Bulls Bears TSR Forex Trading Strategy

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Bulls Bears TSR Forex Trading Strategy 1

Trading is about price movements. Master how price moves, and you would win the game of trading.

But what is it that makes price move? Is it the broker? Does it just move randomly without reason? Is there an invisible hand that moves price? Nope. None of this is true.

A trade occurs whenever a buyer and a seller agree to exchange assets at a certain price point because both parties deem it to be fair. This means a consensus of value or a fair price. Price moves because the appetite of buyers and sellers at a certain price point change causing the fair price to move.

This movement of consensus of value is a function of market sentiment. It is a result of the change of the bulls’ appetite to buy and the bears’ appetite to sell at a certain price point.

The Bulls Bears TSR Forex Trading Strategy is a strategy that attempts to objectively identify the market sentiment, both on the bulls’ and bears’ perspective. It makes use of this information to time market entries prior to the next price movement.

Bulls Power and Bears Power

Many indicators attempt to gauge trend strength or momentum based on price movements. Most indicators derive their indications from price movements, whether the move is bullish or bearish.

The Bulls Power and Bears Power attempt to gauge possible changes in trend strength by isolating bullish price movements and bearish price movements.

To do this, two separate indicators are developed. Bulls Power and Bears Power are two separate oscillating indicators which uses different price points in a certain period.

The Bulls Power is measured by subtracting the high of a candle from an Exponential Moving Average (EMA). The Bears Power on the other hand is computed by subtracting the low of a candle from an Exponential Moving Average. The results are then displayed as histogram bars displayed on separate windows.

Positive bulls and bears indicate an uptrend while negative bulls and bears indicate a downtrend.

A confluence between the two indicators provide a good indication of where price may be moving next.

TSR Bar Trend

TSR Bar Trend is a momentum indicator that helps identify short-term trend changes.

It indicates trend direction by overlaying bars on the price candles. The bars change color whenever the short-term momentum is changing.

Candles with dark green bars indicate a bullish short-term trend, while candles with purple bars indicate a bearish short-term trend.

Being very responsive and having minimal lag, the TSR Bar Trend is an excellent entry trigger as it could accurately identify short-term trend changes.

Trading Strategy

This strategy trades on confluences between the Bulls Power, Bears Power and TSR Bar Trend indicators.

The 50-period Simple Moving Average (SMA) is used to identify the general trend direction. Trend direction is based on the location of price in relation to the 50 SMA. Buy trades are taken if price is above the 50 SMA and sell trades are taken if price is below it.

During such trend, the Bulls Power and Bears Power histograms should generally stay on the side where the trend is.

A retracement towards the 50 SMA line should cause the TSR Bar Trend to temporarily reverse. As price retraces slowly, a diagonal support or resistance should be observable.

It should also cause either one or both oscillating indicators to temporarily reverse.

Price should breakout of the diagonal support or resistance line indicating the end of the retracement. This should also be accompanied by a confluence of the Bulls Power, Bears Power and the TSR Bar Trend indicators pointing towards the direction of the breakout.

Indicators:

  • (T_S_R)-BAR Trend.ex4 (default settings)
  • Bears Power
    • Period: 26
  • Bulls Power
    • Period: 26
  • 50 SMA

Preferred Time Frames: 15-minute, 30-minute, 1-hour and 4-hour charts

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should be above the 50 SMA line.
  • The Bulls Power and Bears Power indicators should generally have positive bars indicating a bullish trend.
  • Price should retrace towards the 50 SMA line causing the TSR Bar Trend to temporarily change to purple.
  • Either the Bulls Power, Bears Power or both oscillating indicators should temporarily print a negative histogram bar.
  • The TSR Bar Trend should change back to color dark green indicating the resumption of the bullish trend.
  • Both Bulls Power and Bears Power should print positive histogram bars indicating a resumption of the bullish trend.
  • These bullish signals should be closely aligned.
  • Enter a buy order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss at the fractal below the entry candle.

Exit

  • Close the trade as soon as the TSR Bar Trend indicator changes to purple.

Bulls Bears TSR Forex Trading Strategy 1

Bulls Bears TSR Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should be below the 50 SMA line.
  • The Bulls Power and Bears Power indicators should generally have negative bars indicating a bearish trend.
  • Price should retrace towards the 50 SMA line causing the TSR Bar Trend to temporarily change to dark green.
  • Either the Bulls Power, Bears Power or both oscillating indicators should temporarily print a positive histogram bar.
  • The TSR Bar Trend should change back to color purple indicating the resumption of the bearish trend.
  • Both Bulls Power and Bears Power should print negative histogram bars indicating a resumption of the bearish trend.
  • These bearish signals should be closely aligned.
  • Enter a sell order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the TSR Bar Trend indicator changes to dark green.

Bulls Bears TSR Forex Trading Strategy 3

Bulls Bears TSR Forex Trading Strategy 4

Conclusion

This strategy which trades on retracement breakouts is an excellent strategy to make money from.

Having a confluence of a breakout, short-term trend signal, and market sentiment indicators align closely indicates that a trend is more likely to resume.

Trading in the direction of the trend allows us to have a relatively high win ratio. On top of that, this strategy also tends to have a decent reward-risk ratio.

Trading this strategy in the right market condition would provide traders with high probability trade setups.

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