Aggressive Hourly Option
I was going to avoid mentioning this until later in the thread but I'm conscious that some people might want more aggressive entries. Here's an option for you.
I would advise you trade this style on the hourly charts only. I haven't tested it on other timeframes and I have a feeling it won't perform as well on them. Shorter will contain too much noise and longer will involve massive swings in capital.
We still use a 5 period smoothed moving average on the main chart but this time we have two of them. One is set to the High and the other is set to the Low. This creates a channel, which will be familiar to Roadmap traders.
In the sub-window, we change the smoothed moving averages to 5 and 13.
Let's look at some examples on a chart and I'll talk you through how to trade it.
We first look for a signal bar on the main chart. A signal bar is one that either closes above (for longs) or below (for shorts) the channel. Starting from the left, our signal bar is marked with an arrow. However, we don't yet have daylight in the sub-window. We need to have that before we have an entry. That arrives two bars later and we can enter short. The trade progresses very well indeed.
Then we get an opposite signal when price closes above the channel. This time daylight exists in the sub-window and we can enter long immediately. Again, the trade progresses very well. Notice what happens later in the move though. The sub-window moving averages cross to the downside. However, there is no signal bar as price fails to close below the channel. If we are still in our long at this point, we can stay in.
Let's look at a messier example.
Here we see a signal bar and, two bars later, we get our daylight so we can enter long. The trade doesn't work out and we exit either when the bar closes below the channel or on the next bar, when the sub-window averages cross. That bar also gives us a short entry as both signal and daylight are in place. The short initially progresses well but notice that a bar eventually closes above the channel. However, this does not have to be an exit signal. It can be if you prefer, but it doesn't have to be. Because the sub-window averages do not cross.
I hope this makes sense but, as always, please feel free to ask questions if you have any.
I've also attached a template for this alternative approach.
I was going to avoid mentioning this until later in the thread but I'm conscious that some people might want more aggressive entries. Here's an option for you.
I would advise you trade this style on the hourly charts only. I haven't tested it on other timeframes and I have a feeling it won't perform as well on them. Shorter will contain too much noise and longer will involve massive swings in capital.
We still use a 5 period smoothed moving average on the main chart but this time we have two of them. One is set to the High and the other is set to the Low. This creates a channel, which will be familiar to Roadmap traders.
In the sub-window, we change the smoothed moving averages to 5 and 13.
Let's look at some examples on a chart and I'll talk you through how to trade it.
We first look for a signal bar on the main chart. A signal bar is one that either closes above (for longs) or below (for shorts) the channel. Starting from the left, our signal bar is marked with an arrow. However, we don't yet have daylight in the sub-window. We need to have that before we have an entry. That arrives two bars later and we can enter short. The trade progresses very well indeed.
Then we get an opposite signal when price closes above the channel. This time daylight exists in the sub-window and we can enter long immediately. Again, the trade progresses very well. Notice what happens later in the move though. The sub-window moving averages cross to the downside. However, there is no signal bar as price fails to close below the channel. If we are still in our long at this point, we can stay in.
Let's look at a messier example.
Here we see a signal bar and, two bars later, we get our daylight so we can enter long. The trade doesn't work out and we exit either when the bar closes below the channel or on the next bar, when the sub-window averages cross. That bar also gives us a short entry as both signal and daylight are in place. The short initially progresses well but notice that a bar eventually closes above the channel. However, this does not have to be an exit signal. It can be if you prefer, but it doesn't have to be. Because the sub-window averages do not cross.
I hope this makes sense but, as always, please feel free to ask questions if you have any.
I've also attached a template for this alternative approach.
Attached File(s)
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Daylight_Alt.tpl
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