IB Forex Trading - 40 to 100 Pips per Day

This forex system is very simple and requires only one indicator. The system works in anytime frame and with any pair. The Indicator you need is Slow Stochastic setting 8.3.3 some platforms will only allow 8.3 that’s ok.

Next the key part of the system in all trades is the INSIDE BAR or IB. An IB is simply when the current bar is less than or equal to the bar to the left of it. The inside bar can also be the same size as the previous bar.

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THE INSIDE BAR is a standard technical analysis pattern; however most people over look it. You can also use an outside bar or OB.

HOW TO TRADE THE IB
First look for an IB to form then check if it’s a valid IB with the stochastic indicator set up.

STOCASTIC INDICATOR SET UP
When stochastic are below or around the 20 and oversold and starting to hook round look for an IB to go long, When stochastic are up to 80 and above and starting to hook round in overbought look for an IB to go short you will find them the best in trending markets also range bound markets but if the price action is choppy stay out.

The Stochastic don't have to be exactly 80-20 but it is stronger signal if they are. Sometimes as an example they may at 35 as long as they start to turn and hook up and an IB forms it’s a possible valid trade.

ENTRY
To enter a trade wait for the next bar after the IB to go up 1-2 pips higher than the IB for a buy signal or 1-2 pips lower for a sell signal. Also the shadow of the IB must be inside the prior bar as well in the overall size otherwise it’s not a valid signal.

If after the IB formed you get another bar the same size as the IB and it doesn’t go 1-2 pips either way then you may look at up to 3 more bars after the IB bar to confirm a signal and enter a trade. If you don’t get a signal stand a side and wait for a new IB to form.


STOPS & EXITS
For stops and exits you can trail a stop at the bottom of the prior bar to the IB by 1-2 pips if you’re more Aggressive 2 bars below the prior bar to the IB.

Exit when stochastic cross in the opposite direction but becarefull when going long as when stochastic hits 80 it can hang around a while first before carrying on up or just staying flat in a strong up trend so wait for a hook down and heading under the 80 level or a reversal candle to exit. Also to exit look for the big numbers if you were trading GBP/USD. Try not to enter trades around the big numbers wait for price to go through and retrace to the support or resistance then look for an IB to form and take the trade.

I look at a 1 hour chart first and see what the over all trend for the day is going to be then trade off a 15 min chart for the day.

One of the benefits of this System is it can get you into trades early before the crowd. Once you have demo the system how would you like to trade live


James
Master Contributor and Member of BabyPips.com Forum