The trading system can be summarised as follows:
- Suppose you are going to trade a daily chart. First use a longer time frame, namely, a weekly chart to assess the tide of the pair. Use MACD to assess the tide.
- Move to daily chart, use daily Elder-ray and Stochastics Oscillator to assess the wave of the pair.
- Use stop order to place an order.
After optimization, I have found that the best stratege of using the Triple Screen Trading System for EURUSD can be summarised as follows.
- If the last two weeks MACD(12,26,9,Main_Mode,Typical_Price) are negative and move upward, and the daily Bear Power is moving from negative to positve, set up a Buy Stop order at 1 pips higher than yesterday's High. Stop Loss 100 pips and Take Profit 350 pips. (PS: I believe that "1 pips higher" is not important at all, but I used it in my backtest).
- If the last two weeks MACD(12,26,9,Main_Mode,Typical_Price) are positive and move downward, and the daily Bull Power is moving from positve to negative, set up a Sell Stop order at a certain pips lower than yesterday's Low. Stop Loss 100 pips and Take Profit 350 pips.
Bear Power = Yesterday's Low - EMA13_Typical_Price;
Bull Power = Yesterday's High - EMA13_Typical_Price.
If I use Traditional / Mainstream MACD Histogram as an indicator as Elder suggested, the annual trade is only 5, and it's not very profitable. By contrast, if I use MT4's MACD MAIN_MODE, the annual trade is 11, and the system is always profitable when you choose any STOP_LOSS between 50 pips and 250 pips, and any TAKE_PROFIT between 200 pips and 500 pips, as shown in the screenshot of
As STOP LOSS is 100 pips, if you want to control the risk of each trade under 2.00%, the actual leverage should be 2:1. As Take Profit is 350 pips, this means the potential reward of each trade is 7%. The annual trade is 11, and the over-all winning chance is 0.54. So the annual return is
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