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The Twenty Entry & Three Exit strategy

Description

The Twenty Entry & Three Exit strategy (TE-TE) was developed by Joachim Struck. It is designed to trade forex markets in a 60-minute time frame. TE-TE is a mean reversion strategy. This means the trader takes a position in the direction of the trend, but only after the market price moved significantly in the opposite direction of the trend.

The strategy is loosely based on a mean reversion strategy called “Double Seven”. This strategy is used by the well-known traders Larry Connors and Cesar Alvarez.

The following is typical for the TE-TE strategy:

  1. A well-established and simple concept (mean reversion).
  2. Based on a strategy designed by two famous traders.
  3. Every trader can implement this strategy.

The strategy is used for daytrading.

 

Suitable for : Forex (EUR/USD ...)
Instruments : Futures and Forex
Trading type : Daytrading
Trading tempo : +/- 50 signals every month
Using NanoTrader : Manual or (semi-)automated
 

When to open a position?

The TE-TE strategy determines the trend by using an exponential moving average (EMA). To make things easy and visual, the EMA colours the chart background. A bullish trend is indicated by a green chart background. A bearish trend is indicated by a red chart background.

A buy signal occurs when the market price reaches a 20-period low in a bullish trend. A short sell signal occurs when the market price reaches a 20-period high in a bearish trend. Hence the first part of the strategy’s name “Twenty entry”. The 20-period highs and lows are indicated by a channel in the chart.

This example the 20-period price channel and the EMA. The chart background is green, indicating the trend is bullish.

Free trading strategy Joachim Struck.

Buy signals and short sell signals are indicated by a coloured band in the chart. Green for buy signals. Red for short sell signals. This example shows a buy signal. The trend is bullish and the market price is at 20-period low.

Free trading strategies.

This example shows a short sell signal. The trend is bearish and the market price is at 20-period high.

Trading strategy Larry Connors.
 

When to close a position?

The open position is managed by:

  1. a profit target
  2. an stop loss, for emergency purposes only
  3. a time stop

The profit target is the highest (lowest) closing price of the last three candles. Hence the second half of the strategy’s name, “Three exit”.

The emergency stop loss is a simple fixed stop loss. It is quite far from the entry price. Hence it only serves to cover emergency situations. The time stop automatically closes the position after nine hours. In most cases either the profit target or the time stop will close the position.

This example shows a buy. The profit target (green line) is reached.

Twenty entry, three exit strategy.


This example shows a short sell. The market price never comes close to the profit target (green line) or the emergency stop (red line). The time stop automatically closes the position after nine hours.

Best trading strategies?

Note: Although the TE-TE strategy was designed and optimised for forex trading, it can easily be adapted to trade other instruments and/or time frames.

 

Practical implementation

Using the NanoTrader follow these steps:

  • Select the instrument you want to trade and open the chart.
  • Select the strategy in the WHS Strategies folder.
  • If required, adapt any parameters as described above.
  • For semi-automated trading, activate TradeGuard+AutoOrder in the chart. For automated trading, activate AutoOrder in the chart.