Author: johnsbe

Shooting Star

Shooting Star

Bearish Reversal Pattern

What is a Shooting Star?

The shooting star is a bearish reversal candlestick. Most bearish reversal patterns this pattern will

-occur within an uptrend or at the top of a trend
-Often it is followed by a confirmation candle.

Be aware with bullish reversal candlesticks this is a warning sign of  a possible change in trend, but it is not a signal. Traders normally look for confirmation of a change of trend on the next candle.

Formation:

A shooting star is created when the opening, closing and low prices on a candlestick are in the same area. The shooting star will have a long upward shadow. Normally the shadow is 2 to 3 times the size of the body.  The whole theory behind this is that prices have been moving higher until they reach a high point or a resistance. They try move higher but the sellers come in and push the prices all the way back down to the opening price. This shows the strength in the sellers.

A strong pattern shooting star is formed when the closing price is in line with the opening price or is lower than the opening price.

Shooting stars are often applied in many price action spread betting strategies. Below is a spread betting example of the shooting star.

Shooting star

 

Here is an example of the shooting star applied in a scalping spread betting strategy on the FTSE.

 

How to trade the shooting star?

Below is a of a shooting star in GSK.L

GSK Shooting

As you can see in this strategy the prices were moving in an uptrend, until prices reached a new high. At this high, a lot of selling pressure comes into the market that pushes the prices way below the opening price of the candle. The next day is dominated by sellers again that the prices close near their lows on a very strong bearish candle. The Bulls try another attempt but are unable to push higher the following day. The shooting star is the first candle that marks a change in trend.

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Alligator Scalping system

Alligator Scalping Strategy

Time frame: 5 Min

Tag: GBPUSD

Indicators used / Settings:

Exponential moving averages

Yellow: Pink:
Ema 3
Ema 5
Ema 7
Ema 9
Ema 11
Ema 13		 Ema 21
Ema 24
Ema 27
Ema 30
Ema 33
Ema 36

Ema 55 Color Red

Possible other spread betting charts:

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Spread Betting Example

Entry Rules:

When the yellow bands cross the pink bands this is your entry signal. I will present this strategy in two ways, for those that are risk averse and for those that don’t mind risk.

Spread-betting long:

Trade Long when the yellow bands cross the pink bands to the upside.  The cross over of the bands should occur above the 55 EMA line.
Risk averse: The above strategy could lead to some false entries as you can see in the second diagram. For those spread betters that are risk averse,  trade the rebound: After prices have broken to the upside, wait for the , that is prices to come back down into the pink bands  then trade long.

Spread-betting short:

Spread betting short is the opposite. Trade short when the yellow bands cross the pink bands to the downside.  The cross over of the bands should occur below the 55 EMA line.  for those risk averse

Exit Rules:

This is a scalping strategy, therefore keep to your money management rules.
on GBPUSD: use a target of 5-10 points and a stop loss of about 15 points. These targets could change according to what you are trading, You should determine your money management rules.

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*best time for this strategy is on the European open or after a move has started.

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Here is a spread betting example of the Alligator Scalping system strategy on GBP USD

Arrows indicate entries. the risk averse spread betters would only scalp the yellow arrows.

Alligator Scalping

 

Here is an example of the disadvantage of this system. you might get false break outs.  A risk averse trader will avoid these false breakouts, as he trades only the retracements (indicated above by the yellow arrows).

 

Alligator Scalping_2

 

Below the spread betting example shows various entries. and the red arrow is the trader being stopped out.

Alligator Scalping_3

 

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Retracement

What is retracement?

Retracement is when prices have moved in a direction either up or down, then they retrace the move.

 

Below is a spread betting example of a retracement. Prices retraced the original move then continued in the direction of the main trend down

 

retracement

ADX and Bollinger Band

ADX and Bollinger Band spread betting strategy

Time frame: 5 Min

Indicators used / Settings:

(14)

(20, 2)

 

Charts used: FTSE 100

Possible other spread betting charts:GBP

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Entry Rules:

When the ADX is above 25, this indicator tells you that a trend is underway. The whole point of this scalping  the FTSE strategy, is to find moments when there is no trend and the FTSE 100 is trading sideways or is consolidating after a move.  The whole purpose of this is to be patient. Once the FTSE 100 is consolidating you apply a mean reverting spread betting strategy. 

