The BANANA Technique [The Trading Course]

[immy]

The BANANA Technique [The Trading Course]
 

These are the 9 Markets I shall be trading on the Hourly charts using the HUNT 2.0 Method 

Questions that Help Create the Entry Setup

Edited 23 March 2022: 




These 7 Questions help understand when to take the Banana Signal. 

The 7 RULES to Qualify The BANANA Signal EXPLAINED with Examples



 
 Ask these Questions to Qualify a Banana Signal: 

 Question 1: Is there an Impulse Move?  Is there a Breakout with a Higher High or Lower Low?

Explanation:

There is a good Impulse move with at least 1,2 or 3 trend candles that has little to no wicks. If there was a trading range before then there must be a Breakout. A breakout can happen out of a Trading Range or if there is a confirmed trend, there must be a New Higher High for Longs or New Lower Low for Shorts. I am looking for 2-3 Trend Candles that break out of a trading range or when there is a trend I am looking for a new swing high or low.

 Question 2: Is there a good pullback? 

Explanation:

After an impulse move price takes 1-2-3 up to 5 candle pullback before it enters past 10 ema. The pullback candles are often smaller in range while the 10 and 20 lines are still separated and pointing up or down.  Best Single Leg pullbacks end near 10 while the best 2 legged Pullback ends near 20. I only take single-legged pullbacks. 

 Question 3: Is the Impulse move too climactic? 

Explanation:  

Price should not be too far from Dashed Line. I don’t want signals when the Rubber Band Effect is present which means the price went too far too fast away from breakout and the moving averages.  

 Question 4: Is the Pullback Impulsive? 

Explanation:

The pullback candles have a smaller range compared to impulse moves. You want to see smaller candles like inside candles, dojis etc.  If the pullback candles are equally or more impulsive than the impulse candles or if the price goes back inside the trading range then filter the signal. (The 10 ema (or the 5ema i.e dashed line)  should not point down.) 

Link 1

 Question 5: Is this the first or the second pullback?

Explanation: 

We want to trade trends and we want to get in relatively early into the trend. Not too early, but not too late either. Hence we want to get in on the first or the 2nd pullback. The probability of bigger winners, higher risk to reward ratio trades, drops as the trend develops. So, the best is to take 1st and 2nd or maybe sometimes a 3rd pullback but nothing after that. 
(Link 1, Link 2) 



 Question 6: Is there an S/R Level near Entry Level?

Explanation: 

We want to trade within the trend, which means there are supposed to be no support and resistance pivot zones near or on the left of the entry levels. We will see swing highs and lows within trends but swing highs and lows are not always support and resistance levels. 

If yes, do not trade until that level is clear. The S/R level should be a Trading Range High or Low from the HTF. e.g. when trading H1/M5 H1 should be out of TR. For M5/M1 it should be either or both. 

 Question 7: Is M5 (the next higher time frame) Breakout Phase or Pulling Back?

Explanation: 

Ideally, the chances of success will be higher if there is a trend going on in both current and higher time frames. But this is not a holy grail or a secret cheat code.  Generally, if the higher time frame (D1 for H1 or H4 for H1, M5 for M1) is showing a Breakout Trend then wait for a pullback on the m1. If the m5 (of higher time frame) chart is showing pullback, wait for at least the high of the m5 candle to be broken. You must understand the Market Cycle to understand this. If you don't, its ok but will be best to learn the market cycle. 



 

=============================================================================
 Edited Out Previous Rules as of 6 Feb 2022

The following Questions no longer applied. Effective 6th Feb 2022
Question 1: Is there an Impulse Move?

IF yes then go to Question 2, If No then-No Trade 

Question 2: Is there a shallow pullback? 

If Yes then go to Question 3 else no trade. 

Question 3: Is there a tradeable signal? 

=======================================================================================
 
Edited Out Previous 4 Rules as of 23 March 2022

4 Rules to Create The Banana Signal

Four Rules to Qualify The SetupRule 1: There is a Breakout with a New Higher High or Lower Low and 
Rule 2: There is a good Impulse move with at least 1,2 or 3 trend candles that has little to no wicks
Rule 3: There is a pullback towards the dashed line and/or retest of the previous level to the left. The pullback smaller candles do not pullback more than the black line.
Rule 4: The Pullback ends with a Banana Signal. 

IF yes, Set a pending order with 1R SL using the range of the signal candle and 2R Target point. 

If no, then wait for the signal and no trade for now. 

