M1 Countertrend Scalping Strategy

You can find the complete cpfleger template and ruleset here: https://www.forexfactory.com/thread/...3#post14318063

Warning/Introduction: This is a very aggressive/cautious strategy, so do not trade with money you cannot afford to lose. Also, I am not the original creator of this strategy! I just thought this would be a really interesting experiment to share and study since most online systems preach the mantra "trends are your friends" but in my experience this is not true (most of the time). The owners of this strategy claim that it can generate consistent profits over time and that it will "join the 1%" club, so I believe these big claims should be put to the test.

Main business premises:

1) We know that price fluctuates most of the time, so it makes sense to capitalize on this type of trend and/or momentum movement.
2) We know that prices are difficult to say accurately "in time" , so we use more "loose" entry rules (on average) to avoid headaches (and losers).
3) We know grid systems tend to break and burn accounts, so we add price action to the formula and try to gain an "edge" in the market.
4) Assumption: Breakouts and trends are short-lived on the lower timeframes (defined by 9, 20 and 50 EMA hits).

Time frames and chart settings: EURUSD, GBP/USD, M1 (one minute) charts. Please note that the spreads should be low enough for this to work (I recommend the IC Markets Standard account with the highest available leverage). Inserting 9, 20, 50, 200 period EMA and volume indicator with 20 MA overlay for reference (see example):



rule:

1) Avoid trading “before” or during news releases.

2) Stick to lower time frames, one chart at a time (M1, M5).

3) Entries:

a) First buy: The closing price is below All 9, 20 and 50 EMAs are "good enough" distance from these averages (further distance = higher profit).
b) First Sell: The closing price is above All 9, 20 and 50 EMAs are "good enough" distance from these averages (further distance = higher profit).

NOTE: What is a "good enough" distance is up to you and depends on current market conditions (volatility and structure). You can use support and resistance, swing indicators, demand/supply zones, volume strength, wave theory, and more. I recommend you use simple support and resistance (horizontal levels) and volume readings to determine this (it will become clearer when you look at the example below).

VERY IMPORTANT: Do not trade if price is still "stuck" between EMAs.

4) Re-enter the market: If the price goes against your position, start placing new orders against the trend. The re-entry signal is the 9 EMA crossing your latest order level , see example:



Note: The main premise is that the longer the breakout lasts, the greater the chance of price returning to the "mean" represented by the EMA. If you don't have a breakout, you should profit on every move with this system, as you are most likely in a range (countertrend strategies work best).

5) Exit: You can exit with profit once the price hits the nearest EMA (could be the 9, 20, 50 or 200 EMA).

In volatile/slow markets, the 20 EMA is a great choice. If you are caught in a breakout and have multiple losing positions, you may want to wait for the 50 EMA or 200 EMA to be hit, as most of your trades will be profitable by then. There are rare cases where the 9 EMA hit is a better option (ie: when you caught most of the top or bottom after the breakout):



important! Don’t let a deal happen while you’re distracted, or worse: overnight!

6) Quantity and discretion:

a) If volume is above the 20 moving average, the price may still have enough momentum to continue in the current direction. You may need to use weakening volume (safest) or increasing volume (risky) to enter a new position. Both are possible, it mainly depends on your risk appetite and trading experience.
b) Other minor moving average crossings above/below the 200 EMA will often result in volatility, so do not over-leverage in these situations.
c) You may need to use price action (ie: bars) and/or other types of information such as: wave theory, support and resistance, swing bands, volume, etc. to try to call tops and bottoms to open new positions. However, remember that "simple works best", primarily if you are a trend decline/breakout trader and wait for the "mean reversion" phenomenon.

Here is a video of the strategy in action, including examples of severe trends/breakouts. Although you should remember that the main idea is to trade within (most of) the range:



Example:

*Example 1 (Easy long trade):

- Input/Settings


- quit


* Example 2 (another simple long trade):

- Input/Settings:


- Exit, and more hypothetical settings:


*Example 3 (Tough breakout/trend):

- Entrance and other potential settings:


- Example of resuming trade:



- quit:



Please tell me what you think and your experience with such a system.