Mean Reversion Trading without Indicators

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If you find Indicators easier to use then here's a STRATEGY USING BOLLINGER BANDS: • This Bollinger Band St...
But you don't always need to use indicators to find profitable entry and exits points. In this video I show you an alternative method to trade a mean reversion strategy without the use of any indicators at all.
Typically mean reversion is often traded using indicators such as RSI, Williams percent R, Stochastics etc. However they mostly tell the same story of over stretched prices to the upside and the downside.
Our job as mean reversion traders is to identify the overstretched areas and trade against price back towards the mean or moving average.
Grab 3 favourite strategies for FREE in my new 22 page Beat the Markets Strategy Guidebook here: www.thetransparenttrader.com/...
WEBSITE: www.thetransparenttrader.com/
LATEST TRADING COURSE: www.thetransparenttrader.com/...
EMAIL ME: jarrod@thetransparenttrader.com
DISCLAIMER:
I am not a financial advisor and I am not offering you financial advice. I am not regulated in any way. The purpose of the content I provide is for educational purposes only.
Any information you receive is based on my own knowledge and experience in the financial markets and how you act on the information provided is your own responsibility.
I cannot be held responsible for any losses you may incur as a result of ideas taken from my content provided.

Опубликовано:

5 авг 2024

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Комментарии : 230

@TheTransparentTrader 3 года назад

I hope you enjoy this video showing you how you can trade mean reversion without using any indicators at all!

@matthunter9562 3 года назад

Is that this strategy still work if the market in the trending condition?

@johnshugo9608 3 года назад

Hello, sir.. I used an idea from this video. I made an EA based on the tutorial you provided. I made some modifications to the strategy. I provide a link to download on my web for reference. I hope you don't mind me including your video link there.

@TheTransparentTrader 3 года назад

@@johnshugo9608 Well done! I always encourage testing and modifying for yourself. What are the modifications?

@johnshugo9608 3 года назад

@@TheTransparentTrader Thank you sir. I use the highest high and lowest low of 6 candles and the running price for the execution (not the close candle price).

@jktrader37 3 года назад

@@matthunter9562 I would ONLY use a mean reversion method ( during a trend) in the direction of a the primary trend ( otherwise you will be cut to pieces).. i.e,. if the trend is UP, only take mean reversion trades that would place you in the BUY LONG mode, ( i.e., shorts will most likely be killed ) I hope that helps

@OhhHellNoYouWont 10 месяцев назад

Eventually, professional guidance may be the only recourse!

@EButz 10 месяцев назад

how so?..if u don’t mind please could u shed more light on this

@Couchlnvestor 10 месяцев назад

For starters you’ve got to understand that trading is no walk in the park, you’ll be needing lots of study and practice before trying out real trades even then you’ve still got to go easy.

@EButz 10 месяцев назад

lol blew my account twice already

@OhhHellNoYouWont 10 месяцев назад

Well, I’m convinced that the key to safer trades and lucrativeness is professionalism.

@OhhHellNoYouWont 10 месяцев назад

Over the years I’ve been very fortunate to work with a certified broker Christine Mila, I met her at a summit in Oklahoma where we discussed how she can guide me on the technicalities of profiting in the market and if I’m being honest I’ve had numerous withdrawals under her guidance.

@Cor430vette 3 года назад

Thank god I found you...you are seriously the only mean reversion trader on you tube...!!

@danield.thompson6158 3 года назад

Very true

@nm6287 2 года назад

Hi ,,your video is simple, but is great,, you teach one of the most important thing in trading,,,,many people don´t understand this concept for many years and is the core concept for entry in a trade , congratulations

@Louis-yg3xq 3 года назад

Excellent, the best trading coverage on RU-vid by a country mile!

@TheTransparentTrader 3 года назад

Thanks Louis! Glad you find it useful. Just sharing how I study the markets in order to develop strategies.

@pchan4267 2 года назад

Regression to the mean is a very powerful indicator. Thanks for sharing.

@andrewmuchtar9286 2 года назад

Amazing, very simple method yet effective. Thank you for sharing the knowledge. God bless you.

@tzvassilev 2 года назад

Great work and very inspiring. Thank you a lot for sharing this!

@allexuk78 3 года назад

Insightful video as usual. Thanks a lot!

@cryptinu 3 года назад

I’ve just been manually testing this on tradingview and am really impressed with the results. Will back test this properly and take notes. Thanks a lot Jarrod.

