The whole truth about the Sniper trading strategy
Hello, colleagues forex traders!
In the comments to the articles, you often ask to talk about the Sniper system: is there any point in trading on it, is it a divorce or not, and what are the reviews.
The trading strategy “Sniper” is an example of a successful combination of widespread rules of technical analysis with tactics of money management and aggressive marketing promotion. As a result, hundreds gave their hard-earned money for classical technical analysis.
Today we will understand the rules of the Sniper system, the secrets of its success among the population, and also consider examples of transactions.
Was there a boy?
Today's material is devoted to the Sniper strategy, which over the six years of its existence has become the subject of constant discussion on the Internet. Despite the “long life” and the mention of the system in various sources, it is more a successful marketing product than a “grail”. The creators well thought out a way to spread the strategy among beginners, collecting it on simple and reliable trading postulates, which picked up beautiful names in order to bring down an associative series and provide “beautiful packaging”. This made it possible to fulfill the desire of the bulk of newcomers coming to the market “to trade right now,” and the network of distributors with enthusiastic reviews provided the clientele.
Due to the lack of indicators, it is impossible to develop clear rules for following the strategy and conduct its tests to prevent the threat of a deposit drain. There are also many questions regarding the correct determination of resistance and support levels, as well as flat zones used in trading. The purpose of this material is to show that the principles of the Sniper system are based on simple principles that cannot be improved.
However, after 2016, the author of the strategy was able to automate its algorithm and diversify with additional blocks. However, the principles of their construction do not differ from the general postulates of the strategy. Today we will analyze this strategy in the most detailed way.
Characteristics of the trading system "Sniper"
Platform: MetaTrader 4
Currency pairs: any
Trading time: during the day without rollover, excluding moments of important news
Recommended brokers: Alpari, RoboForex, Exness
Key principles of the strategy
“Sniper” is an intraday trading system for trading according to the trend determined by the direction of breakdown of the “night flat”, followed by confirmation in the form of support or resistance levels formed along the way.
The strategy has a clear entry point at the beginning of the day, and it contains the classic Dow Jones theory with three market phases: accumulation (flat), jerk (impulse) and correction (reversal).
In fact, traders open the first deal of the day in the direction of the “London candles”, winning back the opening of European exchanges, which is accompanied by an increase in liquidity and volatility. This is the so-called London explosion strategy.
At the same time, the author does not insist on a large number of transactions, offering to keep the transaction until the trend develops “in our direction”. To make it “psychologically easy” for the trader to follow the trend, Pavel Dmitriev uses the tactics of transferring the stop to breakeven, but does this by taking profit, by closing 50% of the position. It is extremely important for beginners to “feel the money” at the start and it is impossible to know the “bitterness of big losses”, so the size of the stop and profit is 10-20 points.To avoid "knocking out stops", the Sniper system prohibits trading during the period of economic news. The input is used after the impulse, which leaves behind a flat zone, which acts as a natural obstacle to any pullback.
Take-profit strategy is defined in the pivot points where the most possible reversal. The author of the strategy considers such points to be highs, lows, the closing price of the previous day, as well as resistance and support for higher timeframes.
These levels are marked in advance, before the start of trading. The trader is invited to closely monitor the behavior of the price when reaching the pivot zones in order to receive a reversal signal when forming the first flat zone opposite to the trend. By the way, this is a universal rule for determining a change in trend, because quotes can unfold sooner or later drawn key levels.
Terms of the Sniper Strategy
The trading system introduces its own names of resistance and support levels, moving away from professional slang generally accepted in trading.
- Banking level (BU) - closing of the previous daily candlelight GMT (minus 3 hours MSK);
- Levels drawn through the minimum and maximum points of the price of the previous trading day;
- Resistance and support levels of the senior timeframes (M30, H1, H4), called “total impulse levels” (TIU);
- Level of Rapid Change Trends (URST) - a candle with a long tail in the direction of the trend in the 5 or 15 minute range, after which the reversal movement begins;
- Impulse levels (IU) - the upper and lower borders of the flat on the M5-M15;
- Consolidation Zone (ZU) - a flat that occurs during the Asian session;
- Safe - closing a 50% take profit position equal to stop loss.
Renamed patterns and elements of Forex strategies included in the Sniper TS
Beginners who have come to study the Sniper strategy are invited to start by working out two elements - the Banking Level and the Consolidation Zone.
The banking level is issued by Pavel Dmitriev for know-how. He argues that due to a shift of 3 hours, you can determine the price level desired for transactions of large banks.
In fact, trading using the previous day's closing price as a reversal level has been extensively explored by Larry Williams in his book, Long-Term Secrets of Short-Term Trading. And disputes about the meaning of shifting the closing time of the day are discussed in detail in the materials of our site.
Closing the day is a significant level for a reversal, but obviously not Banking, as can be judged by the daily published tables of orders of large banks. Financial institutions are not tied to the closing price of the day.
