In the first a part of this series I defined the “Flying Buddha” candlestick sample which may be used to exchange Forex profitably. In this 2d element I will explain strategies you may use to decorate the profitability of this access technique. I can even compare returned take a look at consequences with results of another similar entry method and we can see whether or not there may be something unique approximately trading the “Flying Buddha” pattern.
Testing the “Flying Buddha” Pattern
Let’s start by means of taking a examine again test consequences. A lower back test became carried out from 2002 until the give up of 2015, which is a complete of 16 years overlaying many varieties of https://fxexness.net/login/ marketplace conditions. The currency pairs tested were the seven main USD foreign money pairs. Hypothetical trades have been taken following “Flying Buddha” candlesticks on the H4 London time chart handiest if the charge became above its stages from three months and 6 months ago (for lengthy trades), or below its tiers from three months and six months ago (for brief trades). Entries had been located 1 pip beyond the “Flying Buddha” candlestick, with stop losses placed just the opposite side of the candlestick, or if the preceding candlestick prolonged past that, then just the alternative facet of that preceding candlestick.
When trading the “Flying Buddha” sample, the entry candlestick turned into the very last candlestick of the trading week, it changed into no longer taken and become excluded from the outcomes. If a change access become not induced at some point of the very next candlestick following the “Flying Buddha” candlestick, then the change become cancelled.
During the length covered via the lower back check there were five,307 hypothetical trades. The hypothetical consequences are shown inside the desk below, in overall and by way of forex pair, in the form of expectancy according to exchange at distinctive reward to risk profit targets.
Flying Buddha Pattern
It is simple to look that the technique had a fantastic expectancy that increases with the scale of the income goal all of the manner up to a praise to threat ratio of one hundred to at least one!Let’s evaluate the ones effects with the end result of a back take a look at protecting the identical foreign money pairs and time period, however the usage of a exceptional access method: simply the use of the next candle damage of any candlestick that made a low beyond the previous 4 candlesticks in an upwards trend, or vice versa in a downwards trend. There were 6,482 hypothetical trades, i.E. About 20% extra trades than there were in the “Flying Buddha” take a look at.
Flying buddha through forex pair
If we examine the headline outcomes of all the hypothetical trades taken trading the “Flying Buddha” pattern, we see that this access method became a bit advanced to the much less discriminating entry approach, but there isn't truly a remarkable deal in between the two techniques. This is right information, as it indicates you have exceptional entry methods that can be used to profitably take advantage of tendencies!
Now allow's destroy these effects down similarly. Is there a brilliant distinction among the “Flying Buddha” entries that appeared at distinct instances of the day? The instances shown inside the table under are London instances:
It is apparent that the 3 excellent instances to go into a trade are at some point of the four hour durations that start at the hours of darkness London time (which is also nighttime UTC, or very near it), after which later at noon and 4pm (which correspond to the primary -thirds of the New York enterprise hours, such as the London/New York overlap).
Before we try to attract any conclusions in trading the “Flying Buddha” sample from this, permit’s check the back check effects from the other access approach, additionally broken down through time intervals:
We can see that noon and 4pm appear to be top times to enter trades here too. However nighttime looks a good deal worse and 8pm an awful lot better. This is probably because of an impact due to a totally robust pass taking region simply earlier than the New York close, which would be likely to provide a “Flying Buddha” candlestick finishing in the dark London time. This impact might be generating a fast reversion to the mean.
Candlestick Range
Another clear out that might be useful whilst trading the “Flying Buddha” pattern is time of day by forex pair. The tip right here is first to keep away from buying and selling the USD/CAD pair among middle of the night and 8am. This truly stands out as the most important variance via time of all the currency pairs examined right here. It makes feel as the Asian consultation is well outdoor the commercial enterprise hours of the USAA. Or Canada.
One very last clear out to recollect is the dimensions of the “Flying Buddha” candlestick itself, or extra specially, the range among the alternate access stage and its prevent loss. After all, as the profit goals are defined by means of reward to threat, a smaller candle that offers 200 pips maximum profit will be more worthwhile than a larger candle that gives 300 pips earnings as the use of a regular risk per exchange might produce extraordinary function sizes. Let’s study profitability by means of the stages of the entries for the “Flying Buddha” trades:
Looking on the stats, there may be absolute confidence that the smaller candlesticks or two-candlestick combos do produce more profitable consequences than the overall average where the variety is less than zero.50% of the fee of the currency pair. However, note how the simply large candlesticks that represent more than 1% additionally generally tend to produce advanced effects, because such huge fast movements which have already snapped again towards the moving averages are probable to maintain in that path.
Conclusion
There is lots of tried and examined material here in this article to build a entire, lengthy-term trend trading approach. Exact access techniques aren't so very vital, what's greater essential as a substitute is sticking to a plan for entry and taking each possibility that comes alongside because in fashion trading, it's far crucial now not to overlook the big winners, even when the set-up does not seem to be of particularly excessive excellent.
Remember that in the Forex market, it's far pretty viable to not get any lengthy, robust movements for pretty a while, so it is important to take profits right here and there, regularly, because in case you sit tight watching for the big 1,000 pip winners, they will not come for a yr or so.