@raymondphilip6232 3 года назад

Use mt5 bro, easier to backtest

@raymondphilip6232 3 года назад

Just a recomendation, look it up when u have time

@TheTransparentTrader 3 года назад

Great! I always encourage everyone do their own testing too.

@randomz8065 3 года назад

what was the result of the back testing

@TamerRashdan 2 месяца назад

It works until it doesn’t

@crosselen9766 2 года назад

Your video is really concise, I think I will test it out with crypto. Thankful for the strategy and wish you good health!

@Patso65 Год назад

Really enjoyed this video, thank you for sharing. With just this information alone, a trader could literally make a living from just this information. MANY ways to trade, but, the equity curve doesn't lie. Thanks again.

@ManifestedUniversalDestiny 3 года назад

This equity curve is nice...thanks for sharing!

@davemakesmagic 4 месяца назад

This was really fascinating. THANK YOU!!

@sheana2005 2 года назад

Really like your analysis and enjoyed the video.

@jdaniele 5 месяцев назад

Thanks a lot Jarrod🙏 That's very interesting👍😁

@double-n 3 года назад

Great video, would have helped if you had mentioned it's a stop and reverse type of system with a fixed stoploss :) No matter, the comments cleared it up for me. Thanks!

@peterloei9223 2 года назад

This advice is very useful.. thanks a lot

@EEMBMinecraft2442 10 месяцев назад

I enjoyed the video and study. Thank you. I really liked that you kept it simple, gave a clear explaination and are able to present the statistics. I do have a request. Can you elaborate on what a "quite a strong" close is? Id like to hear more specific details. Have a great day.

@howardhill3395 Год назад

I think using a moving average (mean) is very helpful.

@narendramanikanta7597 3 года назад

Thanks for sharing the knowledge

@jamesyen241 3 месяца назад

Thanks for sharing!

@alrey72 2 года назад

Haven't tested this yet but the market can move a long way in one direction w/o the reverse signal and the loss will be huge.

@alrey72 2 года назад

@@jakesanders136 It was mentioned in some comments that there is no sl. The buy signal closes the sell postion and vice versa.

@jaysteve4442 2 года назад

Of course u would have stops in place. Gotta know when you’re wrong

@OneCreator87 2 года назад

Don't trade 100 lots and you'll be fine. Also, don't use this on GBP and pairs that like to do the thing you said.

@lakshaydhiman6132 Год назад

@kanagarajahm4427 3 года назад

Very interesting tq, will try it out.

@dev07845 2 года назад

Jarrod great video learning a lot from your content,plz could u do a video on the mean reversion on say bollinger band a practical strategy how u take the trade and exit i assume at middle band,would appreciate a video on the strategy thanks

@majallal Год назад

Great vedio , thank you for your helpful information

@djxenomuzik 3 года назад

Thanks again Jarrod!

@alfred604 3 года назад

Your videos are high quality!

@TheTransparentTrader 3 года назад

Thanks!

@ryeez919 2 года назад

Trading without indicators " and this line here is a moving average" OH HERE WE GO

@absolutebosscollective8202 3 года назад

Very Insightful!

@zjelco 3 года назад

How do you enter on the second candle of the previous six? In case of going long and the second candle is the lowest close out of the six. Or do you only check the last close and see if it's the lowest of the past 6? Thanks

@maninjapan79 3 года назад

A little late to the party here, but how do you define a 'strong Close'? Are you looking at a large range day? And/Or the close in relation to the high/low of the day?

@Evo-bro 2 года назад

good resource, thank you for putting it out there. I use a ema bounce m15 candlestick strategy and feel this will help with it. Can I ask what software are you using to backtest?

@briankelly2037 Год назад

Lots of "food for thought" in this video. Thx. I think the strategy should work best on non-major-news days. Also, there are some currency pairs which tend to bounce around a lot during the Asian session (e.g. gbpchf, eurchf, gbpusd etc) but don´t normally trend. An ideal situation for mean reversion strategies. I haven´t looked at it yet but there may also be a quiet time later in the European session before New York trading begins. Lots of opportunities to test and apply these strategies.

@jdelaney993 2 года назад

am i not understanding this properly? so if you are looking back at the last 6 bars, and the last bar in your scope is the highest close in the past 6, you would immediately open a short? And opposite for longs? Someone please tell me i'm misunderstanding that right?

@howardhill3395 2 года назад

Jarrod, as I understand it, if previous day was a strong bull candle, you will go long in new day against strong bear candles...do I have that correct?

@AhmadAli-uu3tr Год назад

Amazing. Thank you

@stevendonohoe2150 3 года назад

Interesting, I've been trading for 10 plus years & often the projections of equity curves don't match reality when it comes to algo live trading. Depends on the data you use & how robust the stradegy is through all market conditions.

