what do you guys think of a system that can be used to fade and trend
use daily to trade:
use bollinge bands 20 period with 2 std deviation
linear weighted moving average 200 and 20
when price closes below the moving average 200:
when price closes below -2 std deviation, sell
limit when price closes above 20 moving average
when price closes above +2 std deviation, sell
limit when price closes below 20 moving average
Reverse the steps when price close above moving average 200
rationale:
when price closes below the 200 moving average, there's a high probability that price is going to go down. When it hits the -2 std deviation, this is a sure signal for a down trend
At the same time, when the price closes above the +2 band, we are going to sell since there is a strong probability that it will correct itself to the downward movement since the price is below the 200 moving average.
Use the 20 moving average for limits. Set stops at 150 pips..
i know it's crude and there can be variety of ways of modifying this..but i just came up with this when i read "mechanical trading systems" by Weissman
So in a way you can use this in both trends and fading environment. It just depends where the price is in relation to the 200 moving average.
whatchu guys think???!!?
use daily to trade:
use bollinge bands 20 period with 2 std deviation
linear weighted moving average 200 and 20
when price closes below the moving average 200:
when price closes below -2 std deviation, sell
limit when price closes above 20 moving average
when price closes above +2 std deviation, sell
limit when price closes below 20 moving average
Reverse the steps when price close above moving average 200
rationale:
when price closes below the 200 moving average, there's a high probability that price is going to go down. When it hits the -2 std deviation, this is a sure signal for a down trend
At the same time, when the price closes above the +2 band, we are going to sell since there is a strong probability that it will correct itself to the downward movement since the price is below the 200 moving average.
Use the 20 moving average for limits. Set stops at 150 pips..
i know it's crude and there can be variety of ways of modifying this..but i just came up with this when i read "mechanical trading systems" by Weissman
So in a way you can use this in both trends and fading environment. It just depends where the price is in relation to the 200 moving average.
whatchu guys think???!!?
Working towards CME membership