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Greetings, ladies and gents! It took longer than expected, but I hereby finally present Version 4.0 of The Happy Hunter Price Action System (Trailing Variant).

Yes, you read that right. This is a new Version because the rules have been completely overhauled. You can read more about the changes in the List of Changes or you can go directly to the rules, whichever you prefer.

Again, these rules are for the Trailing Variant.  If you’re looking for the rules for the Fixed TP Variant then you can find it here.

The Happy Hunter Price Action System 4.0 (Fixed TP Variant)

Both Variants use the same entry rules (that’s why they’re Variants). The difference lies in the exit method used, so if you’ve already read the entry rules, then you can go ahead and skip to the Exit Rules

Anyhow, below are the topics contained in today’s write-up. The only real changes are contained in the entry rules and exit rules, so regular readers may wanna click on that.

But if you’re a first-time reader, then I insist that you read everything, particularly my statements/disclaimers.

List of Changes

  • Entry Type 2 has been broken down and then amalgamated with Entry Type 1, resulting in FIVE entry types based on the LHLL and HHHL patterns.
  • Entry Type 5 has been discarded, so we no longer use IB patterns as continuation patterns.
  • For convenience, entries that use LHLL and HHHL patterns have been designated as “A” rules (A1, A2, A3, A4, and A5).
  • Entries that use IB patterns, meanwhile, are designated as “B” rules (B1 and B2).
  • All entry rules now have a clear logical progression.
  • There are now two conditions when the SL can be moved to RSL.

A Couple of Statements/Disclaimers

Firstly, I make no claim to the profitability of this system (I’m forward testing it after all), so if you use the system to trade real money without doing your own tests, that’s on you, whether you lose money or get lucky and make money

Secondly, there’s no central exchange for the forex market, so there may be discrepancies in our data feed, and it’s highly probable that I may have a valid signal based on my charts where none exist on yours (and vice versa)

Parameters/Assumptions

  • Currency pair for the tests is GBP/NZD and only GBP/NZD (for now)
  • We only use the 1-hour chart to trade
  • Trading day begins at 12:00 am GMT+2 and ends at 11:00 pm GMT+2
  • Starting account balance is $10,000 per month
  • Max risk per trade is $50 or 0.50% of starting account
  • The lot size is variable, so learn to use (and love) the Position Size Calculator
  • As I’ve been stressing since I laid down my plans in My 2018 Trading Resolution, I’m assuming a fixed spread of 12-pips in all my tests; this system was designed with strict cost control in mind, so variable/floating spreads weren’t even considered
  • In cases where there are weekend gaps that would make the trade invalid (i.e. the market opens way beyond the TP or SL level), it’s assumed that the broker cancels pending orders, just like most of them usually do in real world conditions
  • But for orders that were filled before the weekend gaps, it’s assumed that we get out at TP (even if the gap greatly favors the trade) or at SL (even if the gap is not in favor of the trade) because it’s assumed that the broker guarantees our exit levels, well, that or it’s assumed that we complain and/or threaten to close out our account with the broker

The Core Patterns

This trading system uses price patterns known as Higher Highs, Higher Lows (HHHL) and Lower Highs, Lower Lows (LHLL), as well as the Inside Bar (IB) pattern to enter trades.

The HHHL pattern has the following elements:

  • The high of the recently closed candle must be higher than the high of the previous candle
  • The low of the recently closed candle must be higher than the low of the previous candle
  • The recently closed candle is designated as the signal bar

Pretty simple, right? Here’s an example to help you out:

The LHLL pattern, meanwhile, is just the opposite of the HHHL pattern, and it has the following elements:

  • The high of the recently closed candle must be lower than the high of the previous candle
  • The low of the recently closed candle must be lower than the low of the previous candle
  • The recently closed candle is designated as the signal bar

And here’s an example:

As for the IB pattern, it has the following elements:

  • The high of the recently closed candle must be lower than the high of the previous candle
  • The low of the recently closed candle must be higher than the low of the previous candle
  • The recently closed candle is designated as the signal bar

Basically, we’re referring to these candlestick formations:

Inside Bar

Definitions

Take note of the following since I’ll be using them constantly when explaining the rules of the system.