@larrycox6614 2 года назад

Thanks for this insight. I'm going to back test it on TV on the 5m and 15m timeframe to see what results I can get. So when you said..."if we have a strong close to the downside (or upside), then that's the direction you would be looking at trading in for the next day. How much of the close are you looking at to make that next session determination...the last hour, the last 2 hours, etc. ?

@malcolmring6229 9 месяцев назад

Hi That was very interesting and useful. The way you showed the chart hand drawn they looked like inside candles. Does the same apply to 6 trending candles? Thanks

@raymondphilip6232 3 года назад

This is really good content, i'm glad not so many people found it because good legit contents only reserve for the 6% lucky profitable trader

@lionking20101000 Год назад

thank you so much

@Bhoomy98 3 года назад

I would ask you some clarification over your strategy: since you invert the current position when you get an opposite signal, what happens to the open trade when you have an opposite closing the day before or similar when the trade is crossing the preferred time zone 14-19 EST? are you closing the trade or you leave it going?

@TheTransparentTrader 3 года назад

Hi, using 15 minute bars only take the entries or exits if they occur within the time window. If you are already in a trade and an opposite signal occurs but you are not within the time window then leave the trade running until you get a signal within the next time window.

@chekov885 8 месяцев назад

You never mentioned the stop location and TP you used in back test. Also what was the account size and trade size????

@fxsurgeon1 2 года назад

What is your exit rule? Thank you for the insights

@ryanreadsbible 5 месяцев назад

Thank you

@kanagarajahm4427 3 года назад

What the best time frame to use this or get into a trade?

@gozzilla Год назад

can this be applied to trading OPTIONS as well? i mean the 6 candles?

@sitthapromwasphornsaran5736 3 года назад

I trade with a mean reversion indicator together with other indies, and love it.

@eddyvideostar 3 года назад

To Sit hapromwas ph: Info, link and data, please.

@MrAcSP 3 года назад

What kind of mean reversion indicator are you using? I am using on balance volume oscillator with the settings Periode 14, Levels for reversals at 20 and 80 and only on the H4 and daily charts.

@sugengprofit9993 3 года назад

what are the good currencies to use? EUR, GBP, AUD ect?? cross rate maybe?

@pirunsirimangkalo2385 Год назад

thank you

@andreandree4384 10 месяцев назад

Mean reversion don't always work, price can stay overextended (up and down) longer than you can be solvent; it can keep going up or down for sometime and the average will follow up/down the price and the mean reversion will happen at a very different level.

@FenderAddict93 8 месяцев назад

Then you will never succeed in trading if you have this mindset. One strategy doesn’t work for all market conditions.

@richardbokele830 4 месяца назад

Exactly ! But as the ratio R:R is high ...it will recover losing streaks

@luccanovaes8604 3 года назад

Thanks!!!

@scarfo441 2 года назад

if all you are using is the high or low[close]....how do you know weather its going to revert to the mean?..i always thought that the reason that price reverts is because of std dev.of 2 or better is extreme...but without an indicator,or without a calculation,price might not have reached the 2 std dev and fake you out like its about to mean revert but it does not.

@therogerwilco 3 года назад

You're a math/finance major I assume? What's your stop loss % usually also? Just wondered if you feel arbitrage orders have created much wider swings or am I overestimating the market makers influence? Thanks very much!

@khalidhakimi93 2 года назад

Ive been trying to figure out the market monopoly and indicators can be a distraction and I would at times be overloaded with information and end up trading the indicator rather than the price. I’m going to try trading candle closes with resistance and support levels and market highs and lows in the trend. I’ve been in this game for 5-6 yrs now and it’s very frustrating if I think about how long I’ve been in it and haven’t been profitable

@oxbys3531 3 года назад

Check charts over 10 years, everything returns to original levels. You have a window of opportunity every few years to make 1 killer trade requiring patience and 4:1 margin you can clear over 1Million profit, all you need is time.

@aslanmuradekmekci5277 2 месяца назад

Hi Jarrod, from comments below, I see that this is a stop & reverse type strategy. But how about the market behaviour the day before which we use as a filter? I mean, say, it was an up close yesterday which means that today I will be taking only long trades between 14:00 pm to 19:00 pm EST. Between trading time window, a set up formed and I opened a position. And then a stop & reverse pattern formed which encourages me to close my long position and open a short position. However, yesterday' s market behaviour (which I use as a filter) does not suggest me to do so. So, may I still use stop & reverse as an exit strategy? Please advice,

@aslanmuradekmekci5277 2 месяца назад

The same question may be asked for the Bollinger Band 30 minutes timeframe intraday strategy you developed for GBPUSD (yesterday' s market behaviour is a filter).

