DiNapoli's strategy.
The overwhelming number of traders are very biased towards trading options from the long past, because they are confident that the markets have changed a lot, and the tactics that were relevant 10-20 years ago are incapable of generating profit in today's realities.
Of course, there is a rational grain in this statement, but if you look at most modern Forex trading strategies, you will see that they are based on the same old indicators, which are slightly modified.
Therefore, it is quite stupid to write off strategies that have crossed the ten-year threshold, especially if they were able to bring huge profits to someone.
One of these strategies, which we will look at in this article, was created by John Dinapoli, a famous trader with more than thirty years of trading experience.
It is worth noting that John DiNapoli described many approaches and signals for entering the market in his book, and DiNapoli’s strategy in question is only one of them.
The strategy itself is universal and can be used on any currency pair or CFD, and the strategy itself is designed for intraday and medium-term trading.
Setting up DiNapoli's strategy
To use the strategy in any trading platform, plot a moving average with a period of 25 and an offset of 5, as well as a moving average with a period of 3 and an offset of 3.
In addition to these two indicators, add and Stochastic
indicator Also, to implement the strategy, your platform must have the Fibonacci Grid tool. For users of the MT4 trading platform, we have prepared a special template, by downloading and installing which you can use the strategy in a matter of minutes.
To install the template, you will need to download it and then place it in the appropriate folder in the terminal data directory.
To access the data catalog, launch your MT4 and in the upper left corner go to the file menu. You will see a list of options, among which you should find and run the option called “Open data directory”.
Then, after launching the directory, a list of system folders will appear on your monitor screen, among which find the folder called Template and drop the downloaded DiNapoli strategy template file into it.
It is very important to restart the trading platform after installation or update it in the navigator panel, otherwise the terminal will not see the new files.
After the platform has restarted, open the hourly or four-hour chart of your chosen currency pair and run the DiNapoli template on it.
Signals of the DiNapoli strategy
If you get acquainted with the book of John DiNapoli, you can see that indicators in almost all of his approaches are used only as a trend definition, and not as signal tools.
In the case of DiNapoli's strategy, we can observe the same picture.
Thus, the main signal tool in the strategy is the Fibonacci grid, or, to be more precise, the level 38.2.
For a downward wave, the grid is built from the top point (maximum) to the bottom point (minimum).
For an ascending wave, the construction occurs from the lowest point (the minimum of the wave) to the maximum point of the wave.
Level 38.2 acts as a signal tool, namely, a position is opened for its breakdown, and other indicators act only as a filter. So let's get straight to the signals.
Signal to buy:
1) The price breaks the Fibonacci grid level 38.2 from bottom to top.
2) At the moment of breakdown, the moving average with a period of 3 should be above the moving average with a period of 25.
3) The histogram of the MACD indicator hits level 0 or is above this level.
4) The lines of the Stochastic indicator are directed upward and may be in the overbought zone.
The author of the strategy believed that in the overbought zone of the stochastic oscillator, only weak players leave the market, while strong ones continue to push the price up.
The stop order should be set at the level of the local minimum or at the level 23.6 of the Fibonacci grid. Exit from the position occurs at profit, which must be no less than the stop order in points.
You can take the level 61.8 as a guide. Example:
Signal to sell:
1) The price breaks the Fibonacci grid level 38.2 from top to bottom.
2) At the moment of breakdown, the moving average with a period of 3 should be below the moving average with a period of 25.
3) The histogram of the MACD indicator nails level 0 from top to bottom or be below this level.
4) The lines of the Stochastic indicator are directed downward and may be in the oversold zone.
The placement of stop orders and profits by Fibonacci levels is similar to what we considered when opening a buy position.
Example:
In conclusion, it is worth noting that the DiNapoli strategy is primarily designed for more experienced market participants who know how to work not only with indicators, but also with Fibonacci .
Another nice feature of the strategy is the fact that when you place stops and profits on a grid, your risk will be one and a half times less than your potential profit.
Download a ready-made Dinapoli strategy template .