538# The Best Contrarian Forex Strategy
The Best Forex Strategy
Submit By Mike Trader 20/02/2014
The Best Contrarian Forex Strategy is based on the two bands indicators Bollinger Bands and Q BandS. It's Ok. Why , the contrarian forex strategies work best ? the answer is here:
“First I Find That Both the momentum and contrarian strategies generated substantial abnormal profits . This implies That the FOREX market is not an efficient market . Interestingly , momentum strategies to Appear Likely to be not be more than successful contrarian strategies. Once conditional on the
time horizon of returns , momentum strategies Appear to be profitable in the medium -to long- term while contrarian strategies yield significant profits only in short- term horizons .
To better understand the fundamental determinants to the abnormal profits of trading strategies as well as the exact attribute of the market inefficiency , I examine the relative Importance of two
Components of the profitability : the time-series autocorrelation and cross -sectional dispersion in mean returns. I Find That the cross -sectional variance does not fully account for the excess profits , Which again
Indicates That the EMH does not hold in the FOREX market . More strikingly , the time series autocorrelation is Primarily responsible for the extra profits to Both momentum and contrarian strategies.
It suggests That it is the autocorrelation That causes the market inefficiency in the foreign exchange market .
The mean return dispersion , on the other hand , makes only a marginal contribution to the abnormal returns and market inefficiency . Lastly , the profitability holds , even after taking transaction costs into consideration.”
Rules the Best Contrarian Strategy
Time frame 15 min or higher.
Markets: Currency, Indicies Metals and Stocks.
Bands Q (3.0 0).
When the price breaks the lower band Q (red band), wait that the price retraces and close above the lower band acqua with candle up (candle color aqua).
When the price breaks the upper band Q (blue band), wait that the price retraces and close below the upper band acqua with candle down (candle color red).
Profit Target at the middle band.
Initial Stop loss the previous swing more 10-100 pips depends by time frame.
In the pictures the Best Contrarian Forex Strategy in action.