If Order is not triggered and another signal appears, delete the first order and set a new order based on the new signal. 
==========================================================================================================
 
 
 
There are 2 Setups I look for.

Everything STARTS with a Tight Trading Range. 

✔ So Look and WAIT for Tight Trading Ranges... and then

✔  Wait for a Breakout.... 

✔  Then wait for pullback 

✔ Then wait for Signal .... Sounds simple right? 

It is! 
 
 

Two Types of Setups.png

 
Banana Flowchart 1 

 

bfc.png

 

Banana Flowchart 2 

 

BFC2.png

 
 
 
 
 
 
 
 
 
 

[immy]

Risk and Trade Management

Example based on Prop Firm Challenge of Account Size of  $50,000 

Account Profit Target: $5000 (10%) 
Account Maximum Loss: = -10% (-$5,000) 
Daily Stop Loss: $2500

Total Risk at any point in time? 
Take all the signals that appear during the day but take only 3-4 signals per session.  

How much to risk per trade?
Risk Per Trade should always be 1%. (NEVER LESS - NEVER MORE)

Daily Stop Loss: 
The daily Loss Limit is $2500 so don’t go more than 4 Loss trades per day. 

Where to Setup up Target Points: 
Always set a 3R Target Point. No questions asked. 

How to Manage Trades: (Simple = ATM Does it, if you have it)

Stop Loss -1R (Range of Candle)
BreakEven: Move SL to BE at +1R
Target Point: 
ALWAYS Set take profit levels at 3R. e.g. (10 SL 30 TP move SL to Be at 10+)

Once I set Target 3R I will not touch trade once entry is made. 

Here is another Trick I do to gain more profit
When you can find a SEED or a signal that is less than 1ATR or say it's less than 10 ticks for DAX M1. 
Always go for 5R in this situation. E.g if you can find a SEED signal on EU H1 Chart with a SL of 5-7, then set your profit level at 50. 1:5 trade. 
 


Aggressive but Effective Risk Management Technique to Win Funded Traders Prop Firm Challenge

Asymmetric Compounding Method 

Target is 8% or 10%. 
The chances of 2 Consecutive Win Trades are pretty high on this system. 

The chances of hitting 3R winners are always pretty good. 

Here is how to do it. 

Risk Per Trade   
We will risk 1% or 4% per trade depending on the result of the last trade.        
       
Target Points are always 3R 

Risk Per Trade is Dynamic and dependent on the result of the last trade.  

Step 1: Risk 1% on First Trade                
                
    Step 2a: If first trade is winner, Risk 4% with 3R Target on Next Trade                
                
       Step 2b: If the first trade is loser Risk 1% with 3R Target.                
                
Step 3: If the next trade is a loser, Risk 1%   with 3R Target.               
                
Step 4: If Last Trade is Winner Risk 4% with 3R Target.                
                
Target Point: Target Always 3R. Win on 1% Riks is 3% but Win on 2nd Winner is 12%. Boom      

Stop Loss to BE: Move the Stop loss to BE at 1.5R profit or 2R Profit.  

Win FTMO Challenge within 2 Trades.         
Here is how One trader who does not like to be named won a 250K account. 
An example is taken from his trades based on a 50K account
https://www.screencast.com/t/lNf0HBs4xw




====================================================================================
Alternative Version (0.5% - 2%)

If your broker or prop firm does not allow a 4% position (become lot size gets bigger) then you can use the following solution

Divide the Risk percentage by 2. 

Risk per trade: 0.5% 
Risk after 1 winner 2%. 

Now let's say you win a trade, you're now up 1.5%. 

The next trade will be taken with 2% risk. If you win the next trade, you are now up 6%. 

If you lose the next trade, you'll be own 2%. So in total, you're now up (1.5+6-2 = 5.5%)

Since you've lost the last trade, now you will come down to 0.5% risk per trade. 

Say you lost this, now you're down to 5%.  
Now say you lost two more, you're now at 4% total wins. 

suppose the next two trades are winners
On first trade, you've gone in total to 5.5% and then a 6% winner and you're up 11.5% and your challenge has been won. 
 
 (Edit 10/2/2022)
 

Also Check this calculation based on actual trades. (3R targets are assumed) 2R is real.

I have calculated alternatives. What happens if you use a 0.5%-2% model with 2R targets and then 3R targets. Which one wins? 
 

