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The Bladerunner is a forex price action method that uses purely price action to find entries. In trading this strategy, the factors also involved are candlesticks, pivot points, round numbers and support and resistance levels. Off-chart indicators and Fibonacci levels aren’t required, but if you feel like putting them there, feel free.

However the important indicator here is an on-chart one, the 20 EMA (Exponential Moving Average). This is what makes this strategy as a “bladerunner”— because the 20 EMA acts like a knife edge separating price.

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Now this method can be used on any pair and on any time frame. While it can be traded at almost any time of the day, there are specific hours in the day that are more reliable than others. For instance, the morning hours of the Asian session may deliver a decent break out and retest giving an entry as opposed to the afternoon session which can be very slow. Then in London trading, the opening of the market may be too irregular and volatile to provide any entries for any strategies. On the other hand, after the string of news and announcements and price has settled, chances for one or two reliable entries may be provided.

Here are key points to note: if the price falls below the 20 EMA, our bias is short and we would be looking for price to move up and hit the 20 EMA, reject and then move down.

If price passes through the 20 EMA and closes credibly above it, we consider price to have switched polarity and now our bias changes to long. From then on, we would be looking for price to move down and hit the 20 EMA, reject and then move up.

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Trading this Strategy

Now the vital entry factors for the bladerunner strategy is that the price must break out of consolidation or a range before entering. In other words, it must be trending. The price must then retest the 20 EMA successfully.

But what constitutes a successful retest, you ask?

If the price floats above the EMA, it must bounce from and stay above the EMA, and vice versa when the price is below the EMA. More precisely, the first candle that touches the EMA should close on the same side of the EMA as it approached it from. This becomes the signal candle.

The price has now rejected from the EMA and we are waiting if the next candle confirms the move. If the next candle continues the move away from the EMA, then this candle becomes the confirmatory candle.

Note that if the bladerunner seems basic, it is because forex price action and current fundamentals are factored into trading decisions. No entry is ever taken based only on price having rejected from the 20 EMA.

Always look for a convergence of motives to enter the trade. For instance, it’s safer to have more than just a rejection from the 20 EMA. You would prefer to see this happening at the same place as an old support / resistance level, pivot level or other noteworthy price impact point.

Monitor approaching news announcements when trading this setup, especially on the lower time frame charts. A tip is to not enter any trade within 30 to 45 minutes before a scheduled news event, and wait at least 15 minutes after the event before considering a trade.

And importantly, always trade with the direction of the current trend, as identified by which side of the EMA or polarity indicator price is currently on.

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Bladerunner: Order placement

For a long entry, here is what we suggest doing:

  • 2 buy stop orders are positioned with entry 2 pips above the confirmatory candle.
  • Orders expire at the start of a new candle; for instance, entering limit orders on the five-minute chart will expire at the beginning of the next candle, unless they have already been filled by price action on the current candle.
  • The stop loss is placed 2 pips below the signal candle that touched the 20 EMA. You may position the stop behind a recent swing point if you deem that would give a more realistic stop size.
  • The take profit for the first order is set at an amount equivalent to the risk in pips.
  • The take profit for the second order is set at an amount equivalent to double the risk in pips.

For a short entry:

  • 2 sell stop orders are put with entry 2 pips below the confirmatory candle.
  • Orders expire at the start of a new candle.
  • The stop loss is positioned 2 pips above the signal candle that touched the 20 EMA, and as mentioned above, this rule isn’t mandatory as it is up to your discretion.
  • The take profit for the first order is set at an amount equivalent to the risk in pips.
  • The take profit for the second order is set at an amount equivalent to double the risk in pips.

Once the price has moved in favor of the trade by an amount equivalent to the original risk, one of the orders is closed and the stop loss on the remaining order is moved to breakeven.

This remaining order’s stop is then left at breakeven until the market ends the trade, either by hitting the profit target or by stopping out at breakeven. But there may be times when you may want to continue trailing the stop past breakeven, like when a news announcement is coming up.

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