@aaronb4685 Год назад

I guess I dont understand. What if you go short after 6 green candles and it goes up 6 more? When do you get out before being liquidated?

@doubtannihilator2895 2 года назад

Excellent 👌

@kin.ovi. 3 года назад

Hi Jarrod, thanks for this, just discovered your channel. Can I just ask, do you think this strategy is perfect for a simple Metatrader EA using open prices? It would make backtesting with MT4 very fast, with the 'open prices only' modelling.

@TheTransparentTrader 3 года назад

I don't use Metatrader so I cannot comment. What is the open prices only modelling?

@kin.ovi. 3 года назад

@@TheTransparentTrader Open price modelling is for backtesting expert advisors that only trade based on completed bars, so intrabar movement isn't taken into consideration.

@TheTransparentTrader 3 года назад

@@kin.ovi. If you're going to use a 15 minute chart like I am that should be ok then.

@kin.ovi. 3 года назад

@@TheTransparentTrader OK great thanks

@adrianp4590 10 месяцев назад

are trading commisions included in backtesting result

@crunchyroll7734 Год назад

Does this work on stock too may I ask?

@paularcher102 Год назад

This method because we are trading with HINDSIGHT?. We already know from looking back thru the history of the price action is UP.. Would this method work if I started today?.

@lifeadventurer8 3 года назад

I love it! You mentioned about looking at the prior day's candle, to help filter your trades. If it was a strong up day, only take longs; if it was a strong down day, only take shorts. How do you code "strong"? And if yesterday was an average/ordinary candle, the algorithm is allowed to take both long and short positions, right?

@lifeadventurer8 3 года назад

I guess (after posting my comment above) I could maybe use the daily ATR, then compare if the candle body size was greater than that, and then determine if it was a bullish or bearish candle. Then in my code, I could have true/false variables for a "strong up" or "strong down" day, and if true, only take the appropriate position side... But if neither "strong up" or "strong down" are true, it can take any position direction... Is that basically how you do it?

@allexuk78 2 года назад

super valid question

@LibertyOrGTHO Год назад

What is being used as a take-profit? How long is he holding for?

@mewithbaby-1187 2 года назад

where to download the powerlanguage code for this strategy ?

@lapogk1543 Год назад

If the lower close is happening in every 30 min bar, will you keep buying at every lower close. What is the stop loss

@sergiuserdean7056 2 года назад

Hi.Where do you exit trades?

@innav4874 Год назад

I repeated it in python backtesting system, as an algorithmic strategy, with those two rules of buy and sell. Complete disaster! Where do you think can be a difference ?

@flamehands3416 Год назад

Was this strategy ever proven to work? I really like the method described here however i dont think trading costs have been factored in.

@scalpingpro6896 2 года назад

Great video bro . Pls why 6 candles?

@PriyaPriya-qm3pl 2 года назад

Very good

@terrysenyczko121 3 года назад

I like your videos I like people who back their ideas with proof I am a flandering trader who's been in the middle forever make money lose money make money lose money make money lose money

@tomlewis632 3 года назад

The market can stay overbought or oversold, longer than you can stay solvent. This is the problem with mean reversion. And breakouts suffer fake outs, due to manipulation. Need other tools.

@PriyaPriya-qm3pl Год назад

Very nice. Thank you . Wish to see more of your videos in the future.

@danield.thompson6158 3 года назад

Is this strategy timeframe bound? And how many pips should the stops be ?

@TheTransparentTrader 3 года назад

This is an example of a mean reversion strategy without indicators. It's not a complete strategy yet. Markets do move different for different timeframes so just because it works on this time frame doesn't mean it will work on others. This is why it's so important to test.

@yochanangolan9600 Год назад

thanks for sharing this knoledge - but when i look on charts most of the time it doesnt work. may be the robot you showed include more filters.

@jaybee9054 11 месяцев назад

Curious - what's the reasoning behing looking at the candle close instead of high? After all it's just an arbitrary point in time based on the time frame we''re looking at

@TheTransparentTrader 10 месяцев назад

I find closes very significant. Is it because a lot of other traders are also paying attention to the close as a level?

@ShareefusMaximus 3 года назад

Hi all. The exit is stop and reverse!

@alfred604 3 года назад

Just a quick question about exiting, you are in the trade until you get a opposite signal?