[immy]

I have searched the forums and find the reference to banana and cherry signals.   I see the cherry is a coded signal.  What exactly is the banana signal?  Apologies for the elementary question.

thank you,

Luke


 

The Banana Signal is the result of 10,000 hrs of trading and hundreds of hours of backtesting using a trading code of about 1000+ lines of Code.

We have tested the pullback pattern with the banana signal on the past 20 years of data on several time frame. 

The Banana is a concept I created this year from the hours and hours of chat and trading in the Discord Channel. 

It's simply a 3rd flavor (third entry alert) based on the Hunt 2.0 concept. But now we only use one entry indicator. 

The Hunt is designed to be in tune with eWave (AIMS Wave) and Gator. 

Whereas the Hunt 2.0 is in faster. It is based on the price itself. 

Here is more about the Banana Indicator and concept ... 

https://itradeaims.net/?s=banana
 

[immy]

I have searched the forums and find the reference to banana and cherry signals.   I see the cherry is a coded signal.  What exactly is the banana signal?  Apologies for the elementary question.

thank you,

Luke


 

The Banana is a concept I created this year from the hours and hours of chat and trading in the Discord Channel. 

Its simply a 3rd flavour (third entry alert) based on the Hunt 2.0 concept. 

The Hunt is designed to be in tune with eWave (AIMS Wave) and Gator. 

Whereas the Hunt 2.0 is in faster. It is based on the price itself. 

Here is more about the Banana Indicator and concept ... 

https://itradeaims.net/?s=banana

 

https://itradeaims.net/aims-the-hunt-2- ... indicator/
 

[mingyuliang]

Hi Immy, could you please explain the banana signal from the point of price action?
for example:  seed is an inside bar, cherry is a reverse bar.
because I only trade stocks with interactive brokers, the MT4 banana indicator is useless for me.

Thanks,
Milo

[immy]

Hi Immy, could you please explain the banana signal from the point of price action?
for example:  seed is an inside bar, cherry is a reverse bar.
because I only trade stocks with interactive brokers, the MT4 banana indicator is useless for me.

Thanks,
Milo


 

Hey Milo

Good question. 

The banana is based on the core concept behind the Hunt method. It is a code that simply Looks for a pullback situation. The Cherry and the Seed signals looked only at the pattern created by 1 or two candles. Whereas, the BANANA looks for a Pullback situation and then looks for a pattern on the individual candle as well. So it has signals based on 1,2,3 all the way up to 10 candle patterns. It's a slightly complex code. 

The Seed is an INSIDE Candle/BAr formation whereas Cherry is a candle formation that depicts some sort of rejection and indicates possible resumptio nof trend and end of correction / pullback. The banana is the bit of the code that is checked before the code for the SEED and Cherry is check. e.g. a SEED is an inside candle plus a banana. Likewise, the cherry must first conform to the banana concept then it becomes the cherry. 

But a banana will be a banana even if there is NO Confirmation candle formation such as Seed or banana. 

E.g. the Bullish Banana Signal will alert you regardless of the candle formation. It looks for whether the Current high is lower than the previous high and is the current low lower than the previous low and then in addition to that, it has the option of applying further filters. Such as if the close is above the dashed line (which could be either 5ema or 10ema)  is above the solid line (20eam or 10ema) and solid line (20ema) is above 100 etc. All of these filters can be modified in the settings. 

You can find more about how to use it on the blog ... https://itradeaims.net/aims-the-hunt-2- ... indicator/
The banana concept was born out of the experiments with the KC Method 
https://itradeaims.net/kc-method-step-by-step-guide/

Hope this helps 
 

[immy]

Hi Immy, could you please explain the banana signal from the point of price action?
for example:  seed is an inside bar, cherry is a reverse bar.
because I only trade stocks with interactive brokers, the MT4 banana indicator is useless for me.

Thanks,
Milo


 

Hey Milo

Good question. 

The banana is the based on the core concept behind the Hunt method. It is a code that simply Looks for a pullback situation. 
The Seed is an INSIDE Candle/BAr formation whereas Cherry is a candle formation that depicts some sort of rejection and indicates possible resumptio nof trend and end of correction / pullback. The banana is the bit of the code that is checked before the code for the SEED and Cherry is check. e.g. a SEED is an inside candle plus banana. Likewise the cherry must first conform to the banana concept then it becomes the cherry. 

But a banana will be a banana even if there is NO Confirmation candle formation such as Seed or banana. 

