Simple Price Based Forex System

Simple Price Based Forex System is a very interesting strategy that utilises no indicators whatsoever, but only price levels and setting of pending orders. The strategy works on higher time frame charts (H1 and above) with any currency pairs and in all market conditions.

Here is how it works:

  1. Firstly, we need to calculate a "Key Value" based on the current price of the currency pair. For quotes with 4 decimal places, the key value is the current price multiplied by 10 and then rounded. For quotes with 2 decimal places, the key value is the current price divided by 10 and the rounded.
  2. Place a pending Buy Order at Current Price + (2 * Key value).
  3. Place a pending Sell Order at Current Price - (2 * Key value).
  4. Place a stop-loss for pending Buy Order at Open Price - (2 * Key value).
  5. Place a stop-loss for pending Sell Order at Open Price + (2 * Key value).
  6. Take-profit for both orders is calculated similarly to the key value but the current price should be multiplied by 100 and then rounded.
  7. Place a Trailing Stop to both order at 2.5 * Key value.
  8. When one of the order get triggered, cancel the other untriggered order.
Let's look at an example of a EUR/USD H4 chart below and how these values should be calculated.
  1. The current price is 1.4810 and the current candle's open price is 1.4832.
  2. The price is quoted with 4 decimal places. Therefore, the "Key Value" is calculated as 1.4810 * 10 = 14.8. Rounding it results in 15 pips.
  3. Pending Buy Order is calculated as 1.4810 + (2 * 15) = 1.4840.
  4. Pending Sell Order is calculated as 1.4810 - (2 * 15) = 1.4780.
  5. Stop-loss for pending Buy Order is calculated as 1.4832 - (2 * 15) = 1.4802.
  6. Stop-loss for pending Sell Order is calculated as 1.4832 + (2 * 15) = 1.4862.
  7. Take-profit for both pending orders is calculated as 1.4810 * 100 = 148.1, which is
    148 pips after rounding up.
  8. Therefore, the Take-profit for pending Buy Order is set to 1.4840 + 148 = 1.4988.
    The Take-profit for pending Sell Order is set to 1.4780 - 148 = 1.4632.
  9. Finally, the Trailing Stop for both orders are set to 2.5 * 15 = 37.5, which is 38 pips after rounding up.

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7 Comments:

Anonymous,  30 October 2012 at 20:45  

Thanks for this interesting post, does it work with all brokers? Like ECN broker IC Markets?

Austin,  30 October 2012 at 21:44  

Yes it does. Try it out and see its results!

Anonymous,  4 November 2012 at 06:53  

Thank tou for this strategy. But on what moment you have to place the pending orders?

Austin,  4 November 2012 at 19:57  

Your orders must be placed before the candle in question closes. For example, if you are trading the H1 chart, wait for the candle to move for perhaps 55 minutes so that the high and low are created. Then calculate the required levels and place your pending orders before the candle closes. Cheers!

Anonymous,  5 November 2012 at 13:09  

Very interesting strategy. But I have a question about it. You have to place 2 pending orders just before the close of every candle? And without deleting the previous orders if they are still untriggered?

Austin,  5 November 2012 at 19:52  

You are not going to place orders on every candle. That would be too risky and doubling up your trades. Choose one candle and place your orders based on that candle. Then wait for one of your orders to be triggered.

Anonymous,  9 April 2015 at 03:28  

Is this strategy profitable or loosing in the long term?

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