what i have experienced in my backtesting is that this system eliminates almost all whipsaws and gets you into position to profit from the nice long runs......
enjoy.........
Indicators
Bolinger Bands (BB) (default MT4 settings)
55 EMA - shift 8 - median hl/2 - color red
21 EMA - shift 3 - median hl2 - color lime
Laguerre 2A ( )
gamma 1 = .80
gamma 2 = .85
max bars - 1000000
levels = .45
Laguerre ( )
gamma = .55
countbars = 1000000
levels = .85 & .15
JMA SLope ( )
MACD Colored ( ) - settings (3,6,3). I actually use a different one, but i paid for it through a class and am unable to share it with you, but this one is almost the same and won't have any significant
difference.
Stochastic Oscillator overlaping the MACD Colored set to 8,3,3. This is primarily used to check divergence for exiting the market
Putting It All Together
- we are waiting for the bollonger bands to squeeze together. a lot of times you will get an additional signal after a big run has already ended. you should not consider an additional entry after a big run unless price has touched either the center BB line or the 55 EMA. Once BB have squeezed, we start looking for our trading opportunity........
- we take a look at the JMA Slope. If when it turns green, price is above the 55 EMA and gamma .85 and gamma .80 (laguerre 2A) are above or darn near above (i mean very close) we would enter long. if the secondary conditions are not met until after the JMA Slope has turned green no trade.
- we take a look at the JMA Slope. If when it turns red, price is below the 55 EMA and gamma .85 and gamma .80 (laguerre 2A) are below or darn near below (i mean very close) we would enter short. if the secondary conditions are not met until after the JMA Slope has turned red no trade.
Stop Loss
you should set your s/l to a desired amount of pips. you can also use a close above the previous formed fractal that is against your trade or use the laguerre .55 above the high last time is was above level .85 or bleow the price it was at when it was below level .15
15 - 20 pips or less for eurusd and 20 - 25 pips or less for gbpusd should be quite good, and make sure you use good money management and adding multiple positions can help you win big, but also lose big.
Adding Additional Positions
Once you have entered your first trade you go and start looking at the MACD colored indicator. If you are in a long position, you would wait until the MACD has gone from red and back to green and enter an additional trade. Vice Versa for a short postion. Be careful here not to enter any more trades after the trade appears to have expired and the BB are moving closer together.
Exiting Your Positions
to exit your positions, you will need look at a few things......
- get a feel for the market
- wait for price to peirce above/below the bar that closes above/below EMA 21
- after a significant amount of bars have closed inside the BB channel with no more movement in your direction
- a close above/below the middle BB line
- profit target is met
- use your MACD colored and located divergent differences in the chart and the indicator
- when you last open position got too close to 0 pips in profit
- Stochastic Oscillator shows heavy divergence against your trade
let it be know that many times price will bounce off the EMA 21 and continue in the desired direction...the direction of your trade. Stay in as long as you can handle the pressure with multiple trades in the position.
Template:
Here is a few charts and trades........
eurusd
as you can see above all criteria were met at the first blue arrow where we entered long at the open of that bar. the blue "x" is where price would need to close below to exit our position and the additional blue arrow would be additional entry points. the blue trendline on the charts and the blue trendline in the indicators bax show a divergence which should lead to a downward move and so we would exit our position there.
gbpusd
as you can see from the chart above, that we had lots of nice entry positions and then we would have closed out somewhere around the blue "thumbs-up" in the upper right of the page.
you will find that if you follow these rules, that you will miss lots of in between pips, but you will be put in a position to catch some very nice big runs.
comments and suggestions are always welcome......
. now i should get some sleep before work, but i am not even tired