Psycho System on M15

To add comments, please log in or register
Nadeem
1852
Nadeem  

The Psycho system is an interesting system which can easily be implemented by any one who is familiar with the forex trading. It uses 2 of the pospular indicators which are the Bollinger Bands and the Awesome indicator. However, this method is not applicable at all times when the markets are open but is to be used only in the TOKYO/ASIAN sessions and the LONDON session. By using this method, we will be targeting 75-100 pips per trades and we will be using a minimal stoploss of 10pips plus the spread. As you can see, the Risk/Reward ratio is very appealing. It will take a number of losing trades to cover 1 winning trade and this is very good. The Psycho system is designed to work with the 2 big movers which are GBPUSD and GBPJPY. Open up your chart and set it as follows:

1. Place the bollinger bands indicator with standard settings (20,2, close).

2. Awesome Oscillator with standard settings.

After you are done, save a template of the chart setup so that you can apply it to the charts at any other time you want to trade the system and do not have to apply the indicators manually all the time.

In this system, we are going to make use of PSYCHOLOGICAL levels as trigger for our trades. You are just asking yourself 'what the heck are these??' ... these levels are just levels in the market where there are large number of orders waiting to be filled by big institutions and market participants. These psychological levels are usually the price levels which are whole and half numbers like 226.50, 99.00, 110.50, 2.0150, 1.0900 and so on. These are big psychological levels which institutions and banks will be watching and trying to control. Once they control a level, price will keep going higher and this level will become a support level. When the other party gain control of this psychological level, then the level becomes a resistance level. You do not need to grasp all these details at all to trade this system, just remember that psychological levels are price levels ending with x.xx00 or x.xx50 .. this is the only thing you need to know and these levels are found above and below the current market price. They are always there and we do not even need to hunt for them.

When to BUY

1. When price moves to a PSYCHOLOGICAL level (support), then retraces and CLOSES ABOVE the level - we will call this candle, CANDLE 'A'

2. The next candle after CANDLE 'A' should close 5-8 pips ABOVE CANDLE 'A'

3. Awesome Oscillator should be GREEN on CANDLE 'A'

4. WAIT for price to close ABOVE the UPPER band of the bollinger band which indicate overbought territory.

These are the rules the need to be watched and observed very closely. None of them should be burnt for the system to work as it should, especially the number 2 and the number 4. Once all the rules has been fulfilled, you can go ahead and open a buy position. Place stoploss 10-15 pips below the entry price and place your TP at 75-100 pips.. you can use a 50 pips trailing stop and watch the trades so that you can catch some more pips. Below is a screenshot of a buy signal generated by this method.

I have made this illustration above just to give a better idea about how the system should look like when we have a trade signal, however I have made it on a H1 chart, but you should be using M15 chart and not H1.. Keep this in mind.

When to SELL

1. When price moves to a PSYCHOLOGICAL level (resistance), then retraces and CLOSES BELOW the level - we will call this candle, CANDLE 'A'

2. The next candle after CANDLE 'A' should close 5-8 pips BELOW CANDLE 'A'

3. Awesome Oscillator should be RED on CANDLE 'A'

4. WAIT for price to close BELOW the LOWER band of the bollinger band which indicate oversold territory.

Once all the rules has been fulfilled, you can go ahead and open a buy position. Place stoploss 10-15 pips below the entry price and place your TP at 75-100 pips.. you can use a 50 pips trailing stop and watch the trades so that you can catch some more pips. You can also move the stops manually to the most recent support line which develops in an attempt to give the trades more room to breathe and to catch more profits from the moves.

Final words...

This system should be working neatly and nicely if all the rules are observed carefully. However, as with any other trading system, there are bad trades as well the rule 2 is very important to filter some of these bad apples. Once your trades are in profit of around 30-40 pips, make sure you move your stoploss to breakeven or to +10 pips so that, if the market reverses suddenly, you can still come out with some pips in profit.

I have to tell this again and again, no trading system are foolproof and there are always these bad trades, you need to overcome them with good money and greed management. Also, make sure you open a demo account and practice this trading system for a while until you become well acquainted with it and at this point, you can decide whether you are comfortable with it to move on live account or not. Comments and suggestions are welcomed.. have fun and good luck...

All thanks to mazda123 for sharing this.

xwtsx
3
xwtsx  

Thankssssss

ForexNaija
44
ForexNaija  

Thanks for sharing. Very useful

sumerchandjain
7
sumerchandjain  

where download

flowerhorn
7
flowerhorn  

There's nothing to download. To use the system, just use the indicators available in metatrader.

roland984
26
roland984  
bossxero:
When to BUY 1. When price moves to a PSYCHOLOGICAL level (support), then retraces and CLOSES ABOVE the level - we will call this candle, CANDLE 'A' 2. The next candle after CANDLE 'A' should close 5-8 pips ABOVE CANDLE 'A' 3. Awesome Oscillator should be GREEN on CANDLE 'A' 4. WAIT for price to close ABOVE the UPPER band of the bollinger band which indicate overbought territory.

according to the illustration, did you mean:

1. When price moves to a PSYCHOLOGICAL level (RESISTANCE), then retraces and CLOSES BELOW the level - we will call this candle, CANDLE 'A'

2. The next candle after CANDLE 'A' should close 5-8 pips BELOW CANDLE 'A'

-then it would make sense according to the picture you attached.

Anyway thanks for the idea seems like a good system I will try it

ttimpain
5
ttimpain  

Psycho system is an interesting system that can be easily implemented by anyone who is familiar with foreign exchange transactions. Uses two indicators that are pospular Bollinger Bands and impressive. However, this method is not applicable at all times when markets are open, but should only be used in the Tokyo session in Asia and the London session.

flowerhorn
7
flowerhorn  

Hope Bossxero would confirm Roland984 post. It does make more sense and tally with the chart with Roland984 comment.

roland984
26
roland984  

I´ve tried to find some situations where all these things work together described in Psycho system M15. It seems like these situations are really rare.

To add comments, please log in or register