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The Bladerunner Trade

January 28, 2018
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Overview

The Bladerunner is a forex price action trading strategy that makes use of only Price Action to discover trade entries. Even though bladerunner strategy doesn’t require indicators, the RSI, MACD, stochastics or moving averages can be employed to filter potential entry points. However, one of the successful ways to gain from this strategy is by using the 20-day Exponential Moving Average (EMA).
The bladerunner trade and the bladerunner Forex price action trading strategy depends on the superior art of forex scalping price action. The “scalpel” utilized is commonly the 20-period Exponential Moving Average (EMA) or 20 Bollinger bands. Majorities of traders who trade with bladerunner strategy follow either of these. At the moment, there are no established opinions that determine the best one among them; whichever one you decide to use, its fine. In actual fact, you can utilize both to trade the strategy as a Bollinger band EMA strategy. The examples we illustrated in this article utilized the 20 EMA. Also the examples illustrated here are from 5 min charts.

As opposed to the a good numbers of trading strategies, the bladerunner trade can be used to trade any currency pairs and can be traded at any time of the day. However, the most recommended thing is to keep suitable chart handy but the majorities of trader prefer to maintain the 5 minute charts. Although the strategy is best during specific hours and that the bladerunner trades that “match” with the opening of Asian trading sessions usually gain from the rush hour, the strategy can be utilized any time it is most suitable for you and this is what makes it a great forex trading strategy.

The Asian afternoon session may be rather slow and unsuitable for trading the strategy. Again, during the London opening time, the price may be excessively unpredictable and unstable to offer plausible entries for any strategy. Also, after the first outburst of news announcements has receded and the price has normalized, you may obtain another one or two reliable entry again.

What you just need to do is to structure the strategy to when it is best suitable for your trading strategy. If you observe that specific periods of the day appears more favorable to your style of trading, you can just go ahead and apply it at that time of the day. This does not imply that the strategy doesn’t come with any risk at all.

Candlesticks, pivots, rounded price figures, classic support and resistance levels are utilized while trading with this strategy. It doesn’t require off-chart indicators i.e indicators that appear independently under the chart window like RSI, stochastics, MACD and so on. Nevertheless, you can incorporate any of these is you think they are helpful to you or if you want to get a consolidated confirmation before placing a trade. A few traders use it together with Fibonacci levels which are also good.

Why the name Bladerunner?

The strategy is named Bladerunner due to the fact that the 20 EMA used in trading the strategy serves as a knife edge that divides the price. If price rise beyond the EMA, and continues to maintain it, and retests the EMA, it will probably reject making long trading possible. When the price is below the EMA, and maintains it, and afterwards retests the EMA, it would probably reject to the short side. The chart examples below illustrate this:

Figure 1

Figure 2

Figure 3

If price is lower than the 20 EMA, the trader’s bias is short and he or she would wait for price to go up and touch the 20 EMA, rebuff and afterwards move down.

Nevertheless, if price cut across the 20 EMA and closes persuasively on top of it, we consider price to have switch polarity and in this case our bias is changed to long. (This occurred at the right side of the figure above. At this point the trader would be searching for the time when the price would go down and touch the 20 EMA, rebuff and afterwards goes up.

The diagram below illustrates one clear-cut and one potential trade loss:

 

Fig 4

 

Entry point

 

In order to enter the market with the use of this strategy, you need to consider two significant periods:

  • The price must break out from a trading range before you enter or the price must be trending;
  • The price must after that effectively retests the EMA.

Aggressive traders who engage in scalping and binary option trading usually leverage on the two definite movements this strategy offers.

 

They place a short-term trade when price rises to retest the 20-EMA, and then place another trade when price has efficiently rebuffed towards the first trending direction to double their profits. When a candlestick rebuffs to the 20-EMA, it ought to close in the first trend from which it had come to it.

 

How to figure out a successful retest? 

If price is beyond the EMA it has to rebound from and remain higher than the EMA. The opposite is the case when price is under the EMA. To be precise, the first candle that strikes the EMA must close on the related side of the EMA from where it reached it. Once, this occurs, it becomes a clear signal.

Price has at this point rejected from the EMA and the trader should look if the subsequent candle provides confirmation for the move. If the subsequent candle maintains the movement away from the EMA, this serves as the confirmatory candle. This is an easy way to trade the strategy.

However, to be safer, you may want to wait for a forex candlestick formation to occur to confirm the trade. Also, it may be safer to enter when you have additional reason to trade in addition to the bounce from the EMA like if it happens before support or resistance level, or at a pivot point.

Placing the order and Signals to be looking for

 

When the price is above the EMA, a your bias will be long, so what you should look for is for the price to drop and touch the EMA, rebuff from it and move in the upward direction. Conversely, if the price cuts through the EMA and closes near it, you may take it that price has likely reversed its polarity. In this case, the bias is reversed to short.

 

Here what you should be looking for is the price to rise and touch the EMA, rebuff from it and afterwards move to the downside. Nevertheless, if the price cuts through the EMA, the opposite is the case. It has possibly reversed its polarity and the bias is currently altered to long.

It is recommended to open two orders when trading this strategy. The rules for trading each of the orders are presented below:

Long entry

  • Place two stop orders to buy with the entries two to three pips higher than the confirmatory candle;
  • Place the shielding stop two to three pips under the signal candle, which hit the EMA;
  • Orders expireat the beginning of a fresh candle. For instance, if entering limit orders on the five-minute chart, the orders will expire at the beginning of the subsequent five-minute candle, except they have already been filled by price action on the existing five-minute candle
  • The profit target on the first stop order must be set at a distance, which is equivalent to the risk in pips. For instance, if the risk in the trade is 20 pips, the first order’s profit target will be placed at 20 pips.

