Monday, October 13, 2008

The First Bar Trade.....Monday


The actual rule that I use or found during 27 years of solid research is simple. After the first 3 minute bar is printed, which occurs at 9:34am ET by the way, then this setup bar is used to trigger a trade.

LONG: If the high of the setup bar is taken out without taking out the low of the setup bar, then go long.

SHORT: If the low of the setup bar is taken out without taking out the high of the setup bar, then go short.

EXCEPTIONS: If the bar following the setup bar does not take out either the high or the low of the setup bar, the setup is valid until one side is taken out. These bars are called inside bars.

If inside bars follow the setup bar and then an outside bar is printed, the FBT is voided.

Today the second bar took out the high by a tick and also took out the low by 3 ticks and therefore there wasn't a valid FBT today. So we wait for tomorrow..... :)

10 comments:

simon said...

What confuses me is at the first break of the high of the first bar
a long trade was not triggered. At this point the low of the first bar had not been triggered, to form an outside bar. Was it the case that though the high of the first bar had been exceeded the market moved too quickly down to form an out side bar before a fill was possible on the long side?

Thankyou

Simon

Bob and Cathy said...

Hi Dennis,
I trade FX which is a 24 hour market. I love this FBT idea but what bar at what time do I choose?
USD/CAD is my choice du jour.
Thanks for any ideas.

Anonymous said...

Hi Dennis,
I am a little slow so forgive me. The 1st bar had a hogh of 946.75 and a low of 942. I went long @947 and got stopped out at 941.75.

Where did I go long. I thought the rules were pretty simple...buy the B/O with a stop at the other end of the bar. Please explain as the pain is terrrrrible!

Thank You,
Charles Miller

Sport said...

Well, the rules are simple.....you have a setup bar, and when the high is taken out WITHOUT taking out the low, you go long.

BOTH the high and low was taken out on the second bar and voided the setup.

And no pain...no gain.

Michael said...

Hi Bob and Cathy,

I don't trade FX but if I were trading them I would do a study on how USD/CAD reacts on the open of all of the major markets like US / European. If the currency is very active on the open of either of these markets I would apply the same FBT rules then run a study to determine profitability.

Hope this sparks an idea or two.

Hi Dennis hope your feeling well!

primo

Bob and Cathy said...

Ok, so I will just assume that the bar I am working with would be 9:30am. In 3 minutes FX hardly moves....but I am going to try this out for giggles.

greg said...

so to clarify.determine high and low of first bar.on second bar watch for a break of high or low without the other side being taken out on same bar(trigger direction bar).then on third bar enter at bar open in direction of breakout(entry bar).exceptions are if second bar has high and low taken out by at least one tick then the trade is a no go.also if the second bar is an inside bar then wait for a non-inside bar to determine direction and enter on open of next bar.does this sound about correct? is there a limit to inside bars before the trade becomes too high risk and is void?

Anonymous said...

so to clarify.determine high and low of first bar.on second bar watch for a break of high or low without the other side being taken out on same bar(trigger direction bar).then on third bar enter at bar open in direction of breakout(entry bar).exceptions are if second bar has high and low taken out by at least one tick then the trade is a no go.also if the second bar is an inside bar then wait for a non-inside bar to determine direction and enter on open of next bar.does this sound about correct? is there a limit to inside bars before the trade becomes too high risk and is void?

Anonymous said...

is there any statistics available on first bar trading? win/lose

greg said...

so to clarify.determine high and low of first bar.on second bar watch for a break of high or low without the other side being taken out on same bar(trigger direction bar).then on third bar enter at bar open in direction of breakout(entry bar).exceptions are if second bar has high and low taken out by at least one tick then the trade is a no go.also if the second bar is an inside bar then wait for a non-inside bar to determine direction and enter on open of next bar.does this sound about correct? is there a limit to inside bars before the trade becomes too high risk and is void?