 

Spread-betting long:

When the ADX is below 25, as the UK100 has stalled after a strong trend, or there is no news and the FTSE is trading sideways. Wait for the prices to drop and touch the lower band. As you see the prices reversing going back up towards the middle 20 moving average line, spread bet  long.

You don’t want the price to break the band and close below the band. If the current candle closes below the lower band wait for the first candle to close back above the lower band. Then trade long.

 

Spread-betting short:

Again the ADX is below 25 and the FTSE is trading sideways. Wait for the prices to move up towards the upper band. As you see the prices reversing going back down towards the middle 20 moving average line, spread bet  short.

Ideally you want the prices to touch the bands and move lower / higher. If the prices close above the bands wait for the next bar to close inside the bands.

Strategy does require patience.

 

Exit Rules:

This is a scalping strategy. Use 5 – 10 point profit and 10 – 15 point stop loss.

stop loss: 15

target: 5-10

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Here is a spread betting example of this ADX and Bollinger Band strategy applied to the FTSE100

 

FTSE 100 - Scalping 5 Min ADX BB

 

In the spread betting example below of the uk100. Prices did bounce off the lower Bollinger band, but failed to move higher. Be careful when prices do not follow through past the middle SMA heading towards the top band. , could indicate a change in trend.

FTSE 100 - Scalping 5 Min ADX BB_2

This spread betting strategy can also be applied on :

FTSE, DJI, GBP, Oil

Back to spread betting scalping strategies

Sideways Trend

What is a Sideways Trend ?
A sideways trend is when there is an equal balance between buyers and sellers, thus the price moves up and down between two levels. There is no real strength for a trend to continue in either direction.

During a sideways trend there will be strong resistance and support  levels. To break these levels you will need a substantial push either up or down.

 

 

: The yellow lines are in a consolidation phase.

: The blue lines are trend phase.

:  the Pink lines

 

Consolidation

Trend

What is a trend?

A trend is when prices have pushed in one direction either up or down.

An Up trend is when the lows are getting higher and the highs are also higher

A Down trend is when the lows are getting lower and the highs are also lower

 

Circles are getting lower

Diamonds are getting higher

 

Trend

 

Mean Reverting

Mean Reverting

Mean Reverting refers to theories that say price will normally return back to their mean or average. In Statistics, the mean or average is the average price over the last n days (Days you have chosen as average).

A is widely used when spread betting with the Bollinger Bands. Here is a .

5 Min GBPUSD

Time frame: 5 Min

Indicators used / Settings:

  • Parabolic SAR : (0.1, 0.11)
  • Moving Average : SMA 20
  • MACD:(5, 8, 9)

Charts used: GBP

Possible other spread betting charts:

FTSE 100, DAX, EURUSD

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Entry Rules:

Spread-betting long:

The Parabolic SAR will give you the direction. Therefore you wait for the Parabolic SAR to be below the price. When you see the candle stick bar close above the moving average and The MACD histogram is above the 0 line, this is an indication to spread bet long. You could be spread betting in the evening this trading strategy as the GBPUSD gives you enough movement also in the evening

Spread-betting short:

Going short is the opposite, wait for the Parabolic SAR to be above the price. When you see the candle stick bar close below the moving average and The MACD histogram is below the 0 line, this is an indication to spread bet long. You could be spread betting in the evening this trading strategy as the GBPUSD gives you enough movement also in the evening

 

Exit Rules:

stop loss: 12 point

target: 3 to 5 ticks target

This is a spread betting scalping strategy therefore the following money management rules apply. Use a 12 point stop loss and try scalp the market for 3 to 5 ticks target. how to determine if using 3 or 5 ticks? well if the moving average is sloping or not this will indicate if the pair is trending. in a trending market you could take more points out of the market in a quiet sideways market just look for 5 points.

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Here is a spread betting example of this  scalping strategy:

 

Scalping Strategy- MACD-PARSAR-MA_2

 

 

 

 

 

 

Further spread betting examples / I spread bet this trading strategy at times on :

FTSE 100

 

Scalping Strategy- FTSE100 - MACD-PARSAR-MA