  • HHHL – Higher Highs, Higher Lows candlestick pattern
  • LHLL – Lower Highs, Lower Lows candlestick pattern
  • IB – Inside Bar candlestick pattern
  • ATRH – 120-period average true range on 1H chart
  • SBar – Signal Bar or candle
  • Bar1 – the previous candlestick; the candle to the left of the signal bar
  • Bar2 – the candle previous to Bar1
  • Bar3 – the candle previous to Bar2; you get the idea…
  • SL – stop loss level
  • TP – target profit level
  • SW – small win; instead of getting out of a profitable trade at breakeven, we get out with a small win
  • SWT – small win trigger, price level the pair needs to reach before you can move your SL to SW
  • P1 – this is simply a 1-pip filter for our entries
  • RSL – reduced stop loss; basically just reduces risk by half
  • RSLT – reduced stop loss trigger;  price level when you can move your SL to RSL

Entry Rules for Long Positions

Long Entry: Type A1

  • If an LHLL Patterns Forms
  • And if all LOWS of the 12 candles prior to the SBar are higher than SBar LOW
  • And if (Bar1 HIGH – SBar Low) =< (1.5 *ATRH)
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 6 hours after SBar formed, then cancel the order
  • Moreover, if a new LHLL pattern forms after the previous one, and the SBar LOW of the new pattern is lower than SBar LOW of the original LHLL pattern, and the existing buy stop order hasn’t been triggered yet, then reset everything based on the newer LHLL pattern

Long Entry: Type A2

  • If an LHLL Patterns Forms
  • And if all LOWS of the 12 candles prior to the SBar are higher than SBar LOW
  • And if (Bar1 HIGH – SBar Low) > (1.5 *ATRH)
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 3 hours after SBar formed, then cancel the order
  • Moreover, if a new LHLL pattern forms after the previous one, and the SBar LOW of the new pattern is lower than SBar LOW of the original LHLL pattern, and the existing buy stop order hasn’t been triggered yet, then reset everything based on the newer LHLL pattern

Long Entry: Type A3

  • If an LHLL Patterns Forms
  • And if not all LOWS of the 12 candles prior to the SBar are higher than SBar LOW
  • And if all LOWS of the 4 candles prior to the SBar are higher than SBar LOW
  • And if (Bar2 Low > Bar1 Low > Sbar Low) is TRUE
  • And if (Bar2 High > Bar1 High > Sbar High) is TRUE
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 6 hours after SBar formed, then cancel the order
  • Moreover, if a new LHLL pattern forms after the previous one, and the SBar LOW of the new pattern is lower than SBar LOW of the original LHLL pattern, and the existing buy stop order hasn’t been triggered yet, then reset everything based on the newer LHLL pattern

Long Entry: Type A4

  • If an LHLL Patterns Forms
  • And if not all LOWS of the 12 candles prior to the SBar are higher than SBar LOW
  • And if all LOWS of the 4 candles prior to the SBar are higher than SBar LOW
  • And if (Bar2 Low > Bar1 Low > Sbar Low) is FALSE
  • And if (Bar2 High > Bar1 High > Sbar High) is FALSE
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 4 hours after SBar formed, then cancel the order
  • Moreover, if a new LHLL pattern forms after the previous one, and the SBar LOW of the new pattern is lower than SBar LOW of the original LHLL pattern, and the existing buy stop order hasn’t been triggered yet, then reset everything based on the newer LHLL pattern

