I want to share with you a system that I have been using for the last six months in intraday with good results. I call it 3 Candles + Volume. It is not based on delayed indicators, but on reading the action of price and volume behavior. I tested it mainly in EUR/USD and GBP/USD in M5 and M15 temporalities. Basic Rules: Waiting for a strong candle (wrapped or with a wide body)
Your system seems interesting to me because part of a very sensible base: price and volume action. In my experience, most traders are obsessed with indicators and forget that what moves the price is the flow of orders. What you propose with the reversion candle followed by exhaustion in two candles and high volume is, in essence, a reading of the hand change between buyers and sellers. I like that you do not complicate the entry with redundant rules, and that the system adapts well to the logic of the market. The fact that you use confirmation with volume adds a filter layer that can make all the difference between a trap and a real turn. Also, limit it to specific sessions (like the European one).
Thanks for the analysis. These types of answers are the ones that give value to the forum. I learn more about this than many PDFs that are out there.
And what if the high volume is given on the second candle instead of the first one? Wouldn't you be leaking possible good inputs by too strict a rule?
Very good breakdown of strengths and weaknesses. I agree with you that the ATR can be a perfect filter to avoid cheating in directionless markets.
I also use price action and volume as a base. Most want to operate without understanding what is behind the movement.
One question: do you consider some kind of confluence with key levels, such as support or resistance, to further validate the signals?
It's true what you say about the operations journal. I started documenting my entries and it was like turning the light on in a dark room. I discovered mistakes I repeated without realizing it.
Thank you both for this exchange. I�m starting in the intraday and this gave me a very clear idea of how to approach a simple but effective system.
Don't you think using candles so small on M5 and M15 can generate a lot of false signals, even with volume?
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