 

  • The profit target on the second stop order must be set at a distance, which is equivalent to the risk in pips. Thus, in the above instance, the take profit on the second order will be placed at 40 pips.

Short entry: 

  • Place two stop orders to sell, with the entries two to three pips under the confirmatory candle
  • The shielding stop may be positioned two to three pips on top of the signal candle which hit the EMA;
  • Orders expireat the beginning of a fresh candle. For instance, if you enter limit orders on the five-minute chart, those orders will expire at the beginning of the subsequent five-minute candle, except they have previously been filled by price action on the present five-minute candle.
  • The take profit for the first orderis positioned at an amount equal to the risk in pips. For instance, if the risk in the trade is 25 pips, the first order’s take profit target will be positioned at 25 pips.
  • The profit target on the second stop order must be positioned at a distance, which is equivalent to the risk in pips. If the risk is 25 pips, the profit target for the second order ought to be 50 pips.

 

 

When to STOP sprawling:

Immediately the price has moved in favor of the trade by a figure that equals the original risk, one of the orders is closed because it has reached take profit the first level of profit and the stop loss on the second order is detached to break even. With the use of the examples below, once price moves 20 pips in favor of the trade, the first order is closed and the stop loss on the second order is set to breakeven.

This second order’s stop is after that positioned at breakeven until the market closes the trade, either by attaining the profit target or by ending at breakeven. This is not a hard and fast rule. There are situations you may wish to continue trailing the stop loss beyond breakeven, for instance, during a forthcoming news announcement.

 

Stop-loss and Profit target

 

 

 

Let us examine the 5-minute chart of USD/SEK in the following chart. After the opening of the trading day on June 25th, we started looking for the range high and range low. In the end, the price broke out from the range and attained a fresh higher high. Afterwards, we projected a winning retest of both the 20-period EMA and the earlier range high.

This happened at 9.1500, the middle-sized bear candle on the chart, which is taken as the signal candle, since it closed on the equivalent side from which it came close to the moving average. The subsequent bull candle established the upward trend. Therefore, it turns out to be the confirmation candle. It closed at 9.1555.

After that, we placed two stop orders to purchase, placing the entry point three pips on top of the confirmation candle’s close at 9.1558. The shielding stop was positioned three pips under the signal candle, or at 9.1497. Thus, the entry point is at 9.1558 and the shielding stop at 9.1497 produced risk at the 61 pips. The profit target on the first buy order in this regard is equivalent to the pips risk of 61 pips.

Therefore, we received profit at 9.1619. The profit target on our second purchase order was equivalent to two times the pips risk of 122 pips. Thus, our second position closed at 9.1680. The whole profit on this trade was 61 pips + 122 pips which is equal to 183 pips.

A few useful and important tips for trading with the Bladerunner strategy

  • At all times, search for look for a convergence of reasons to enter the trade. For instance, it’s recommended to have other reasons for entering trade than merely a rejection from the 20 EMA. It is better to look for where it occurs concurrently like the old support and resistance level, pivot level or other noteworthy price impact point.
  • At all times, be on the lookout for imminent news announcements particularly when trading on the lower time frame charts. Avoid entering trade thirty to forty-five minutes before a planned news announcement and for roughly 15 minutes and above before trading.
  • Ensure the price is trending or you’d be in for a huge loss. At all times trade in the direction of the current trend, as shown by the side of the EMA or polarity indicator price is presently on
  • Don’t trade till the price hit the EMA and move the course you projected. If the price action is above the EMA, do not trade till it drops and hit the EMA. Subsequent to that, it should rebuff move higher. Likewise, if the price action is under the EMA, it ought to move to that level and then fall, to be sure that it is a good point to trade with bladerunner strategy.
  • Utilize candlestick formations to verify when price goes up or down to touch the 20-EMA.
  • On candlestick charts, ensure the candle that touched the EMA as well closed on the equivalent side. If this is the case, it serves as the trade and if the opposite is the case, do not trade
  • To be on the safer side, wait to get a confirmation. If the same trend repends itself again, it is the confirmation you are looking for.

Trading the Bladerunner Using the Forex Polarity Indicator

A bladerunner trader views the price charts and compares the real price action with the projected value and correct trades in view of that.

The forex polarity indicator has now been developed and can be found in the Resources Center. For some traders, it is best indicator to trade with bladerunner. It works similar to when you make use of the Bollinger mid-band or the 20 EMA. The band or ribbon or stream produced by the two indicators joined together provides you with something more with which to trade. This is illustrated in the chart below:

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The yellow stream is the forex polarity indicator. It is made up of the 20 EMA and the Bollinger mid-band plotted together. This structure can be configured is you want to try it out.

The white circle shows a morning star that forms at the polarity indicator. If we were to make use of either of the indicators, we could have not taken this as a reliable signal given that it may not have really touched it. This is one benefit of trading with the polarity indicator. You may wish to consider this as an observable sign to launch your bearing.

Conclusion

 

The bladerunner trade is not for everyone and relies mainly on the price action. This implies it gets rid of subjective factors from the trader and makes the trader to lose some control. As good and simple this strategy may sound, remember that there is no hundred percent efficient strategy. Even the best of them all could go wrong. So, be wary as always with every other trading strategy!