sausage >>> There are 3 separate entry/exits given by the 7 rules. The exits form 2 losers a nd one winner. Compare the above chart with the one below where the PSAR is used >>> In this ca se, the PSAR does a far superior job, allowing only one entry and exit with a tr ailing stoploss. The Exitmeter provides reasonable exits on bubbles but the PSAR is superior on sausages. For the record, here is the GFT code of the Exitmeter. I do not really like this thing, it does not give really high quality exits and there is no trailling sto ploss to go with it. The principle of operation is this...... The rate of change of the upper band is measured for the duration of the bubble/sausage. Same for the lower band. Then upper is subtracted from the lower, and at some point the r esult of the subtraction = 0 This zero point is the exit point. Trading Without Indicators Page | 123

The Exitmeter code is my contribution, not that of Ken DoubleU. **************** ********************************** ******** indicator AAA_BB_Exitmeter ; input d eviations = 2; draw zeroline("zeroline", solid_line, blue,2), resfinal("Exitpoin t", solid_line, red,2); vars i(number),avg(series), line_mid(series), tmp(series ), line_upper(series), line_lower(series), res1(series), res2(series); begin zer oline := makeseries (front(close), back(close), 0); line_mid := sma(close, 20); tmp := deviations * stddev(close, 20); line_upper := line_mid + tmp; line_lower := line_mid - tmp; for i := front(close) + 20 + 1 to back(close) do begin res1[i ] := line_upper[i] - line_upper[i-1]; res2[i] := line_lower[i] - line_lower[i-1] ; resfinal[i] := res1[i]- res2[i]; end; end. *********************************** *************** ******** END Copy of exitmeter for MT4 : http://forums.babypips. com/attachment.php?attachmentid=13249&d=1281790251 However, I am now working on a much superior approach. The PSAR as a rule, gives a very generous trailing stop loss - too generous. Yes, there are times, like i n the above example, where the PSAR works perfectly as a trailing stop loss. My new approach is aimed at giving a very tight stoploss and a much better exit tha n the PSAR can ever give. The best news is that I am making progress and feel co nfident about the success of the outcome!! Thank you for your very kind and insi ghtful words, Graviton. You clearly understand what is involved in this work. I now have very good news for everyone!! I have developed two, yes two, not one, i ndicator that sets a very tight stoploss without giving an exit until the price action has gone a very long way to give one of the best exits possible. After ex tensive testing, I have found that the two indicators beat the PSAR hands down. The same extensive testing has shown that the two methods, A and B, are on equal par with each other. That is, they are like two closely matched football teams. Trading Without Indicators Page | 124

50% of the time indicator A gets the best exit. And the other 50% of the time, i ndicator B gets the best exit. The differences are small, but nevertheless one a lways beats the other. In all cases, the exits are very high quality. The beauty of these indicators is that their programs are very simple, in fact indicator B has a program of only one line!! Because of their simplicity, I am going to ama lgamate them into one and use a few "if, then" "< >" functions to allow the comp uter to calculate both indicators, and by comparing them, only draw the one that gives the best exit. I hope to sort that out soon and then we can dispense with all of the other indicators. I think that readers will be suitably pleased with the result. YES!! I have it!! I have successfully programmed the trailing stoploss + exit indicato r!! I will now post the code. This indicator is for the BB Profit Walk method wh ich enters and exits on the BB bubbles and sausages for maximum profit in minimu m time. This indicator is a tight trailing stoploss that gives a very high quali ty exit. It is vastly superior to the PSAR in 3 regards........ 1. The trailing stop loss is so much tighter. 2. The exit point is far superor 3. There is no in version to worry about. The code is in the next post. I will give chart examples of how it works in the posts following. Here is the code for the trailing stopl oss +exit indicator for the BB Profit Walk method. There is both a LONG and SHOR T code. Depending on whether your BB bubble/sausage is a long or short price act ion, you load the appropriate version on your chart. The code for LONG >>> ************************************************** ******* * indicator A_Stoploss_LONG ; draw TS ("trailingstoploss", solid_line, dark_gree n,2); vars tgl(series), mid(series), tr(series), atr(series), lower(series), i(n umber); begin tgl := wma(sma(close, 8), 4); mid := linreg(close, 20); tr := true range(); atr := ema(tr, 15); lower := mid - atr; for i := front(tgl) to back(tgl ) do begin if tgl[i] >= lower[i] then TS[i] := tgl[i] else TS[i] := lower[i]; en d; Trading Without Indicators Page | 125

