ATP (Advanced Trading Philosophy) - The Evolution to Greatness

Hello.....

I would like to introduce you to Book II...The Evolution to Greatness.

Many of you will remember my first book "Positioning for Success". Though this was a valuable trading strategy, there were many faults to the system.....these faults included the following:

1. Too many trade rules that took too many hours to make trade decisions.
2. Lot sizes were very small because of some trend indecision
3. Exit rules were really unclear and were placed without certainty
4. Not knowing if we were in a retracement or part of the larger trend
5. Took many hours to learn the system
6. Uncertainty about profit taking.....

....Just to name a few.

With all these problems we still saw people who made upwards of 15% - 25% in less than 2 months time. So...despite the deficulty level of 10, it was and will remain a profitable trading philosphy.

You will notice that I use the words Trading Philosphy rather than strategy or any number of other words that other people use. The reason is that I trade with a philosphy and that is this:

Keep your profits, find the trend, add additional positions margined against your increased equity, eliminate drawdown and leave the trading platform with a profit.

"The Evolution to Greatness" is everything that "Positioning for Success" wasn't and also everything that it was. I think you will find this a more condusive trading solution to adding profit to your bank account.

All questions are welcomed as well as positive comments. Please, if you don't like what we are doing, write a note regarding so and send it to the editor of your newspaper, and if you really don't like what we are doing get a petition started and take it to the mayor. Just plainly bashing me or my system without documented proof is not only a piss poor way to go about your business but will also go to show that you are only full of hot air.

"Positioning for Success" was a very nice thread that helped a lot of people learn how to trade and I hope to have that same comradeship here.

So with that said, Enjoy and I look forward to your thoughts about we are doing.

Unlike "Positioning for Success" which used multiple indicators to place many different kinds of trades. "Evolution to Greatness" at the moment is only using 1 indicator in two different ways. Many of you will write to me and tell me that this indicator repaints itself and I say let it. I got the idea for using this indicator from someone who has been using it successfully for over 1 year and actually has a thread on this forum. Kudus to you my friend and thank you.

The way we battle the repainting is to put in levels that need to be breeched for a trade to be considered valid. You see, most repainting will only happen during consolidation of the market when things are uncertain. Not when the trend is in motion. By putting these levels into place we should in most cases be already past the repainting portion once these levels are breeched. I can't gaurantee that this will always be the case becasue you can never tell with a repainting indicator, but I believe that this will most often be the case.

Once again...this indicator is a repainting indicator, but what is most important is our levels that we will set up. As I am only getting into this myself, we need a good base and I think that this is as good as any. Be aware of your confidence level with this indicator when deciding on lot sizes.

Indicator: Solar Wind ACS 3

Attached File(s)

SolarWind-ACS3.ex4   6 KB | 1,015 downloads

You should put this indicator on your charts twice in two different windows.

Settings for the 1st placement are for our entry signals and you should leave everything as is except change the following parameters

1. Under "Inputs" change Option=2
2. Under "Colors" change Color1=Lime
3. Under "Levels" add Levels .3 and -.3

Settings for the 2nd placement are for our exit signals and you should leave everything as is except change the following parameters

1. Under "Inputs" change Option=2
2. Under "Colors" change Color1=Red and Color2=Lime
3. Under "Levels" add Levels .6 and -.6

Good ATP Positioning For Success. Can't actually wait for you to unravel the new trading system here...

Together, we can make greener pips...

Some of your highlighted problems according to ATP Positioning for Success, I use 50EMA, 100SMA and 200SMA to filter trades. This actually can be considered for problem number 4 highlighted below. I plot it on all my charts.

1. Too many trade rules that took too many hours to make trade decisions.
2. Lot sizes were very small because of some trend indecision
3. Exit rules were really unclear and were placed without certainty
4. Not knowing if we were in a retracement or part of the larger trend
5. Took many hours to learn the system
6. Uncertainty about profit taking.....

Waiting for the indicator and new rules to the new system

Cant wait for this revision.Thanks for the research in advance.

Are you selling this book or sharing it?

The 3 Deciphers is your key to Risk Management. Notice that this is not Money Management, but rather Risk Management. There is a big difference here....

For right now, this post may seem like a mystery, but it will come into play later as I bring you the rest of the Trading Guidlines.

The 1st Decipher:

1. This decipher brings you the knowlege that you are either in a long trend, a short trend, or a no trend on the Monthly Charts

The 2nd Decipher:

1. This decipher brings you the knowledge that you are either in a long trend, a sort trend or a no trend on the Weekly Charts

The 3rd Decipher:

1. This decipher brings you the knowledge that you are either in a long trend, a short trend or a no trend on the Daily Charts

Knowing this information will help you determing your Risk.

Based upon the information that the 3 Deciphers give to you, you will have basically three distinct levels of risk when placing your trades.

