Rainbow Squeeze | Forex Indicator Download - MT4/MT5 Resources - MetaTrader 5 Resources
Hello everyone. Thank you for visiting.
The system "Rainbow Squeeze" is based on the belief that the (hourly) candlesticks will "climb" or "fall" along the edge of the Bollinger Bands, as the Bollinger Bands expand after running parallel for a period of time.
I developed this system directly from the brilliance of the "Pivot Point Squeeze, High Probability System". I recommend reading this thread if you haven't already, for two reasons: 1. It's better than mine, 2. It gives you a better idea of where my system comes from. I started using these ideas in different ways on this system, to the point where I felt like I wasn't staying true to the intent/direction of the thread.
I don't trust the great templates or indicators I used and posted here, both were designed by other FF members who are obviously much smarter than me... J
Oh yeah, one more thing before I get into the details - I'm trading with a micro account and only trading with money that I can afford to lose (but hopefully not! Please do your own due diligence before making any trades!
Ok, this is my system:
I have never put more than 2% of my equity into the market.
I have never, and I mean never, changed my stop loss.
I will only enter a long trade if:
Candles of the last hour pierce the upper light pink upper band and
Price is above the daily pivot point (even better if it has been broken recently) and
The price is above the moving average and
MCAD is above zero and its bars are bigger than the previous hour (it would be better if it breaks zero during this hour) and
Before that, the Bollinger Bands were more or less in parallel channels (the longer the better) and/or
The Bollinger Bands have just been squeezed and are now starting to expand.
If the above were reversed, I would enter a short trade.
I would set a stop loss, approximately 30 pips, at least 10 pips from the daily pivot point in the opposite direction of my trade.
Exit strategies vary widely and are arguably the least developed part of the system. Currently, I am looking to take profits at the daily support line (1,2 or 3) or resistance line (1,2 or 3). For example, if I buy immediately after a currency pair breaks the daily pivot point, I will either take profit at R1 or sell half of it at R1 and let the rest run to R2. When the hourly candle begins to lose contact with the Bollinger Bands, it signals the end of the trade.
Got it?
Now for some additional details -
The system seems to work best on E/Y and also works well on E/P and Cable. It works differently on different pairings, and I haven't experimented with it often enough on too many other pairings to know how well it works.
When I move up 15-30 pips (depending on volatility), I adjust my stop to breakeven plus 1.
I consider a signal "stale" if it's three hours or more old and I haven't entered yet.
In some cases, when the price is well above or below the daily pivot point, but the signal still looks good, here I will use a moving average or S&R line to place a stop loss.
The closer the moving average is to the daily pivot point at which the signal occurs, the better.
Be extremely careful if the signal occurs during a major news release - it is best not to use this system in the news.
Are you still with me? ...
There is one more important point:
Theoretically, there is an "optimal" bandwidth that signals when price action is about to make a decisive move. When I say "bandwidth" I mean the distance from the lowest upper Bollinger Band (in points) to the highest lower Bollinger Band. This optimal bandwidth changes over time and across currency pairs. Generally speaking, however, the tighter the bandwidth, the better. When bandwidth is very tight, colored Bollinger Bands start to mix and look white-hot - this is an "excellent" sign that a major and decisive price move is about to happen, but it doesn't happen very often.
As with (probably) all systems, you can increase your success rate if you are aware of the overall market direction while you are trading.
To use this system you must have MT4 and add the indicators and templates listed in my next article.
Well, if you're still with me...I'm impressed
A picture is worth a thousand words, so soon I will be posting some MT4 screenshots to give you a better idea of how my system works (no pun intended, really!). I don't claim to be a guru, but have received a lot of great ideas from FF and want to give something back. I will post photos of some of my trades over time so you can see how I use this system. But please note that they don't come every day and I have a day job - so sometimes there can be some time between positions.
Cheers to everyone and good luck with the deal.
The system "Rainbow Squeeze" is based on the belief that the (hourly) candlesticks will "climb" or "fall" along the edge of the Bollinger Bands, as the Bollinger Bands expand after running parallel for a period of time.
I developed this system directly from the brilliance of the "Pivot Point Squeeze, High Probability System". I recommend reading this thread if you haven't already, for two reasons: 1. It's better than mine, 2. It gives you a better idea of where my system comes from. I started using these ideas in different ways on this system, to the point where I felt like I wasn't staying true to the intent/direction of the thread.
I don't trust the great templates or indicators I used and posted here, both were designed by other FF members who are obviously much smarter than me... J
Oh yeah, one more thing before I get into the details - I'm trading with a micro account and only trading with money that I can afford to lose (but hopefully not! Please do your own due diligence before making any trades!
Ok, this is my system:
I have never put more than 2% of my equity into the market.
I have never, and I mean never, changed my stop loss.
I will only enter a long trade if:
Candles of the last hour pierce the upper light pink upper band and
Price is above the daily pivot point (even better if it has been broken recently) and
The price is above the moving average and
MCAD is above zero and its bars are bigger than the previous hour (it would be better if it breaks zero during this hour) and
Before that, the Bollinger Bands were more or less in parallel channels (the longer the better) and/or
The Bollinger Bands have just been squeezed and are now starting to expand.
If the above were reversed, I would enter a short trade.
I would set a stop loss, approximately 30 pips, at least 10 pips from the daily pivot point in the opposite direction of my trade.
Exit strategies vary widely and are arguably the least developed part of the system. Currently, I am looking to take profits at the daily support line (1,2 or 3) or resistance line (1,2 or 3). For example, if I buy immediately after a currency pair breaks the daily pivot point, I will either take profit at R1 or sell half of it at R1 and let the rest run to R2. When the hourly candle begins to lose contact with the Bollinger Bands, it signals the end of the trade.
Got it?
Now for some additional details -
The system seems to work best on E/Y and also works well on E/P and Cable. It works differently on different pairings, and I haven't experimented with it often enough on too many other pairings to know how well it works.
When I move up 15-30 pips (depending on volatility), I adjust my stop to breakeven plus 1.
I consider a signal "stale" if it's three hours or more old and I haven't entered yet.
In some cases, when the price is well above or below the daily pivot point, but the signal still looks good, here I will use a moving average or S&R line to place a stop loss.
The closer the moving average is to the daily pivot point at which the signal occurs, the better.
Be extremely careful if the signal occurs during a major news release - it is best not to use this system in the news.
Are you still with me? ...
There is one more important point:
Theoretically, there is an "optimal" bandwidth that signals when price action is about to make a decisive move. When I say "bandwidth" I mean the distance from the lowest upper Bollinger Band (in points) to the highest lower Bollinger Band. This optimal bandwidth changes over time and across currency pairs. Generally speaking, however, the tighter the bandwidth, the better. When bandwidth is very tight, colored Bollinger Bands start to mix and look white-hot - this is an "excellent" sign that a major and decisive price move is about to happen, but it doesn't happen very often.
As with (probably) all systems, you can increase your success rate if you are aware of the overall market direction while you are trading.
To use this system you must have MT4 and add the indicators and templates listed in my next article.
Well, if you're still with me...I'm impressed
A picture is worth a thousand words, so soon I will be posting some MT4 screenshots to give you a better idea of how my system works (no pun intended, really!). I don't claim to be a guru, but have received a lot of great ideas from FF and want to give something back. I will post photos of some of my trades over time so you can see how I use this system. But please note that they don't come every day and I have a day job - so sometimes there can be some time between positions.
Cheers to everyone and good luck with the deal.
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