end. ************************************************** ******** The code for SHORT > >> ************************************************** ******** indicator A_Stopl oss_short ; draw TS ("trailingstoploss", solid_line, red,2); vars tgl(series), m id(series), tr(series), atr(series), upper(series), i(number); begin tgl := wma( sma(close, 8), 4); mid := linreg(close, 20); tr := truerange(); atr := ema(tr, 1 5); upper := mid + atr; for i := front(tgl) to back(tgl) do begin if tgl[i] <= u pper[i] then TS[i] := tgl[i] else TS[i] := upper[i]; end; end. ************************************************** ******** BB Profit Walk Indic ator Requirements At the end of all this, the BB Profit Walk method needs only 3 indicators to make it work >>> 1. The Bollinger Bands to allow you to see the b ubbles/sausages. 2. The trailing stoploss + exit indicator just posted. 3. An te mporary indicator to tell you if the bubble/sausage is safe to enter. This 3rd i ndicator is one I have yet to construct and it should not be nearly as difficult as what I have just done. This 3rd indicator simple measures the squeeze and te lls you if it is <= 25% of the section in front of it. If the squeeze is not equ al to 25% or less than the previous expanded area, then it is unlikely that the next expansion will yield a successful trade. So therefore, this 3rd indicator i n necessary. However, once you haved used this indicator to determine the safety of entry, then this indicator can be deleted from the chart as it will have no futher use in the trade. I shall now post chart examples of the exit indicator t o show how it works. Then I have to construct the 3rd indicator and, to finish o ff, put all the latest entry rules together. Once that is done, the final PDF of this method can be designed and posted. Trading Without Indicators Page | 126

Here is a LONG example >>> S = signal candle. E = entry candle. X = exit candle. The trailing stoploss is given in green in a LONG trade. The trailing stoploss is given in red in a SHORT trade. From each candle point on the stoploss, an ext ension line is drawn. If the live price action in the next candle crosses this l ine, you exit. The final exit is shown with the blue extension line. Compare with the PSAR >>> As you can see, the exit of the PSAR is much lower, exiting at about the mid BB band. The stoploss with the PSAR is also much more generous - too generous. Trading Without Indicators Page | 127

Another LONG example >>> In this chart, I have also loaded the PSAR for comparis on. The PSAR in very inferior in both the size of the stoploss and the exit poin t.A Short example. The stoploss has been calibrated so that it can Comparison with t he PSAR >>> Need I say more!!? come very close indeed to the price action but no t allowing the extension lines to cross a candle prematurely. A very inferior ex it and stoploss!! In this case, the stoploss line is very close to the price act ion but the exit is still of very high quality. Trading Without Indicators Page | 128

Another short trade, Same parameters as before. And yet another short trade >>> The area marked AA will be magnified next post. A magnified view of AA >>> Have a look at this!! >>> The stoploss is finely cali brated and sometimes there is a near You would think that candle R is such a str ong retracement that miss for the extension. However, a near miss means that an it would bring the death of your trade. However, not so!! extension further down the line gives a better profit. The stoploss goes around the low of the candle, so that any extension lines do not cross future candles. And look at the exit very high up indeed!! Trading Without Indicators Page | 129