Risk Level 1: Risk Level Green

1. This is when the 1st, 2nd and 3rd Deciphers are all giving you the same signal. Here are the three unanimous signals they can give you:
   1. All give you a long signal
   2. All give you a short signal
   3. All give you a no trade signal

Risk Level 2: Risk Level Orange

1. This is when the 1st Deciper disagrees with Decipher 2 and Decipher 3. Here are the three different signals they can give yoiu:
   1. The 1st Decipher gives you Long and the 2nd and 3rd Deciphers both give you a Short Trend or a No Trend
   2. The 1st Decipher gives you a Short Trend and the 2nd and 3rd Deciphers both give you a Long Trend or a No Trend
   3. The 1st Decipher gives you a No Trend and the 2nd and 3rd Deciphers both give you a Long Trend or Short Trend

Risk Level 3: Risk Level Yellow

1. This is when the 1st and 2nd Deciphers disagrees with Decipher 3. Here are the three different signals they can give you:
   1. The 1st and 2nd Deciphers give you either a Short Trend or a Long Trend and the 3rd Decipher gives you a No Trend
   2. The 1st and 2nd Deciphers give you eithe a Short Trend or a No Trend and the 3rd Decipher gives you a Long Trend
   3. The 1st and 2nd Deciphers give you either a Long Trend or a No Trend and the 3rd Decipher gives you a Short Trend

Putting this into Risk Perspective

Putting this into risk perspective you will see that the 1st Decipher is the boss. The 2nd Decipher is the Superviser and the 3rd Decipher is the Employee.

When all three are in agreement is goes without saying that this is the strongest signal that you can have and so you should naturally want to risk more.

When the Employee and the Supervisor agree with each other but disagree with the boss there is a good chance that all things are good, but you should reduce your risk, because the boss still disagrees with you.

When the employee is going against both the boss and the supervisor, it does not mean that it he is wrong, it just means that he should tread with caution and so this should be the time when you risk the least.

Hopefully you all understand this aspect and how these 3 Deciphers interact with each other.

Hey DL....I will sell you everything except this

To start with I would like to recommend the following calculations.

Step 1

Take your equity and diveide it by 400 and then divide that calculated number again by 100. This will give you the lot sizes (on a mini account) to use to enter the trades.

After you have made your calculations, you now would have the lot sizes that you would enter the market with based on Risk Factor Yellow....The riskiest of the 3 risk levels. If you were given a Risk Factor Orange, you should double your calculated lot size and if you were given a Risk Factor Green you should tripple your original lot size.

Are you now seeing how Money Mangement plays into Risk Management and how the are inter-related? The riskier the percieved trade, the least amount that you will risk.

Step 2

You may find this hard to comprehend, but I will not be using any S/L orders when I place my trades. We have determined the risk factor and the Trend Direction. NO S/L should be necessary.

So, what you need to do next is factor in your invisible S/L factor. We are making some assumptions here regarding Trend, but I think they are safe assumptions to make. Basically your Invisible S/L Factor (ISLF) is calculated like this. Take your entry point (just above the high or low of a bar) and figure out how many pips seperate that point of entry from the high/low on the other side of the bar.

For example if you are going long you would place your pending order 1 pip+spread above the high of the set-up bar in which case your ISLF is calculated by subtracing the low of that setup bar -1 pip from your entry point. This ISLF can then be further used to determine your lot size.

Like wise if you are going short you would place your pending order 1 pip below the low of the set-up bar in which case your ISLF is calculated by subtracing your entry point from the 1 pip+ spread above the high of the set-up bar. This ISLF can then be further used to determine your lot size.

The reason for the ISLF rule is so you don't end up risking too many pips on more volitile pairs like GJ, EJ, GCHF, EA or ECAD for example. By rule you should reduce your risk across the board on pairs that are more volitile.

This will be very simple for you to figure as I will have all the calulations on the spreadseet that I will give you to. All you will need to be able to do is subtract the calculated low from the calulated high.

Determining the trend is a very important aspect to ATP. To do this you will use the 3 Deciphers to not only handle this for you, but depending on how many are in confirmation with each other will also determine your Risk Management and Money Management.

No Trend

No trend is determined by using our Entry Indicator and is determined per chart like this. Obvously when No Trend is given we will not place any trades until Trend is re-established.

1. Monthly, Weekly or Daily Chart - No Trend siganl is given if last bar is in between .3 and -.3 levels of your indicator.

Long Trend

1. Monthly, Weekly or Daily Chart - A Long Trend signal is given if the last bar is above the .3 level of your indicator.

Short Trend

1. Monthly, Weekly and Daily Chart - A Short Trend is given if the last bar is below the -.3 level of your indicator.

Now that we have determined how to find the Current Trend, you should know that we will only take trades in the direction of the Daily Trend. We will however increase our odds of success if the Daily Trend is also in unison with the Weekly Trend or the Monthly Trend. That is why we would raise our risk per trade the more indications are in our favor.