@TheTransparentTrader 3 года назад

Yes. It's a stop and reverse type strategy.

@alfred604 3 года назад

@@TheTransparentTrader Thank you for the reply.

@tryzxl 3 года назад

I trade the Indian markets and we have higher volatility here. I am planning to use the mean reversion to identify short and long trades using a daily chart and a 50DMA (Exponential) . My trade durations could span a few days and I am not intra day - more positional. Any advice?

@franciscom.d.459 Год назад

He's, muy advice Is retire hour Manu quickly

@franciscom.d.459 Год назад

Hour money

@bbecky2010 Год назад

What is the Exit strategy?? Thanks.

@antoniobertone7589 Год назад

Where do you take profits?

@atatunca4776 3 года назад

I have a question about if it's a downward trend and each new bars closing is smaller from the previous six bars.Than what happens? What ı understand is that the algorithmm should buy buy buy ... and so on! Is that so?

@TheTransparentTrader 3 года назад

The algorithm will only buy 1 position even if the trend continues downward.

@IkennaIloejeo 2 года назад

@@TheTransparentTrader thanks for this. Please how do you code it to not continue to buy with lower closing prices in a downtrend? I believe it will keep buying and losing until a reversal occurs?

@soleray2 3 года назад

GOOD DAY SIR, SIMPLE BUT GOOD, QUESTION IS EXITS OR STOPLOSS DIDN'T MENTIONED, WHEN AND HOW ? THANK YOU SIR.

@alexander__5400 2 года назад

No transaction costs?

@suntouch3r 8 месяцев назад

Last 6 years look similar to buy-n-hold returns. 6% per year?

@jimparsons6803 Год назад

Interesting.

@kerryriordan8662 3 года назад

Thanks for the video and I note that this is a Stop and Reverse Strategy Your improvement is to limit the trades to buy or sell depending on market move on the previous day I assume that trade exits on these days would be on a take profit basis?

@TheTransparentTrader 3 года назад

Yes I am limiting trades based on previous day's behaviour. But that also means not exiting the trade either as there is no separate take profit order.

@kerryriordan8662 3 года назад

@@TheTransparentTrader wouldn't you be destroyed in a trending market?

@robmcghie5248 2 года назад

I like to use Parabolic SAR along with EMAS major S and R not using lots of lagging indicators

@robmcghie5248 2 года назад

@@kerryriordan8662 This is a scalping technique So expect most gains from being in the trend and don't expect to make many pips from Pullbacks

@laptoplifestyleromania569 2 года назад

no words about stop loss

@a.b.712 Год назад

i dont think it will work with crypto market, sometimes you need to wait 60 candles before taking entry lol. Why 6 candles only? didnt understand why 6

@lifeadventurer8 3 года назад

I didn't catch what the exit rules are. Can you clarify please? This is really interesting.

@OneCreator87 3 года назад

It's the opposite signal!

@h.l6849 3 года назад

@@OneCreator87 thank you. i missed that too. So it does not use SL?

@OneCreator87 3 года назад

@@h.l6849 No, in this system the opposite signal acts as a take profit OR stop loss. Fixed stop loss is not necesary if you trade small in the right markets/time-frames, and will likely hurt the strategy performance badly if you do it incorrectly.

@h.l6849 3 года назад

@@OneCreator87 noted. I uses BB and trade similar hours. mean reversion works well in this period, but the SL is an issue. so this gives me some fresh ideas. thank you

@h.l6849 3 года назад

another question. when the daily filter is used, does that mean that its no longer a stop and reverse option. it will be the 6 bar high to exit a short entry, but it wont open a new trade?

@hugonongbri8100 3 года назад

Any reason for using bars instead of candlesticks ??

@TheTransparentTrader 3 года назад

No, I am just used to using regular bars. Either works!

@colette5680 3 года назад

Is this for options? Or sell buy trades?

@TheTransparentTrader 3 года назад

No this isn't for options Colette.

@tshepomosili2599 Год назад

He drew that moving average smoothly

@patmontes2 2 года назад

Where is the take profit?

@Nobodier 3 года назад

TP, SL ?...

@Phurngirathaana 3 года назад

Whether the other bars are 6 bar highs themselves is irrelevant?

@TheTransparentTrader 3 года назад

We are only looking at the closing prices in this strategy.

@HitAndMissLab Год назад

In journalism they say if celebrity or politician survived for 11 days after a big scandal, than he'll be out of harms way. Jarrod just proved the same thing in markets, but its only x6 days. I market was shocked into a direction, effect will fade after x6 days.