The example below shows that on Monday, August 27, two banks opened a purchase on the EURUSD pair at prices of 1.1600 and 1.1625.
The banking level on Friday August 24 was 1.1620. As you can see from the example, the first bank bought the euro “at the bottom”, much lower than the bank level, and the second opened at the end of the day.
The consolidation zone is a consequence of the low liquidity of the “Asian session” arising from the absence of European and American traders. The low trading volume at this time of the day does not allow to overcome local support and resistance and form a trend.
On the chart of any currency pair, the consolidation of quotes is clearly visible, falling out in the evening, passing to the morning.
The biggest confusion is caused by the names “pulse level” and “total pulse level”. That is why this is happening.
The total impulse level is a line of resistance or support for a higher timeframe. Sometimes the author of the strategy talks about the zone, but only because the exact line is difficult to determine. The reason is that the author proposes a wording about the many touches and pullbacks of quotes from this level.
Nevertheless, this is a line, not a zone, while the Impulse Level is really a certain range of variation in prices moving horizontally, without a trend. This zone, unlike the total impulse level, is built on small working timeframes: M1, M5 or M15, depending on the preferences of the trader.
Therefore, the Impulse Level is a classic flat known since the publication of the Dow theory as a zone of accumulation or low liquidity. The authors of the strategy had to spend many years to automate the rules for finding the Impulse Level. However, there is a strategy of the Stairstep Breakout System, which allows you to build and trade fairly reliably at flat levels following the trend.
The Trend Shift Level is an easily recognizable Price Action pattern called a pin bar. Its distinctive feature is the appearance of a large tail in the direction of the trend. The logic of the expectation of a reversal is understandable - the movement came across a strong opposition from the opposite side.
Safe is an ideal marketing find of Pavel Dmitriev. The tactics of a 50% yield on take profit equal to stop were copied by many developers. There is nothing new in it, such an approach is equivalent to the widespread reception of money management - transferring a position to breakeven. However, the idea of taking profit to the account turned out to be an interesting psychological find.
The Sniper strategy consists of the trend and counter-trend parts of trading. All deals are opened after the formation of impulse levels - price consolidation zones on the M1-M15 timeframes:
- Sales transactions are opened under conditions of formation of the current level below the previous impulse level, as well as impulse breakdown of the lower flat border;
- In turn, purchase transactions are opened under conditions of formation of the current level above the previous impulse level, as well as impulse breakdown of the lower flat border.
Flat zones are defined by the Sniper TS as the range of oscillations between the levels of local resistance and support. They are determined by the largest number of points of contact and rollback on the horizontal movement of quotes. But practice shows that their length can be any, the presence of the pulse itself is important.
Entrance to the market is carried out after breaking the flat border in the direction of the trend - a candle with a wide range. The trend is determined by the location of the impulse level relative to the previous such level. Entrance to the market is made after the rollback of the price, under the following conditions:
- If the pulse candle exceeds a range of 4 points from the lower or upper border of the flat, depending on the direction of entry;
- If the rollback level was at least 15 points from the lower or upper point of the price extreme, depending on the direction of entry.
Counter-trend transactions are carried out at bank levels, total impulse levels and at the level of a sharp change in trend.
The banking level is held at the point of the last closing price at 0:00 GMT. In most cases, quotes for the current session will unfold after the breakdown of the banking level. Therefore, on the M1-M15 working timeframe, the trader is waiting for a flat to form in the direction of the rollback. This will be the first impulse level for entry according to the rules described above.
By the same principle, we make transactions on pullbacks from resistance or support of higher timeframes, which are called total impulse levels in the strategy.
The trader must track them during the session and transfer in advance to the chart candles M1-M15. Therefore, trading is conducted on two charts, with the M30-H4 ranges being additionally open.
When approaching, breakdown and price reversal, as in the case with the bank level, you should determine the first zone of the impulse level on M15 and wait for the impulse breakdown of the price to enter during the rollback.
The level of a sharp change in trend is a pin bar, after which a quote reversal occurs. If you find such candles on the M5-M15, the rules of the trading system require you to note this level and be ready to enter the retest - return the price with the formation of the zone of the pulse level. But in this case, the trader is asked to wait for an impulse breakdown in the opposite direction of the trend. That is, down from resistance or up from supporting the level of a sharp change in trend.
It is logical to assume that reversal pin-bars often coincide with the closure of the previous day or levels of resistance and support.
Where does the session begin, or the Consolidation Zone, as the first entry point of the “Sniper”
The "Night Session" is allocated by the Sniper trading system to a special "consolidation zone". The trading strategy involves opening the day with a deal, in the direction of an impulse exit for this zone. At the same time, the flat width should not exceed 20 points, and the rollback after the impulse should approach at least 25 points.