Stop Loss (S/L) Orders

I may have mentioned earlier that I will be setting no stop losses when I make my trades. This rule as with any other rule is subject to change or re-evaluation, but that is where I stand at the moment.

Exiting the Market

This is a hardened fast rule that is determined by using our second indicator.

If we are in a long position and our Exit Indicator closes below the .6 level on the Daily Chart we will close out all open trades for that pair at the close of that bar.

If we are in a short position and our Exit Indicator closes above -.6 level on the Daily Chart, we will close out all open trades for that pair at the close of that bar.

Basically our Exit Rule is a constant, the only thing that chages in our trading is our Risk Factor based upon the 3 Deciphers

Appendix 1:

If you are in a trade and the Exit indicator does not cross above .6 or below -.6 to give you a solid exit signal upon re-entry nto that zone, you will exit the market on the first change of direction bar close on the daily charts. Another words if you were short, and the the exit indicator bar did not cross below -.6, you would exit the market as soon as that bar had a lower high within the .6, -.6 zone

Here is a scenario of how your trading day should go. Once again, becasue we are trading the daily charts, all management and pending trade orders should be complete anywhere between 23:00 GMT and 2: GMT.

1. You would go to your first chart
2. You would switch to the Monthly Chart and see the trend. Then mark it on your spreadsheet.
3. You would switch to the Weekly Chart and see the trend. Then mark that on your spreadsheet.
4. You would switch to the Daily Chart and see if you need to close out your trades based upon the Exit Rules given earlier.
5. While on the Daily Chart you would verify the trend and mark that on your spreadsheet.
6. You would then calculate your Risk
7. While on the Daily Chart would make sure that the closed bar is properly positioned to make a trade. (I will go more into this at a later date).
8. If the bar is properly positioned, you would make your trade.
9. Once you have made your trade, you will then just move onto the next pair and follow the procedure above.

Damonl, this is really evolution to greatness. What you have done is great and I am working on an EA, although not for this trading system, but it will be posted here.

Swing Man is working on it already.

I think this is really precise and compact. No too much rules like the positioning and this makes it even greater.

You know what???????? You are the B-O-M-B

Waiting patiently for the spreadsheet.

Anyways, are you thinking of trading for intraday i.e. daily trading like DPTT or just trading all the way for weeks like in the other system?

Shout Out to yah all.... Can anyone EA this system for us?

You won't believe it, this system actually works on 5M TF although it is riskier for some pairs because of volatility and high spread from my broker.

Hey wlj...just remember that on the lower TF's the repainting risk becomes more evident than it does on the higher TF's...Please proceed with caution.

As for your question....of course we will be adding multiple trades as the trend goes up. That is my main philosophy of leveraging your open positions to open more positions.

I will be coming forward probaly tomorrow with the entry rules. They are much simpler than before and will take relatively no time at all to implement each day.

You might have to give me a few days on the spreadsheet as I am in need of my bed for tonight.

BTW...we have a long trade on the ECHF tonight. Risk Yellow. That is the only trade that we were able to place tonght.

I have done a spreadsheet already but I missed the calculation for the Invisible Stop Loss so I don't think it's necessary to attach it here. Let me know if need be Damonl so you can speed it up. I have done the risk management and lots calculation accordingly on it too.

Anyways, why do we have to wait till 23:00GMT to 2:00GMT? I think we place trade faster than this before now or am I mistaking?

Good system...

When using SolarWind to determine trend on the M,W and D charts, are you using the bar that corresponds to the last candle or last CLOSED candle on price chart?

Thanks

yes....the last closed candle

http://www.shareapic.net/preview3/007666842.gif http://www.shareapic.net/preview3/007666843.gif http://www.shareapic.net/preview3/007666844.gif

If i understand correctly theese 3 all indicate NO trend..in that case i would just switch to another pair and wait for this one to develope without entering.

Hi Damonl,

Thank you for sharing this system. Can I just confirm with you regarding the reasoning behind the long trade you took for ECHF? Basically on monthly chart, the previous bar (circled in yellow) shows a short trend as it is slightly lower than -0.3 level; moving on to weekly chart, the previous bar shows no trend as it falls between 0.3 and -0.3 level; and on the daily chart, the previous bar shows a long trend as it is slightly over 0.3 level. Hence [monthly = short, weekly = no trend, daily = long] give Risk Level Yellow. Am I correct so far? And how about GU? Monthly and weekly charts show no trend but daily's previous bar shows a sell trend, would you have gone short with risk level yellow this morning?

I just wondering the same with you regarding this setup that told by damonl. Your chart same with mine..

I guess we have to wait for Damonl to answer this question. BTW, is it just me or has ECHF Daily's previous bar just suddenly went lower than 0.3 level? I could have sworn it was at around 0.33 when I posted the chart but upon rechecking, it went to 0.26? That would have voided the ECHF long trade for this morning? I am using ODL as my demo broker.