Hello Again,
Some of you may know me from my Journal "WaveTrade". I started that thread at the end of August 06' as a journal of my FX trades based on a system that I had developed, primarily based on range trading and exhaustion signals. Range trading and price movement trading, is my style and the type of trading that I feel yields the best results in the long run when proper, conservative money management techniques are in practice. I also started the WaveTrade thread to inspire fellow traders who are frustraded, to take a step back, define their goals, lifestyle best suited for trading and develop something of their own. This is why I haven't revealed all the system techniques in WaveTrade, no point in just giving away the fish, when we can all learn to fish.
A couple of weeks ago, I was starting to develop another system based on fibonacci spreads with fixme1too. That is still in development, however, there is another technique that is very simple that can yield great results when executed properly. This new technique is based on Price Channels. One word of caution with range trading is that it fails in large trending moves when it breaks it's range. Dialist said it best in one of his posts, (paraphrasing) "Their are a lot of good range traders, and trend traders, but it takes someone exceptional to trade both, consistantly", or something like that. Well, we will work on the latter later! In the meantime, remember the market trades within a range 70% of the time.
Every currency pair is unique, even with correlation they behave slightly differently, and work to a slightly different set of rules in a system. So my proposal to those interested is this; because I am busy with life and WaveTrade, which is my primary system and will continue, I would like those of interest to run back testing on different currency pairs to find the best criteria/rules to trade in price channels and share them with the thread, so we can all develop a system together. I have no idea if this type of system has been done, or a version of, but suspect it has as it is very basic, but the point is to refine it and put it to practice for ourselves and discover the characteristics of a system and currency pairs within.
For now, I am posting the rules and setup to follow with the price channel GPB/USD pair:
Basic Candle chart, using:
Some of you may know me from my Journal "WaveTrade". I started that thread at the end of August 06' as a journal of my FX trades based on a system that I had developed, primarily based on range trading and exhaustion signals. Range trading and price movement trading, is my style and the type of trading that I feel yields the best results in the long run when proper, conservative money management techniques are in practice. I also started the WaveTrade thread to inspire fellow traders who are frustraded, to take a step back, define their goals, lifestyle best suited for trading and develop something of their own. This is why I haven't revealed all the system techniques in WaveTrade, no point in just giving away the fish, when we can all learn to fish.
A couple of weeks ago, I was starting to develop another system based on fibonacci spreads with fixme1too. That is still in development, however, there is another technique that is very simple that can yield great results when executed properly. This new technique is based on Price Channels. One word of caution with range trading is that it fails in large trending moves when it breaks it's range. Dialist said it best in one of his posts, (paraphrasing) "Their are a lot of good range traders, and trend traders, but it takes someone exceptional to trade both, consistantly", or something like that. Well, we will work on the latter later! In the meantime, remember the market trades within a range 70% of the time.
Every currency pair is unique, even with correlation they behave slightly differently, and work to a slightly different set of rules in a system. So my proposal to those interested is this; because I am busy with life and WaveTrade, which is my primary system and will continue, I would like those of interest to run back testing on different currency pairs to find the best criteria/rules to trade in price channels and share them with the thread, so we can all develop a system together. I have no idea if this type of system has been done, or a version of, but suspect it has as it is very basic, but the point is to refine it and put it to practice for ourselves and discover the characteristics of a system and currency pairs within.
For now, I am posting the rules and setup to follow with the price channel GPB/USD pair:
Basic Candle chart, using:
- Daily Charts
- Price channel 10 (remove the middle)
- EMA 10
Entry:
- Whenever the candle closes outside the channel lines, this is the entry (closing price or as close to it)
- Target is half way between that days opposite channel line and the EMA10
- Potential is the difference between the closing pice and the target.
- Stop is the 60% of the potential +/- to the entry price. R/R 1.66 to 1.
Additional:
- If we are stopped out, before re-entering, the price must touch the EMA10 before exceeding the channel line on a close.
Attached are the preliminary back test results from December 2005:
I have done the setups for the EUR, CHF, and CAN as well as the back testing but would like to redo them as the results are good but not as good as the GBP, feel free to take on the project and let us know the results. The setups are the same except the CAN uses PC7. Modify and test at your leisure.
Northpro
Attached File(s)
