Strategy Idea: Panic and Recovery

How about this for a strategy.

Panic Recovery 1: If there is a sudden spike in the market, assume there will be a retracement. Open position if the price moves a lot (standard deviations or pips based off range of previous n bars)… Once we have a close that closes lower than the open of the previous bar (or vice versa), the price has turned so open the position expecting a retracement.

03/02/2012 07:00

Panic Recovery 2: Market panics in response to some news. The price might crash (or rise) 5% in one day (or session) so expect a reversal. Can also use standard deviations?

  • When a new session/day/bar starts, if no position is open, calculate 5% from the close of the previous session/day/bar. If the price moves past this, enter an opposite position
  • Set a stop loss at 0.5%?
  • In the next bar, we expect it to move back at least 1 or 2%. If so, take profit.
  • If a position is open when a new session/day/bar starts, close the position.
    • Subscribe to tick data (to execute) and hour data (to recalculate entry point)
  • This might only work on the sell side?
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  1. Pingback: Standard Deviation and Z-score | MooMoo Forex Trading

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