Battle of the Bands

This is a momentum-based system using just a few indicators. The rules are simple to follow, and all bases are covered so nothing is left in question. The indicators I use are:

1.32 Sma (high)/ 32 sma (low)

2.Parabolic SAR

3. 100 and 200 sma (close)

I have a few yrs FX experience however due to small account size, I closed it down and focused more on my larger stock trading account. It was during that time I developed this system. As far as I know, there is nothing just like it, so I think you will find it unique, and profitable.

The system has been tested exclusively with equities, however from doing some simple backtesting, it looks promissing on FX as well, and Will be posting from demo trades on here as examples.

Here are the rules for the system

Long Entrys:

* Price must close above the 32sma high or the 100/200 sma

* Price must close as a green bar
* NO Doji or pin bars allowed (ignore)
* Price must penetrate the parabolic SAR
* If price closes as a red bar, or a doji/ pin bar wait for next candle to break previous candle high and make sure all above conditions are true.

Short Entrys:

* Price must close below the 32sma low or the 100/200 sma

* Price must close as a red bar

* NO Doji or pin bars allowed (ignore)
* Price must penetrate the parabolic SAR
* If price closes as a green bar, or a doji/ pin bar wait for next candle to break previous candle low and make sure all above conditions are true.

Scale out:

* Scale out 1/2 your position on the next bar if you are in profit, and move stop to Break-even. If you are not inprofit from the next bar, wait as long as it takes until you are. Either you will make at least 1/2 your profit or get stopped out

Stops:

* Once you have taken 1/2 your profit, and your stop is at break-even, move your stop up to every new candle to the value of the parabolic sar as long as the parabolic sar value is greater than the value of your initial entry. This is basically a trailing stop done manually.

* (optional)If your long, and the next candle closes as a doji, pin bar, or red bar, immediately move stop to entry candles low. This will greatly reduce risk of $ lost, however it may also increase the chance of being stopped out before the market makes new highs. This is why I left this rule as optional.

Re-Entry:

* If you feel you have been unfairly stopped out, lol and think the market has more to go, then your rules for re-entry are : 1) break of previous candle highs 2) Price must be above sar, and 3) price must be at least above the 32 high. Your stops are done the same way as above.

The downside to this system, like any system based off MA's is that it lags price, so sometimes you find yourself buying a top or selling a bottom. I worked with many different MA's to find that a 32sma works best. Its a fine mix between not being to volatile, but its not too slow either. This is why we use the parabolic sar for stops, because they are usually far enough down to where IF the market really is about the move in the desired direction, only a small correction will take place before a much larger move up giving you the right amount of space. I like to use this system off 1hr charts the most and the daily as well. Anything below 1hr and your on your own.

For simplicity, I'm going to only trade the three majors: EU, GU, UJ

I have made three videos on how I trade this system. For those of you with skype and would like to learn more. PM me. my handle is big_pipin

took 5 GU long here off the daily @ 1.6273 once it broke the 32sma high. Stop is @ 1.57061.

I dont use targets with this system as there is no need to.

Looks really intersting but ranging markets might be a problem.

Thank you big pipin for this strategy! But why did you take the 15SMA instead of the mentioned 32 SMA???Do you use other MA's for your trading on daily charts??

lol, I didnt even notice that. I was messing around with different values.

NO its always 32, I just made a dumb mistake.

True, and in this case a trader should either ignore the trade if the market is too choppy or trade off the 100 or 200 sma because they're less prone to market noise.

Here is a trade I saw, i didn't take it, but using this system, you would have made 300 pips off this single trade. Not bad for a weeks work.

Do we take the break of the marked bar? I am not sure about it since the price didn't come from 32 sma low

No because it did not close below the 32sma low, 200 sma low or the 100sma... the parabolic sar was penetrated, but price must have closed below one of these averages in order for it to be a full signal.

Wow, 500 pip SL is chunky to say the least. You're asking GU to go to at least 1.6700 to make this a profitable trade. Does it really have it in it to get there?

One thing I dislike about any system is purely quoting pips in terms of profit. 300 pips, 500, 1000!!! They mean nothing until transferred into %'s. What risk are you using? Avg SL? A 300 pip week with a 300-500SL isn't that great imo. Somebody using a 30SL only needs 30 pips a week to match yours. But everyone sees 300 and thinks, magic!

I'm not trying to bad beat your system, I hope it works for you but I just wish more people would quote %'s not pips.

I'll work on providing you guys with the win/loss % ... i have a few trades that I have archived but not much to really make a strong statistic.

The stop is so wide because in my experience of trading with moving averages is that:

1. They lag behind the market
2. when they do give a singal (cross overs), it can, and is often times too late and you end up buying a top or selling a bottom.

The parabolic sar helps solve this because, even if you did buy a top, and the market reverses on you, there is no need to panic because your stop is no where near being hit...the market will level out, find support and continue up (we hope anyway )

This is also why we need to be fast to take 1/2 off when you can, in case we did buy a top, you need to get out quickly, and hopefully with a few pips in your pocket.

The worst case senerio is that you buy the top and never have a chance to sell 1/2 your position at break even, and the market stops you out. Now I never risk more than 3%, but I know that I will have a higher % of winners than losers, which as I post more trades, I hope to proove to you.

I tried to upload a zipfile but its a little bit too big. I can send it to anyone who has skype or if you want to PM me I can email it to you.

The win / loss % for 20 trades so far is

70% winners

30% losers

Also, you need to give number of pips won and number of pips lost, because if your average win is 300 and your average loss is 700 you only break even with 70/30 win rate.

I have made three videos on how I trade this system. For those of you with skype and would like to learn more. PM me. my handle is big_pipin

Bigpip.. where can I view the above videos.

Rebel..

Yes, no need to ask people to PM you, on here we just give out the information freely. When people are requested to PM, usually there is a cost to something. I'm sure you are not after selling something, but just be ware that when you ask people to PM you those of us who have been around here awhile smell a troll.

It'll take me a while to give you a numnber of pips won / lost as the system as originally designed to trade stocks so fx trades are very limited right now but im working on that.

in fact what i'll do is just look back on some charts and give numbers rather than actuall trades. it'll be faster.

as far as the videos go, contact me on skype. The videos are on my computer and i can do a file share through the chat program.

- nate

Maybe this will make your mouth water. This is EU on a weekly chart, using this system, you would have made at LEAST 1300 pips.

entry --> 5/1/2009 @ 1.3624

out 1/2 --> 1.4000 + 376

IF you were to get stopped out this week, the sar is currenly at 1.4571 + 947 , but so far it is still going up

total --> 1,323 pips!

and if you took the short, you would have made about 2,282 pips

Here is usd/jpy on the 1hr that I just took short at 90.37.

hi bp,

thanks for sharing this system,it seems to be very cleen and easy,i have a question,how about selling positions,SMA100 and SMA200 are showing the trend direction and if price and channel is above it its uptrend,the sell position on attached picture were a countertrade,right?

sam