HL30 trading system

The trading strategy I am going to show you is one that we use every day. It has been called the HL30 when I first learned it and I use it for mostly scalping, (my idea of scalping is about 15 to 20 or 25 pips).

The HL30 trading system is designed to generate trade signals and to do so with the least amount of visual distraction.This basically means that the easier it is to identify and confirm a trade, the easier it is to quickly find and execute a trade order.

The indicators (how to set up your charts)

We begin with and always use this method on a 30 minute chart.

There is really one indicator that is necessary and that is the CCI. Set at 14.

Trade Structure:

The trade begins with identifying the previous day high and low on the 30 minute chart (hence the name of this strategy HL30 is High and Low of the day on the 30 minute chart)

The only indicator used in this technique is the CCI indicator with the 14 setting.

We identify the high and the low for each day on the 30 minute chart. “tools” then select “options” then select the charts tab and check the box for “show period separators”. This will automatically draw a vertical line on your charts when a new day starts. Once you have identified the High or Low for the day, you need to wait for a candle pattern to complete and close at the high or low within 10 pips.

Within 10 pips means that the price cannot move more than 10 pips above the high and price must come up the the high no less than 10 pips. Just the same, if price is testing the Low, price cannot move lower than 10 pips below the low and must come down to the low no less

than 10 pips away from the low. (please see the charts below)

The final confirmation of a valid HL30 trade signal is to measure the CCI indicator. On the candle that completes the candle pattern, the CCI reading MUST be lower than the “Spike high” CCI reading of the previous day. And just the same if we are trying to trade a HL30 trade

off of the support level, the CCI reading MUST be higher on the candle pattern that gives us our signal, than the previous day low reading of the CCI indicator.

In this example we entered short on a bearish engulfing candle.

In order for a signal to be confirmed, there must be a closed, completed candle pattern.

(the entry was on the closed candle “A”) On the EUR/USD pair we are only looking to achieve 20 pips with the same size for a stop loss. If there happens to be a small rally in place then we will trail the trade for perhaps another 20 pips. If the price action has been somewhat muted and there is no economic data available then we would most likely look for a close target with in the nearest support or resistance range. The set up requires that each day must be identified. We do this by adding a purple vertical line to each chart on the 30 minute time frame right at 5 pm New York time. This begins the new day. From this we can determine the high and the low of the previous day.

(the olive vertical lines are drawn in to highlight the CCI measurement on the signal candle compared to the high or low of the previous day) In the EUR/USD example, price moved back up to the high of the previous day a few hours after the start of the new day.

Price must be within a 10 pip range to qualify as a test of support or resistance. This means that the candle that attempts to test the previous day high or low must be either within 10 pips short or beyond it. If it moves further, the trade is canceled. The 10 pips rule is the same for all currencies when we use this strategy. Once we have confirmed the price move or retest is within the 10 pip rule, we wait for the closed completed candle pattern. In this case (EUR/USD chart 1) we confirmed that there was a bearish engulfing candle. Before we enter, we need to check the CCI indicator.

As was the case on the EUR/USD chart 1 above, the closed completed bearish engulfing candle CCI reading printed a lower CCI measurement than the CCI measurement when price made the new relative high from the previous day.

This is very important because if the CCI does not confirm then we have no trade.

In this case the confirmation was positive and we have a trade. The entry is on the close of the candle pattern! No delay or hesitation. The target on the EUR/USD is 20 pips and we use a 20 pip stop. If price continues to rally we will trail the trade to the next 20 pips if possible.

HL30 Trading System Trade Check Sheet

Before you place the trade please make sure of the following:

• Did you set a vertical line on your 30 minute chart at the 5 pm eastern time (new york time) start of the new day?

• Make sure you are using the 30 minute chart

• Make sure you identify the weeks high and low

Trade criteria:

• Has price tested the previous day high or low within the 10 pip range?

If so, move to next step, if not consider skipping the trade and looking for the next one

• Has a closed completed candle pattern appeared?

(bullish or bearish engulfing candle pattern, evening or morning star pattern)

If so, move to next step, if not consider skipping the trade and looking for the next one

• Do you have CCI confirmation? (CCI must be set at 14)

e.g. lower CCI measurement on a bearish set up, higher CCI measurement on a bullish set up

Entry is on the close of the completed candle pattern is all criteria is confirmed.

• EUR/USD uses a 20 pip target with a 20 pip stop loss

• GBP/USD uses a 20 pip target with a 20 pip stop loss

• EUR/JPY uses a 40 pip target with a 40 pip stop loss

Trading Examples