This article does not refer to the IM Mastery product by the same name.
One of the many strategies in the IML Web Analyzer (since renamed to Vibrata) is the Bounce Back Strategy. This is a strategy that allows you to spend less time looking at the charts, and more time doing whatever is you want to do.
The basic premise of the strategy is that you enter the trade as the trend on the higher time frame is turning around. Trend reversals are located using Bollinger Bands and the Parabolic SAR. Generally speaking we at Forex Secrets Unleashed stick to the 4h and Daily time frame for entries and exits, with the higher percentage being in the Daily time frame. Trades do move slower, but statistically go for a higher overall profit.
First, let’s take a look at the indicator settings used on this strategy.
Bollinger Bands | Length – 50, Source – Close, Standard Deviation – 2
Parabolic SAR | Start – 0.03, Increment – 0.02, Max Value – 0.2
Stochastic | K – 25, D – 8, Smooth – 6
MACD | Fast Length – 12, Slow Length – 26, Source – Close, Signal Smoothing – 9
RSI | Length – 10, Source – Close
Let’s take a look at an example on the 4 hour time frame. This is the initial look of the pair.
Click Image to Enlarge
We are looking for ALL of the following
- Parabolic SAR flipped
- Price breach of Bollinger Bands
- Stochastic above 75 and Red/Green flipped.
- MACD should be at the top/bottom of the range. It is not necessary for the lines to have flipped.
- RSI should be in the black areas, or very, very, very close to them. It would be preferred to see the indicator pointing down as well.
As you can see on the image above, at the time the image was made, the price and indicators met the rules for the trade. The light blue lines indicate the price the call was made by the IML Web Analyzer (Vibrata), and the time we entered the trade.
Take Profit and Stop Loss
Determining where to put your Take Profit and Stop Loss is also defined by the strategy.
Take Profit – The 50 MA (moving average) which is in the center of the Bollinger Bands.
Stop Loss – The most recent Parabolic SAR.
Generally speaking, you want to adjust your Take Profit and Stop Loss on the same time frame as the trade was taken. Thus if you take the trade on the 4H, then you want to set the Take Profit and Stop Loss on the 4H as well. There are very rare cases where you would want to set the TP/SL on a different time frame. Those cases are beyond the scope of this article.
The Big Picture
As you can see this strategy moves somewhat slow, when it comes to getting into and out of trades. This particular example you will notice that some of the parameters were in place for over 16 hours prior to all of them being met. This means you could have been waiting for the better part of a day to get into this trade. It also means that if you miss the entry right at the start of the 4H candle, all is not lost. Go ahead and get in a few hours later. Granted, you could end up taking a larger loss if the trade doesn’t work out, but losses are a risk with every trade you take.
With this strategy you don’t need to check the charts every 20 minutes or even on the hour. If you are trading on the 4H chart, then check in every 4 hours to adjust your Take Profit and Stop Loss. If you are trading on the Daily, then check in once a day.
At this time ForexSecretsUnleashed is testing this strategy out with the IM Product called Bounce Back. This page should be updated once we determine how well it works for the Bounce Back product.
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