E.g. the a Bullish Banana Signal will alert you regardless of the candle formation. It looks for Is the Current high lower than the previous high and is the current low lower than the previous high and then in addition to that it has the option of applying further filters. Such as if the close is above the 10ema and 10 is above 20 and 20 is above 100. All of these filters can be modified in the settings. 

You can find more about how to use it on the blog ... https://itradeaims.net/aims-the-hunt-2- ... indicator/
The banana concept was born out of the experiments with the KC Method 
https://itradeaims.net/kc-method-step-by-step-guide/

Hope this helps 

 

The banana is an alert mechanism. Whenever there is a pullback situation it will print an alert on your screen. The Banana is a PRE Cherry Signal. It warns you before there will be a confirmation signal like cherry. 

How to Use Bananas a Trading Signal Only:  
To use BANANA as a confirmation signal only then make sure you turn option "Filter_CounterBars" set to true. Then it will not alert you simply because there was a pullback. 

I like the banana to alert me about pullbacks from where there are at the least 2 candles that pulled back. You can change it 1 or 3 bars by changing the Option "Number_of_Bars" to 1 2 or 3 in the Settings. 

[immy]

The Hunt 2.0 Method - 3 Entry Rules 3 Entry Types 9 Pairs
 

These are the 9 Markets I shall be trading on the Hourly charts using the HUNT 2.0 Method 

Hunt 2.0 Entry Setup Flow Chart

Question 1: Is there an Impulse Move ?

IF yes then go to Question 2, If No then No Trade 


Question 2: Is there a shallow pullback? 

If Yes then go to Question 3 else no trade. 

Question 3: Is there a tradeable signal? 

IF yes, Set a pending order with 1R SL using the range of the signal candle and 2R Target point. 

If no, then wait for signal and no trade for now. 

If Order is not triggered and another signal appear, delete first order and set a new order based on new signal. 

https://www.screencast.com/t/hAoFhfztFQ1

 




 

What does a good Hunt Signal look like?

Rule 1: There is a good Impulse move 2-3 trend candles with little to no wicks
Rule 2: The 10/20 are separated recently and rising up or falling down.
Rule 3: The Pullback has smaller candles, does not pullback more than 20ema..
Rule 4: The Pullback ends with a confirmation candle and a Hunt Signal. 

When Scanning Ask these Questions: 

Question 1: Where is the Impulse Move? 
Question 2: Is there a good pullback? 
Question 3: Is the Impulse move too climactic? If Yes, No Trade
Question 4: Is the Pullback too impulsive? If Yes, No Trade. 
 
 
Edited: 6 Feb 2022: Rules have been updated in the first post of this topic. 

[immy]

How to Deal with Climactic Impulse and Shallow Pullbacks?

The Hunt signals are a mechanism to enter into trends when the probability of success is the highest. 

The highest probability spots are the entry locations that provide the highest chances of getting a 1:2 Risk to Reward Ratio at the least. 

These entry points are located near the potential start of the trend or when the trend is confirmed and there is a 2nd pullback. 
Notice the word used is "potential". Because we never know if the next move is going to be the next trend or not at that point. 

The Market Cycles Helps with this More on this concept here :
Link 1: Market Cycle: https://itradeaims.net/market-cycle/
Link 2: Market Cycle and the Micro Phases  https://itradeaims.net/market-cycle-wha ... ro-phases/

We look for a consolidation or trading range. We wait for a breakout of this trading range. 
Trading Range will often turn into a trend with a strong momentum breakout. The momentum breakout is the form of the trending market that we like the most. During the breakout phase, there are no entries available on the current time frames. 
We then wait for the first pullback.
While we watch the breakout, we continue to monitor if it is going to pull back soon enough or if it is going to just continue going. In the latter case, it can be classed as climactic. A market that goes too far too fast away from the gator (10/20 ema) is supposed to snap back, we won't trust that pullabck. 
We like to see the breakout and immediate pullback to test the trading range highs/lows near 10/20 ema. 
That's where we want our first Hunt signal. This would usually happen on Day 1 or Day 2. 
The Second pullback is always after the first day of momentum moves. 
We don't want to trade the 3rd or 4th pullback. 

In the chart below I have highlighted Climactic breakout followed by a shallow pullback that was not within busy trading hours. This was then followed by a good pullback and a follow-through. 
https://www.screencast.com/t/sWo9ENWNGP


 

[immy]

In my previous post, I used the same chart to show climactic and shallow pullbacks. Below I have marked the same chart with market cycles and phases. 

https://www.screencast.com/t/tiJcB7tISIX