Efficient ways to use Narrow Down to NY
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This is Teramura from the Tools Development Team.
Thank you very much for using the Tools Development Team's tools on a daily basis.
Today, we will teach you efficient ways to use “Narrow Down to NY.”
Narrow Down to NY marks lines for high and low from 16:00 to 21:00 on the day,
and if a line break occurs between 21:00 and 23:59,
and the RSI conditions are met, it will emit an entry signal in that direction.
Since the times when signals appear are fixed,
you can trade with focus.
Moreover, since lines are drawn at the London session’s high and low,
and passing that line is one of the conditions,
it is easy to predict where signals will appear.
Furthermore, since it targets points where momentum rises on a 1-minute chart,
you do not need to perform difficult analyses like checking multiple timeframes.
Therefore, there should be little hesitation in entering, but
there may be hesitation because there are no clear rules for exit.
Some may think, “I’ll just exit with a risk-reward ratio of 1:1 since that’s easier,”
but that would be a bit dull.
So, this time I will share two effective exit decision methods.
First, please look at this chart where Narrow Down to NY is applied.
Around 21:30 there is a signal that looks like it could win.
Is it a signal after you get home from work and take a rest?
I wasn’t looking for a winning point specifically.
The latest chart happened to show that.
Really.
Back to the topic, the first exit method I’ll introduce is trailing stop.
A trailing stop is
most effective in a market that has a strong directional move like this.
To put it simply,
first, set the stop-loss just below the most recent high (or above for a long position).
Then, as the price makes a new low or high and a clear high is formed,
move the stop-loss slightly above that high.
By repeating this, you exit when the stop-loss is hit as shown in the bottom diagram.
Wouldn’t you have captured quite a large portion of the move?
The last high is a bit ambiguous, but since it’s after 23:00, we should get ready to sleep for tomorrow.
No choice.
Back to the analysis, the distance from the initial stop to entry is about 8 pips,
and the distance to the exit is about 30 pips,
so the risk-reward ratio is a little under 1:4!
Nice.
Looks like a good dream to have.
Using trailing stops in this way allows you to maximize profits almost fully.
However, trailing stops also have drawbacks.
First, in favorable markets, the holding time increases, and
since you manually adjust the stop-loss, you need to stay attached to the market to some extent.
Also, by moving the stop-loss, there can be cases where the price would have extended further but exits earlier.
If you do it well, you can achieve a risk-reward of 1:4 as in this example,
which you may be able to endure.
If you cannot endure this, here is the next method.
As in the figure above, display RSI, which is one of the entry conditions.
Then apply the following rules:
1. Stop loss at the most recent high (or below for a long position)
2. Place a limit exit at a point where the risk-reward is 1:1
3. Exit if RSI crosses below 30 from below after you have a profit (for a long position, if it crosses above 70 from above)
It becomes a bit more complex, but
essentially the goal is to aim for a 1:1 exit, and exit early when RSI meets the conditions.
In this market, you may reach the exit before condition 3 is met, and exit.
At best, the result is 1:1, and sometimes it may not reach a 1:1 exit, which some may find unappealing, but
in other markets it can be quite effective.
For example, in the following market
At first glance, you can tell trailing stops have no future here.
If you apply the previous rules,
the middle signal resulted in a loss,
while others were exited at 1:1.
In total, you would have 2 wins and 1 loss, yielding an overall profit at 1:1.
The loss that was at 1:1 turned into a win at 1:1.
Moreover, it settles in a short time, so if you want quick results, this method may be suitable.
Also, in this market RSI did not show strong effects, but a market where RSI exit becomes viable can increase win rate.
Thus, by adjusting your exit method to fit your personality and lifestyle, Narrow Down to NY can be used efficiently.
Please give it a try!