Safe and money management
Entrance with two orders is a prerequisite of the strategy. One of the orders is closed at a pre-set take profit equal to stop loss (usually within 15-20 points). Stop loss is usually placed behind the maximum or minimum of the candles of the zone of the pulse level. Early closure of one of the orders provides the second breakeven if a stop is triggered and psychological support for the trader in the form of profit already received.
According to the recommendations of the trading strategy, the trader should not exceed 10% of the deposit for one transaction. If it is completely merged, trading should be stopped for one day.
It is impossible:
- Trade on the news or leave both deals open on their market entry;
- Enter inside the pulse level;
- Increase lots during the session.
Examples of transactions in the classic trading system "Sniper"
In order not to bother you with the terms coined by Paul, we will call the formations by their proper names and will not mention various impulse levels, banking levels and other fantasies of the author of the TS.
Before the start of trading for the selected pair, the day should be closed on the chart and the levels of resistance and support for higher timeframes.
After that, the trader should switch to the candles of the working range and indicate the flat that arose during the Asian session. The candle breaks up at 4:30 in the morning, but you can’t enter, as a pin bar is formed, which arose near the close of the last session. In this case, the trader should expect the formation of a flat range under the pin bar, and enter in the opposite direction. In our case, we are waiting for a short.
Please note: the flat zone is the same as the previous flat consolidation. In the secret part of the Sniper strategy, such a formation is regarded as a guaranteed rebound to the top. However, according to the classical rules of the strategy, we can only take shorts due to the formation of a pin bar, therefore we ignore the price advance.
An upward impulse forms another pin-bar, which coincides with the resistance of the higher timeframe. The trader expects the formation of a consolidation range below this level in order to trade a reversal on the breakdown of local support. When this finally happens - the deal has to be postponed due to lack of momentum - the range of the candle is too small (less than 4 points).
Quotes go up, but rest against resistance. According to the rules of the strategy, we are obliged to wait for a reversal, therefore, we are preparing to enter the short after the formation of a flat zone under resistance. Sale takes place on a rollback, following a breakdown with a range of more than four points. A pending order was placed on support, which became resistance, as the price closed below the line of the higher timeframe. The stop size determined the take profit of the first transaction according to the safe rule.
But both trades were closed before the take profit of the first transaction was triggered, because the price approached the next level of support for the higher timeframe.
The first deal of the day should be held until the take profit is triggered at the higher timeframe levels. This allows you to catch the trend, while the TS does not provide for the creation of a "pyramid".
As you can see from the example, the flat of the Asian session was broken down, which gave a signal to enter two orders according to the safe rule. A point for the transaction gave a rollback of the candle with a range of more than 4 points following the impulse breakdown. According to the rules of the “Sniper” strategy, the correction approached a distance of less than 20 points from the upper border of the consolidation zone, and the stop is placed one tick above the flat maximum.
After the fall, another flat level is formed below the previous one. This is a signal that the trend is going down and should be sold on the breakdown of the lower border. However, the previous transaction has not been completed, so the trader should not take any action.
An impulse that returns the price above the entry level does not cancel the position taken. The stop didn’t work - and the safe, whose take profit is always equal to the stop, closes one of the deals, actually transferring the second to breakeven.
Flat zones (1) and (3) coincide, Pavel Dmitriev considers this a signal of a guaranteed reversal, which is actually happening - EURUSD quotes go down, clinging to the take-profit of the safe along the way.
In fact - after the first entry point in the second range, due to a turn up, there could be no deal. But in the third case, it could be at the closing point of the candle formed after the impulse. In this case, we would ignore the “best entry” at the maximum of the tail, since entry is prohibited inside the flat.
In 2016 and 2017, introducing the concept of “blocks”, Pavel Dmitriev deviates from these rules, but our material considers the classic version of the strategy.
After the first take profit was triggered according to the safe rule, the second part closed at the level of support for the senior TF.
In the theoretical part of the Sniper strategy, special attention is paid to counter-trend transactions, after the formation of pin-bars. It is believed that they rarely bring big profits, therefore, in some versions of Sniper, after a pullback, locks were opened on these candles.
Often, pin-bars coincide with resistance / support or closing of the day. Consider the case in which both reversal candles formed at the support and the level of the end of the session, shifted by 3 hours.
The first was the reason for opening a deal, after the formation of a flat zone above it and a breakdown of an impulse above 4 points.
The upward movement was strong, which made it possible to close the first transaction according to the safe rule within 15 minutes. The second pin-bar candle brought profit on the second order, as it touched the biased level of closing the day.
The review considers the classic version of the Sniper strategy. The changes in 2016-2017, which were released in the fourth version, introduced the concept of blocks instead of flat, shifting the entry of orders to the borders where stop loss used to be. In the secret parts of the training, traders are promised that they will show 100% reversal patterns. The review also ignored Loki, overclocking a deposit - entering with a double number of orders at counter-trend levels.
These changes represent the marketing move necessary to promote new versions of the strategy, representing all the same principles of trading that were originally set out by intraday levels.