Bossilator Trade « Trading Heroes – Forex Trading Blog by Hugh Kimura

May 6, 2010 - EURCAD 1H Anti-Bossilator Trade

I got stopped out on my last Bossilator trade for a tiny loss. However the Bossilator was still red, so I decided to look for another entry. During this time however, the markets were really nervous about Greece and I felt that the EUR had a very bearish bias.

I decided to ditch the Bossilator and do the opposite, sell. Price jumped up to the previous support level and I thought that would be a good opportunity to short, in case there was a freefall. I didn’t want to be long in a market with such bearish fundamental bias.

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Again, this was a discount price and allowed me to set my stop loss on the other side of the former support level for a very small loss.

Price initially moved down and things were starting to look good. It had moved enough that I decided to move the stop down to +5 pips so no matter what happened, I could go to sleep and I would almost be guaranteed 5 pips profit.

The markets then proceeded to go nuts. Hogs got slaughtered and stock markets everywhere went to hell in a hand basket.

But guess what? I got my 5 pips. It was only a +0.005% gain on the account but that is better than losing money.

My call on the direction was ultimately correct as you can see on the chart. However, the pain that I would have had to endure would have been substantial and I am glad that I moved my stop down to +5 pips. On to the next trade!

May 3, 2010 - EURCAD 1H Bossilator Trade

Here is one I don’t do to often, but this was a good setup, so I decided to take it. In the Bossilator Trade, we are looking for the Bossilator Indicator at the bottom of the screen to turn green (good setup) or red (even better setup) because price has been away from the 800 simple moving average (white moving average) for longer than is statistically normal. In that case, we want to trade back to the 800 SMA.

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I also like to look for a support/resistance level in the opposite direction because that gives me an opportunity to get in “cheap” and manage the risk by setting a stop loss below/above the support/resistance level.

In this case, there was a pretty strong support level. So I went bargain hunting and bought one lot near the lows of that range. My target was just before the previous high, giving me a good risk/reward ratio.

My plan was to stack up to four positions if price went up, but if price went down, I would just let my stop loss be hit on the one position.

Price broke the level and hit my stop loss for a -0.6% loss. That is the good thing about bargain hunting these Bossilator Trades. I can get in cheap and take a tiny loss. If I was able to stack my full four positions, then I would have probably had a gain of 2-3%. I will take that risk/reward ratio any day.