Will the new indicator replace the PSAR? The PSAR was meant for the DNA method p roper. For the DNA method, you should stick with the PSAR for the first few cand les after the extreme until both indicators start to line up with each other. If they do that, then you can switch over to the trailing stoploss + exit indicato r. Sage Advice TQ: After the past three weeks, I m beginning to come to the conc lusion that breakouts of bollinger band squeezes are not very reliable on the 15 m TFThe first type of breakout is the Big Spear, wherein price moves suddenly man y pips in a single candleThe second type of breakout is where we get both our sig nal and entry candles but the bolls really never continue to expand I am going to answer your post in detail because it is important. I am well ahead of you and 100% familiar with what you are saying - therefore, I take the following approac h...... When new traders come on this forum with a view to trading forex, they c ome here expecting to make millions. They look to get rich quick, thinking that a small outlay and high leverage can net them a progressive income. They expect this with little learning, thinking that it is easy. Then after some work, they start calculating, even drawing graphs to show how much compounding will give th em a million dollars in such and such a time. Certain outlays are given, such as 2% or some other growth figure. Then the amount and frequency of trading is add ed into the equation. Newly aspiring traders end up licking their lips as they s ee what appear to be extremely promising figures. Why work? they think, when the y can trade and compound their profits into millionare road. The truth is, of co urse, that the financial pie is limited, and forex trading can be likened to a w hole flock of seagulls fighting over left over fish + chips on the beach. The bi ggest, strongest and most aggressive seagull gets the chips. Now the get rich qu ick mindset of the new trader affects them subconsiously. That is, they don t re alise that it drives them to wrong actions. The new trader, looking for large pr ofits, goes straight to where the action is. And where is this action? Where wil l we see candles growing large in both green and red in very short time? Where d o we see apparent profits roaring? In the 1 minute chart, of course!! Here the c andles move fast, and hence give the illusion of profits. After all, the new tra der is looking for action!! The experienced trader knows better and is looking f or patience!! Where is the difference? Anyone who has traded on a forex chart kn ows full well that the price oscillates up and down. Yes, it has a trend to it b ut the price action goes up, down, up, down, up, down on its way along the trend , be it an up or down trend. This oscillation can be clearly seen on the smalles t time frame - the tick chart. These oscillations can be 10 pips or more at time s. Now in a 15 min timeframe, these oscillations are very important. They make u p a huge factor of the size of the actual candle. Get in at......... the right time of the oscillation - and you make a profit. about halfway thro th e oscillation - and you might get something, maybe just break even. at the wrong end of the oscillation - you make a loss. It becomes extremely important whether you get in at say 90 rather than 100. The 10 pip range is crucial. Furthermore, these large oscillations threaten your st oploss with every 15 minute candle. The oscillations have only to hit your stopl oss once and you are dead. The interbanks know this and send price spikes to hun t out your stops. So one bigger than usual oscillation (a price spike) and there goes your stoploss. Trading Without Indicators Page | 130

