RBICAO - An Elegant and Reliable Range Bars Trading Strategy
Good afternoon ladies and gentlemen forex traders!
What are we looking for in trading strategies? Accuracy, clear and clear rules, the lack of redundant information on the chart and a non-standard approach. All these qualities are combined in a trading system. RBICAOcombining trading on an unusual form of charts (range bars), the legendary indicators Awesome oscillator and Ichimoku, as well as the basics of Price Action. The cocktail came out surprisingly concise and elegant, - it is not for nothing that the TS has been popular in the West for several years.
Characteristics of the vehicle RBICAO
Platforms: MetaTrader 4, Ctrader.
Currency pairs: AUDCAD, AUDJPY, AUDUSD, EURCAD, EURJPY, EURUSD, GBPAUD, GBPCAD, GBPJPY, GBPUSD, NZDJPY, NZDUSD, USDCAD, USDCHF, USDJPY.
Trading Time: European and American Sessions.
Recommended brokers: Alpari, RoboForex, Forex4you
The idea behind the RBICAO TS
The idea that underlies the strategy is quite simple. It consists in the capture of movement after the flat. As a rule, a breakdown of the channel causes a subsequent strong price trend impulse, it is this movement that we must catch.
Exit from a position with profit taking occurs on divergence, divergence of the direction of movement of quotes with the readings of the Awesome Oscillator (AO) indicator.
It would seem that the idea is nothing new, but much more interesting is the approach to solving the problem, which uses non-standard charts, classic indicators combined with Price Action and support / resistance levels, as well as divergence. As a result, we get a cocktail that hits exactly the target.
Tools of the TS RBICAO
The system in the assembly is as follows (timeframe - M2):
A typical M5 chart looks like this:
The different type of charts is explained by the specifics of forming Range Bars charts. About Range Bars we wrote in detail here.
The main difference between Range Bars charts is that they are not tied to time. In our case, a new bar appears only when the price oscillates by 5 old points in any direction from the closing point of the previous candle. With a smaller range of oscillations, there is no new candle, regardless of how much time has passed - at least 10 minutes, at least an hour. Until the price moves 5 points, there will be no new candle.
Setting Range Bars is as follows:
- In the archive with the strategy we find the MQL4 and templates folders and copy them;
- Folders must be inserted into the terminal data directory and agree to a replacement;
- Restart the terminal;
- After that, open the chart of the currency pair for which you want to build Range Bars, go to the “Navigator” panel, select the “Indicators” directory by clicking “+”, and find the RangeBarChart in the list and drag it onto the chart;
- In the settings, change the PipRange value to 5.0;
- Go to the "File" - "Open offline."
In the list we find the chart “GBPUSD, M2” and click “Open”.
On the chart, right-click, select the "Template" and RBICAO.
After completing all these points, you will see the graph in the form in which it should be. It is worth remembering that the chart to which the indicators are attached to build Range Bars cannot be closed - otherwise the system will stop working.
In addition to Range Bars, there is also an Ichimoku cloud on the chart, about which you can also find a detailed and extensive article on our website. Also below you can see the Awesome Oscillator.
The settings for the indicators are as follows:
- Range Bars - 5 points;
- Awesome Oscillator - standard settings;
- Ichimoku Cloud - 9, 16, 26.
RBICAO Strategy Login Rules
A short trade is opened by a pending Sell Stop order under the conditions:
- Awesome Oscillator oscillator crosses the 0 (zero) mark from top to bottom - the bars of the histogram go from the positive to the negative range of values;
- Closing Range Bars under the cloud below the “color zone”;
- Breakdown of the support level built at the nearest local extremum
- Optionally (optional rule) - we enter only after the price rollback according to the rule of 1-2-3 pattern.
A pending order should be placed just below the level.
A long position on the selected currency pair (buy) is opened by a pending Buy Stop order under the conditions:
- The transition of the column of the histogram of the Awesome Oscillator oscillator from negative to the positive range of values (crossing the zero mark from the bottom up);
- Closing Range Bars above the color zone of the Ichimoku cloud;
- Breakdown of the resistance level built at the nearest local extremum,
- At will (the author does not apply this rule) - entry after the formation of the 1-2-3 pattern.
