"Katana Trading Strategy" - MT4/MT5 Resources
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-- Welcome to Katana Trading System --
It was named the "katana" because it was the weapon of choice for Japan's samurai class, who followed a set of rules that came to be known as the "katana." Bushido "
In trading, having a set of rules is crucial to success.
The system is based on using price bars instead of time-based bars. In my opinion, price bar charts are far superior in some aspects compared to time-based bar charts.
Price-based bars represent price movements and they do not close until the price moves a predetermined number of price increments.
As we know, time-based bars close after a set number of minutes, but we are not trading minutes, we are trading price, and price is what you will pay.
The main advantage of this is that the bar dimensions are the same. Traditional candlestick charting methods, such as outer bars, inner bars, and dojis, have no place on price-based charts, and some may consider this a disadvantage.
To understand the logic behind this trading strategy, it helps to first understand how prices move.
Determining price direction is the first priority.
In the currency market, prices often move like this.
Consolidate between set levels and then move to the next set level. This is basically how prices move. These set levels are usually bound by price levels.
These levels are formed around the entire price figure. The strongest of these levels are the xx00 and xx50 levels. For example 1.3600 1.3650 1.3700 etc. Midpoint price levels like xx25 and xx75 also affect the price, such as 1.3625 and 1.3675.
That's how you have to look at the market. Price consolidation and the movement of prices from one price consolidation level to the next.
To determine the direction of the price, look back at the chart and determine which direction the price is headed. If the price goes from top left to bottom right, it is obvious that the price is trending downward. For simplicity, this process can be simplified using a moving average of price.
The period and type of moving averages are not important, what is important is the direction of these moving averages, and the relationship of price to these moving averages.
Once the direction of price movement is determined, the trading direction is also determined. This is the first priority and determines the direction of the price.
Now I don't want this thread to turn into EA build and test thread. This post aims to demonstrate simple yet effective strategies for trading and making money in this market.
Next learn how price reacts to price levels and the signs to look for when considering entering a trade.
As I outlined earlier price movements in congestion areas, movement from one congestion area to the next is typically bounded by the xx00 xx25 xx50 xx75 levels.
Price will also frequently move between these levels. Once we have determined whether the price is trending and the direction of the trend, the next thing to do is to wait for the price to pull back against the trend direction.
Once a pullback begins and is considered a pullback, the next thing to do is to look for reasons to go short or long.
For the sake of simplicity, I won't talk about price patterns, bar patterns, or anything like that. All I would say is, look at stochastics as a guide to whether a pullback is a pullback, and then look at another stochastic and use that as a guide to whether the trend is likely to continue.
That's the simplest thing.
The price bar makes it easy to determine your exit position. Using a fixed number of pips as an exit is also an option, the reason being that the price bars are all the same size, so once you identify the bar you want to use as an entry bar, you can easily use a fixed number of pips.
Finding a place to exit is also easy, usually the next price level in the market is where the price will react so this is the area used as a take profit.
I will post some charts soon to help understand the logic behind and reasons for entering and exiting positions.
-- Welcome to Katana Trading System --
It was named the "katana" because it was the weapon of choice for Japan's samurai class, who followed a set of rules that came to be known as the "katana." Bushido "
In trading, having a set of rules is crucial to success.
The system is based on using price bars instead of time-based bars. In my opinion, price bar charts are far superior in some aspects compared to time-based bar charts.
Price-based bars represent price movements and they do not close until the price moves a predetermined number of price increments.
As we know, time-based bars close after a set number of minutes, but we are not trading minutes, we are trading price, and price is what you will pay.
The main advantage of this is that the bar dimensions are the same. Traditional candlestick charting methods, such as outer bars, inner bars, and dojis, have no place on price-based charts, and some may consider this a disadvantage.
To understand the logic behind this trading strategy, it helps to first understand how prices move.
Determining price direction is the first priority.
In the currency market, prices often move like this.
Consolidate between set levels and then move to the next set level. This is basically how prices move. These set levels are usually bound by price levels.
These levels are formed around the entire price figure. The strongest of these levels are the xx00 and xx50 levels. For example 1.3600 1.3650 1.3700 etc. Midpoint price levels like xx25 and xx75 also affect the price, such as 1.3625 and 1.3675.
That's how you have to look at the market. Price consolidation and the movement of prices from one price consolidation level to the next.
To determine the direction of the price, look back at the chart and determine which direction the price is headed. If the price goes from top left to bottom right, it is obvious that the price is trending downward. For simplicity, this process can be simplified using a moving average of price.
The period and type of moving averages are not important, what is important is the direction of these moving averages, and the relationship of price to these moving averages.
Once the direction of price movement is determined, the trading direction is also determined. This is the first priority and determines the direction of the price.
Now I don't want this thread to turn into EA build and test thread. This post aims to demonstrate simple yet effective strategies for trading and making money in this market.
Next learn how price reacts to price levels and the signs to look for when considering entering a trade.
As I outlined earlier price movements in congestion areas, movement from one congestion area to the next is typically bounded by the xx00 xx25 xx50 xx75 levels.
Price will also frequently move between these levels. Once we have determined whether the price is trending and the direction of the trend, the next thing to do is to wait for the price to pull back against the trend direction.
Once a pullback begins and is considered a pullback, the next thing to do is to look for reasons to go short or long.
For the sake of simplicity, I won't talk about price patterns, bar patterns, or anything like that. All I would say is, look at stochastics as a guide to whether a pullback is a pullback, and then look at another stochastic and use that as a guide to whether the trend is likely to continue.
That's the simplest thing.
The price bar makes it easy to determine your exit position. Using a fixed number of pips as an exit is also an option, the reason being that the price bars are all the same size, so once you identify the bar you want to use as an entry bar, you can easily use a fixed number of pips.
Finding a place to exit is also easy, usually the next price level in the market is where the price will react so this is the area used as a take profit.
I will post some charts soon to help understand the logic behind and reasons for entering and exiting positions.
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