Now in a daily candle, the oscillations, compared to the range of the candle, ar e so small and far away from the stoploss, that you need a telescope or binocula rs to see the oscillations. With a daily candle, as long as you know the trend d irection, it does not matter if you get in at 90 or 100. Why is this so? Because , compared with the total pip range of the daily candle, a 10 pip oscillation is nothing. Further, you stoploss is far away and will never be hit with a price s pike. The daily candle is 24 hours of price action. In 15 minute version, it con tains 4 BB bubbles + 3 sausages + 10 sqeezes + several bits of random action. Th en you make a profit. The essence here it time. With a daily chart, all you need to know is the trend direction. Then, if you enter at random in the correct dir ection, you will make a profit at the end of the day. Try that in a 15 minute ch art!! Trading one bubble while the oscillations are so large is not the way to a profit. The difference is that you are in a daily for at least 24 hours. In a 1 5 min, you may be in for maybe 2 hours. In the daily chart you are in the trade much longer. It is time that makes the profit, not the action in the chart. If t ime in the market (knowing the correct trend direction) is important, we can see the problem with trading just one BB bubble in the 15 min chart. There is not e nough time to let the profit potential grow, and the oscillation factor becomes a huge player in the timeframe and the price action. By comparison, the oscillat ion factor in the daily candle is so small as to be of little consequence. So th e profit potential is greatest in the daily candle. The difference between the t wo is the time in the market. And the daily chart shows very little action compa red to the 1 minute chart. Now we see why the new traders, with a quick profit, no patience mindset, choose the wrong timeframes. (speaking generally not referr ing to Merchantprince). New traders choose the short, action timeframe with its least profit potential, instead of the long, patience timeframe with its almost guaranteed profits. When we understand the above, we are ready to make a breakth ro in our trading - and real profits are potentially on our doorstep. It appears , Merchantprince, that you are ready to take this step to higher timeframes (not that you were ever greedy or lacked patience - I am speaking generally!!) Quote I am strongly considering leaving the 15m TF behind altogether, even though I am only trading squeeze breakouts and CBL entries off level bolls. This is good new s!! If I remember correctly, you started out with the 2 minute timeframe, and gr aduated to the 15 minute timeframe. Why not now go the whole way and forget abou t the 1 hour timeframe, and consider only the 4 hour, 8 hour and daily timeframe s. This I say to other readers also. One of the greatest psychological enemies o f the new trader is pride or stubborness. Every psychological breakthro to an im provement in trading requires a confession that the trader s is present trading approach is wrong, and consequently, making a loss. This confession is followed by a repentence - a change of heart causing the trader to adopt the new way of t rading that leads to a profit. This change of heart is blocked when a trader has a pride or stubborn mindset - thinking that what they know is correct, and henc e persisting in the destructive trading style. The end thereof is a loss of all funds, and this is the only way the stubborn trader is brought to heel. To all, I say this........ Do not be a stubborn trader with pride uppermost. Be humble, and prepared to repent of a wrong trading action long before it destroys your ac count. Trading Without Indicators Page | 131

o990l6mh- Recently there s been a discussion here about the benefits of trading the higher time frames. Tymen PM d me and asked if I would give a brief recollec tion on how it came to be that I ended up on the higher time frames. In order to explain that, I have to start at the beginning. In 2008 when I was completely n ew to all this I had the very good luck of finding Tymen s first big thread. Bef ore that I had wandered the usual newbie jungle path in darkness. That s another story though. I was, and still am to some extent, fond of candlesticks. I learn ed a lot from Tymen and from some books that I read. After a while I started fee ling that I knew enough to have a go a it. This was when a completely unexpected problem appeared: how was I supposed to have the time needed for trading? I wor ked, as I still do, a full time day job, one which doesn t allow me to check the charts at any time I wish. Hmm, how to solve this problem? I knew that the idea l was to trade higher time frames since their signals are more reliable, this I had read and knew to be true. But suddenly my job became an obstacle I couldn t pass. I couldn t trade while at work, period. Since I work during London and ear ly NY this was a big problem. I had two choices really, and as time and money wo uld show me, I started off making the wrong, impatient choice - I decided to tra de for a few hours in the evening after work. Obviously this meant that I had to trade shorter time frames and I ended up on the 5min or even 1min since even th e 15min yielded little or nothing for an impatient guy staring at the screen for 3-4 hours while NY was slowing down. I tried to scalp and failed in a spectacul ar way. I started jumping systems and looking for the holy 1-5min grail etc. Nee dless to say I failed and failed again. I came to a point where I realized that I could either go on like this and join the 95% club that I already seemed to ha ve a pending membership application for, or I could face the hard truth and make some real changes. Luckily I did the latter and the first thing I understood wa s this: you have to find a way to make trading fit into your life. When I unders tood that, I had no choice but to accept that all I could trade was daily bars. There simply was no time in my life to trade intraday. In order to trade properl y I would have to be patient and wait for days or even weeks for a good setup. A s time went by and I learned more about trading, not to mention patience, I incr easingly understood that it was a very good choice to move to a higher time fram e. Some of the pros of trading higher time frames, such as 4H and above, are: Mo re time to make a decision before placing an order. No risk of "I m bored" trade s - these are more common than you ll think. After a couple of fruitless hours i n front of the charts the boredom easily becomes great enough so that a trade is made that never should have been. This of course stops out for a loss every tim e and then the green devil of revenge-trading may appear to add insult to injury . No need to stare at the screen for hours on end, it s enough to check the char ts once a bar closes. More reliable price action signals. I ve been there, so I know what eagerness, impatience etc will do to you. I wanted to trade so badly t hat I tried to force trades that weren t there on a 1min chart during the slowes t part of the 24H day. It didn t work, but it taught me a lot, not least about m yself. Nowadays I will not trade on shorter time frames than 4H. Maybe that will change in the future but for now that is what suits me. My advice is to build p atience and character and start out on a time frame where you re giving yourself a real chance to succeed. Great post o990l6mh. I m sure it will be helpful to m any here. I ve tried to demonstrate methods that work well on longer timeframes in live trading exercises using shorter timeframes. The reason is I wanted to sh ow something in a few hours that would take days or weeks to demonstrate on the proper longer time frames, and I was depending on the fractal nature of the mark ets timeframes to demonstrate the point in a scaled down fashion on a shorter ti me frame. Unfortunately, the markets are not completely fractal in that small ra ndom spikes and moves around 1 X ATR to 2 X ATR occur more randomly on lower tim eframes. These small unpredictable moves that are often caused by minor news eve nts and large trades being executed, sometimes very ham-handedly, greatly increa se the randomness of shorter timeframes as compared to longer timeframes. It see ms that moves of 15 to 30 pips on the short timeframes that wouldn t even matter on longer timeframes, combined with the higher transaction cost of the faster t rades, inevitably overcome even the best laid plans and make trading the shorter