A pending order is placed above the breakdown level.
Transactions are not recommended during the release of important news - it is advisable to stop trading for half an hour and continue it also after a half-hour wait. The significance and time of publication can be seen in the economic calendar on our website. Three marks are a sign of a ban on trading according to the RBICAO strategy.
The author of the strategy does not use the 1-2-3 pattern for entry, enters when a breakdown of the nearest local level occurs (if there are other signals for the transaction)
Standard Money Management - 1-2% risk per trade. The specific position size can be calculated using the lot calculator on our website.
Stop Loss and Take Profit
We set Stop-loss for a local extremum, but it should not exceed 20 points.
From the point of view of exit from the Take-Profit strategy, here is absolute freedom of action. You can exit by AO when the color of the histogram starts to change and the indicator itself moves in the opposite direction:
Other options are returning the price to the cloud or crossing the Kijun line, indicated in blue, as well as on the divergence signal AO. The latter option is most often used by the author of the strategy.
Try to take Take-Profit more Stop-loss. When moving in our direction, you can reduce the stop and transfer the transaction to breakeven.
Examples of transactions
As examples of applying the strategy, we can consider several inputs of the author of the RBICAO trading system.
The search for the entry point starts from the moment when the AO crosses the zero mark (1), then the price goes up to the Ichimoku cloud (2). The author draws the nearest local level and enters its breakdown (3), without waiting for the 1-2-3 pattern. Such inputs are also justified, but if you want more confidence, you need to wait 1-2-3. It turns out the author is at a level where the price hustled for a long time under the middle line of Ichimoku. As a result, we managed to get 59 points.
In the second example, the author exits on a divergence signal on the GBPNZD pair. The signal search begins with the traditional indication of the AO indicator crossing zero (1). After the Range Bar exits above the Ichimoku cloud (2), the trader determines the resistance and enters the breakdown of the local level (3), again without waiting for the 1-2-3 pattern.
Another example of the GBPUSD instrument. The price crossed the AO and the Ishimoku cloud, the author, again, established a breakdown of the local level without 1-2-3 and went into divergence.
In the following example, for a change, the author enters and goes into divergence:
When using the RBICAO strategy, difficulties can arise in areas of the flat where the Awesome Oscillator indicator shows many intersections of the zero line.
Consider a complex example on the EURUSD chart. Here, several false signals are clearly visible, from which the mandatory level breakdown filter saves from following.
On the horizontal line A, the candle appears below the cloud, along with the change of the signal of the AO histogram from plus to minus. But the intersection of local support does not occur, only touch. If it misled the trader, the lack of working out a 1-2-3 pattern would save him from a loss-making entry.
At point B, the candle could not rise above the Ishimoku cloud, the oscillator signal had changed earlier, but the return of the histogram back to negative values at point C led to the formation of two input signals. The support level again served as a filter that eliminated the deal; it was still at the same point as in case A.
The situation on the vertical line D led to the appearance of three signals: AO moved to the positive area, and the candle managed to close above the cloud and touch the resistance line with its tail. Literally 1-2 points decided: in this case, entry to the breakdown of the level would have taken place or not. The only thing that would save the trader from a false entry is the failure to practice the 1-2-3 pattern.
Thus, the examples show that adding a filter in the form of Pattern 123 noticeably improves accuracy, but greatly reduces the number of transactions.
And one more entrance. AO crossed the zero mark, the chart is below the Ishimoku cloud and crosses the nearest extremum. Here we would not wait for a 1-2-3 pattern. You can agree with the author that it is quite rare - during this time you can make several successful transactions.
There is no signal to exit on the chart yet, so we continue to wait.
RBICAO or Trading with Range Bars, Ichimoku Cloud and Awesome Oscillator - A fairly simple and reliable system. The strategy provides high accuracy and allows you not to go into the market when it is not necessary, so use and practice. I hope you got some ideas from this TS and you can adapt them for yourself. Remember that you should not thoughtlessly copy the structure of the system - use it to develop your strategies. Without the personality of a trader, success in the market is impossible.