Long Entry: Type A5

  • If an LHLL Patterns Forms
  • And if not all LOWS of the 12 candles prior to the SBar are higher than SBar LOW
  • And if not all LOWS of the 4 candles prior to the SBar are higher than SBar LOW
  • And if (Bar1 HIGH – SBar Low) =< (1.5 *ATRH)
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 2 hours after SBar formed, then cancel the order

Long Entry: Type B1

  • If an IB Patterns Forms
  • And if (Bar2 Low > Bar 1 Low) is TRUE
  • And if (Bar2 High > Bar 1 High) is TRUE
  • And if all LOWS of the 4 candles prior to Bar1 are higher than Bar1 LOW
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 4 hours after SBar formed, then cancel the order

Long Entry: Type B2

  • If an IB Patterns Forms
  • And if (Bar2 Low > Bar 1 Low) is FALSE
  • And if (Bar2 High > Bar 1 High) is FALSE
  • And if (Bar1 OPEN > Bar 1 CLOSE) is TRUE
  • Then set buy stop order @ Bar1 HIGH + P1 + spread
  • However, if buy stop order is not triggered 1 hour after SBar formed, then cancel the order

Entry Rules for Short Positions

Short Entry: Type A1

  • If an HHHL Patterns Forms
  • And if all HIGHS of the 12 candles prior to the SBar are lower than SBar HIGH
  • And if (SBar HIGH – Bar1 Low) =< (1.5 *ATRH)
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 6 hours after SBar formed, then cancel the order
  • Moreover, if a new HHHL pattern forms after the previous one, and the SBar HIGH of the new pattern is higher than SBar HIGH of the original HHHL pattern, and the existing sell stop order hasn’t been triggered yet, then reset everything based on the newer HHHL pattern

Short Entry: Type A2

  • If an HHHL Patterns Forms
  • And if all HIGHS of the 12 candles prior to the SBar are lower than SBar HIGH
  • And if (SBar HIGH – Bar1 Low) > (1.5 *ATRH)
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 3 hours after SBar formed, then cancel the order
  • Moreover, if a new HHHL pattern forms after the previous one, and the SBar HIGH of the new pattern is higher than SBar HIGH of the original HHHL pattern, and the existing sell stop order hasn’t been triggered yet, then reset everything based on the newer HHHL pattern

Short Entry: Type A3

  • If an HHHL Patterns Forms
  • And if not all HIGHS of the 12 candles prior to the SBar are lower than SBar 
  • HIGH
  • And if all HIGHS of the 4 candles prior to the SBar are lower than SBar HIGH
  • And if (Bar2 Low < Bar1 Low < Sbar Low) is TRUE
  • And if (Bar2 High < Bar1 High < Sbar High) is TRUE
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 6 hours after SBar formed, then cancel the order
  • Moreover, if a new HHHL pattern forms after the previous one, and the SBar HIGH of the new pattern is higher than SBar HIGH of the original HHHL pattern, and the existing sell stop order hasn’t been triggered yet, then reset everything based on the newer HHHL pattern

Short Entry: Type A4

  • If an HHHL Patterns Forms
  • And if not all HIGHS of the 12 candles prior to the SBar are lower than SBar HIGH
  • And if all HIGHS of the 4 candles prior to the SBar are lower than SBar HIGH
  • And if (Bar2 Low < Bar1 Low < Sbar Low) is FALSE
  • And if (Bar2 High < Bar1 High < Sbar High) is FALSE
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 4 hours after SBar formed, then cancel the order
  • Moreover, if a new HHHL pattern forms after the previous one, and the SBar HIGH of the new pattern is higher than SBar HIGH of the original HHHL pattern, and the existing sell stop order hasn’t been triggered yet, then reset everything based on the newer HHHL pattern

Short Entry: Type A5

  • If an HHHL Patterns Forms
  • And if not all HIGHS of the 12 candles prior to the SBar are lower than SBar HIGH
  • And if not all HIGHS of the 4 candles prior to the SBar are lower than SBar HIGH
  • And if (SBar HIGH – Bar1 Low) =< (1.5 *ATRH)
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 2 hours after SBar formed, then cancel the order