timeframes more like gambling than investing. Trading Without Indicators Page | 132

So in the end, even using the shorter timeframes to test, practice or demonstrat e a method designed for longer timeframes is misleading. This trading stuff can be really hard, and tying to demonstrate a longer TF concept real time on shorte r timeframes is nearly impossible. Since it takes months to years of trading to generate significant long TF trading results, it s only through others experienc e like yours that most new traders will migrate their trading to longer TF s wit hout wasting precious capital and lifespan trying to out-scalp the scalpers on t he shorter time frames. Thanks for sharing your experience. It is truly apprecia ted and I m sure a wake-up call to many As I have said before, and say again - a 1hour/4hour/8 hour/ daily timeframe is recommended for beginners here. Assuming you have the trend direction correct, t he oscillations are small compared to the candle, and time in the market will ge t you the pips. The more time, the more pips. It is only when you are experience d that you can go to lower timeframes where the oscillations make up a large par t of the candle. The experienced trader knows how to deal with these oscillation s and get the best out of them. As a result, the experienced trader can shorten his time in the market - that is, use a shorter timeframe. TA Question: I am see ing a strong link between the steepness of the mid bb slope and the success of b b profit grabber trades... am i right? or is that a massive over simplification? TA Answer: This is correct and is a must know!! That is why I coded the Slopeme ter for the mid BB to check for safe entries. When the mid BB is very steep the price action will walk the outer bands. This is the basis for my BB Profit Walk method. But I strongly recommend that you do NOT trade this method just now beca use it is still under development. Embarking on this method could bring you mass ive losses. Stick with the DNA method and enter at a squeeze. Use minimum 30min/ 1hour timeframe. Use the PSAR as your stoploss and stick with the rules that I h ave posted re use of the PSAR. Then you are in safe territory. There is a lot to learn in this thread both in theory and practice. I am field-testing the new BB Profit Walk indicator on the current EU downtrend. But I am a bit confused over how the indicator line is being drawn. Should we be taking our stop-loss value from the previous candle? Since there is obvious confusion here, let me leave yo u all in no doubt about how this indicator works. Firstly......... It looks like the indi paints down near the current price of the current candle underway. It certainly does repaint and that is why I designed a special method to use it. An extension line is drawn to the right from each stoploss point on the indicator. The extension line is drawn from the centre line of each candle. Sample extensi on lines are shown in blue on your chart. The extension line of candle A now hov ers over candle B. The stoploss distance is the green line distance from the hig h of candle B to the blue stoploss extension line. The extension line of candle C now extends to candle D. However, the wick of candle D (price action) has cros sed the blue extension line and, therefore, the trade is closed when the price a ction crosses this line. Trading Without Indicators Page | 133

