Momentum Pinball trading strategy

Momentum Pinball trading strategy was developed by the famous American Trader - Linda Bradford Raschke. The essence of this strategy is the use of the so-called moments of overbought and oversold market. Of course this is all relative, but still this factor is successfully used in many trading strategies.

Marketplace: Forex;
Currency pairsGBPUSD;
Timeframe: H1, Daily;
Indicators : Momentum;
Strategy: intraday;
Protective orders: StopLoss, Tralling Stop.

 Momentum Pinball Strategy Settings

So how are overbought and oversold conditions used in this strategy? First of all, it should be noted that in Momentum Pinball the main timeframe is a daily one. That is, the search for an entry point begins with its analysis. How does this happen? I must say that this strategy is very easy to learn and apply - you only need to use one indicator - Momentum(3, 1), and we additionally use the 30 and 70 levels.

Momentum Pinball trading signals

In this example we can see that on the candlestick, which is marked with a red vertical line, the indicator has crossed the 70 level. This tells us about the overbought condition at the end of the day. Therefore, we have to consider this situation to open short positionthat is, we have to sell.

After we have seen the signal at the end of the day on the daily chart, we need to go to the hourly chart. On the hourly chart, we need to analyze just the first candle, that is, we need to wait for closing of the first hour. After the close of the first hour of the day, a pending order is placed. This is what it looks like.

After the first candle closes on the hour chart, we need to place an order (in this case to sell) 10 pips further from the minimum (to sell) or maximum (to buy) of that candle. Stop Loss will be located on the opposite side also 10 points further from the minimum (to sell) or maximum (to buy) of the same candle.

The position must be closed either at the end of the first or at the end of the second day after opening the position. The position must not be held for more than two days. Use of trailing stop is left to the trader's discretion, but it is better not to use less than 50 points, because a smaller trailing stop can disrupt profitable trades.

Momentum Pinball Strategy works really well, but has the peculiarity that trades are not made often. However, there will still be profit when trading on this strategy. So, its application will already depend on the personal qualities of the trader.