Short Entry: Type B1

  • If an IB Patterns Forms
  • And if (Bar2 Low < Bar 1 Low) is TRUE
  • And if (Bar2 High < Bar 1 High) is TRUE
  • And if all HIGHS of the 4 candles prior to Bar1 are lower than Bar1 HIGH
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 4 hours after SBar formed, then cancel the order

Short Entry: Type B2

  • If an IB Patterns Forms
  • And if (Bar2 Low < Bar 1 Low) is FALSE
  • And if (Bar2 High < Bar 1 High) is FALSE
  • And if (Bar1 OPEN < Bar 1 CLOSE) is TRUE
  • Then set sell stop order @ Bar1 LOW – P1
  • However, if sell stop order is not triggered 1 hour after SBar formed, then cancel the order

Exit Rules

If going long:

Make sure to set the following initially:

  • Then set SL @ Entry – spread – P1 – (ATRH x 1.3)

If trade is triggered and price moves up, you must reduce your risk by moving your SL to RSL as soon as possible.

  • RSL @ Entry – spread – P1 – ((ATRH x 1.3) x 0.5)

And you can only move SL to RSL if either of two conditions are met.

  • The first condition is that RSLT is hit.
  • RSLT @ Entry – spread – P1 + ATRH
  • The second condition is that three consecutive candles form with higher highs and higher lows after SBar forms.

With regard to the second condition, if it’s impossible to move SL to RSL because the third candle closed below entry and too close to SL, then you can only move SL to RSL once there’s a subsequent candle that closes above entry.

Once SL has been moved to RSL, and if price continues moving higher, move your SL to SW if SWT is hit.

  • SWT @ TP – (ATRH x 0.2)
  • SW @ Entry + (ATRH x 0.2)

If price continues moving higher still, wait until price moves higher past TP.

  • TP @ Entry – spread – P1+ (ATRH x 1.9)

If price goes above TP, then the trailing rules kick in. You can only move your SL every time there’s an HHHL pattern

  • If a new HHHL pattern forms, set new SL @ Bar1 Low of the new HHHL pattern less (ATRH x 0.2)
  • However, if  the range of the SBar (SBar High – SBar Low) is greater than or equal to (2 x ATRH), then SL = Sbar Low of the HHHL pattern less (ATRH x 0.2)

If going short:

Make sure to set the following initially:

  • Then set SL @ Entry + spread + P1 + (ATRH x 1.3)

If trade is triggered and price moves up, you must reduce your risk by moving your SL to RSL as soon as possible.

  • RSL @ Entry + spread + P1 + ((ATRH x 1.3) x 0.5)

And you can only move SL to RSL if either of two conditions are met.

  • The first condition is that RSLT is hit.
  • RSLT @ Entry + spread + P1 – ATRH
  • The second condition is that three consecutive candles form with lower highs and lower lows after SBar forms.

With regard to the second condition, if it’s impossible to move SL to RSL because the third candle closed above entry and too close to SL, then you can only move SL to RSL once there’s a subsequent candle that closes below entry.

Once SL has been moved to RSL, and if price continues moving lower, move your SL to SW if SWT is hit.

  • SWT @ TP + (ATRH x 0.2)
  • SW @ Entry – (ATRH x 0.2)

If price continues moving lower still, wait until price moves lower past TP.

  • TP @ Entry + spread + P1 – (ATRH x 1.9)

If price goes below TP, then the trailing rules kick in. You can only move your SL every time there’s an LHLL pattern

  • If a new LHLL pattern forms, then set the new SL @ Bar1 High of the LHLL pattern plus (ATRH x 0.2)
  • However, if  the range of the SBar (SBar High – SBar Low) is greater than or equal to (2 x ATRH), then SL = Sbar High of the HHHL pattern plus (ATRH x 0.2)