Candles E and F operate sion line from candle E line distance from the hope this clears up the Going down nicely isn t

the same way but the trade is now closed. The blue exten hovers over candle F. The stoploss distance is the green high of candle F to the blue stoploss extension line. I confusion. Have a look at the last candle on the chart. it? Nice trade!! Lots of pips!!

OK, now look at the same chart a little while later >>> Hey!! What have you done?!! Let all those pips go in a retracement!! Given back 80% of your profit? That s terrible!! When you get a good spike way past the BB, it is best to exit at the best possible moment as in the top chart. There will always be a major retracement in such cases. So exit well before signs of retrac ement, then let the candle retrace back and you can then re-enter. It takes a ve ry long time in a short trade for the standard price action to come again to suc h a low point as the spike!! Dear People, I have posted very little lately and not really posted replies to a nyone in particular, even though it may be helpful. There are two reasons for th is...... 1) I am busy trading myself since my funds are slowly being depleted du e to concentrating on research and posting. 2) I am carefully researching the Pr ofit Walk (profit grabber) method. I can safely say at this point that entering and running with the profit walk is extremely difficult, as Merchantprince has p osted. The initial signal candle is mostly a very long candle with the remainder setting you up for a trading loss. This means that the real Trading Without Ind icators Page | 134

profit walk is contained in that very long candle - and this translates to a low er timeframe where this long candle is spread out into several candles, the firs t of which is your signal candle. Now which timeframe are we to choose then? The 15 min? The 5 min? Or maybe the 1 min? The lower timeframes show a lead up or p re-expansion before the major expansion. This pre-expansion is filled with retra ces and it quite useless for trading. This, of course, brings the question - how can we know if the pre-expansion is not the real expansion? So you can see how difficult the work is. For the BB DNA method - the PSAR with the rules on post # 3973/3974, page 398. For the BB Profit Walk (profit Grabber) method (still under development) - the stoploss + exit method which was converted to MT4 code by Ir onHeart a few pages back. Do not try to modify these methods or invent exit stra tegies on your own - it requires an enormous amount of correlation and testing w ork in many different timeframes (and mathematical experience to boot.) Changing the parameters will most likely cause you to start having losses. I can report that at this time, as well as starting the BB DNA PDF, I am making great progres s at designing the Profit Walk method. I have had another great revelation - jus t as great as the one that inspired the BB DNA method!! It involves a lot of pro gramming study by me - which will result in all the indicators posted so far bec oming redundant, that is, we will not need them. Instead, we are heading towards naked charts again!! And.........wow!!.............an even higher win/loss rati o than the DNA method!! I envisage the Profit Walk method as follows......... A generally naked chart. A couple of signals to enter. A trailing stoploss + exit indicator. An extremely high win/loss ratio - much higher than BB DNA. The Bolli nger bands will disappear from the chart. However, given the constraints of time , this work will probably not be revealed until February, next year, when I retu rn from holidays commencing 15 November. Sorry about that!! My work at the momen t is cut out with the present PDF. In the meantime I will continue to polish up the Profit Walk method so that it is completely ready to go when revealed. Cut off Post #4671 Trading Without Indicators Page | 135

Notes: Trading Without Indicators Page | 136