The Koala System

Hi all, this is NOT a commercial service / product. It is free

Good day forex trading koalas.

In this post, i will like to share about how one can make use of The Koala System for forex trading.

What?

The Koala System is by no means a get rich quick method for forex trading. There are no guarantees that you will profit from this method. This is a trading style that i believe helps prevent traders from entering trades against the trend and thus increasing the chance of success. It may also help cultivate a patient and defensive trading style due to the nature of the system.

Why?

After suffering three margin calls, i needed a way to help myself. I was trigger happy in entering trades and often went against the trend! I searched high and low for a suitable trading system. I found many systems based on moving averages and i liked the idea as it was not a fast and furious way of trading. I slowly adapted and customized the various systems over the months and The Koala System for Forex Trading was created!

How?

Using MT 4,

we deploy 3 moving averages on the chart. Parameters are

1. Smoothed
2. Applied to Median Price ( High + Low / 2 )
3. Period of 3 ( Red ) , 6 ( Green ) , 9 ( Blue )

This gives us our primary indicators.

Next we deploy 2 moving averages on the chart. Parameters are

First

 

1. Exponential
2. Applied to Closing Price
3. Period of 200 ( Black )

Second

 

1. Smoothed
2. Applied to Median Price ( High + Low / 2 )
3. Period of 50 ( Brown )

This two moving averages will serve as our secondary indicators.

Rules

While you can use any value for your stop loss and take profit, in view of proper risk and reward ratio and money management, recommended sets are

 

1. 30 SL 30 TP ( Normal )
2. 50 SL 50 TP ( Challenging )
3. 30 SL 50 TP ( Very challenging )

The more challenging the values are, the more precise your entries should be.

A buy or sell opportunity will surface when the

 

1. primary indicators becomes parallel towards the direction of the trade
2. brown secondary indicator is in the same direction and is not turning in towards the primary indicators. This functions as an immediate support or resistance warning too as the price often react to the moving average
3. black secondary indicator is not near the price action and hence not a potential strong support or resistance

Exceptional conditions

As the system relies heavily on trends, there are certain market conditions that will affect the performance of the system greatly

 

1. Low trading volume conditions resulting in no trends
2. Excessive flipping of the price action due to volatility
3. Major economic events resulting in unexpected spikes and momentum
4. A major support and resistance / trend line is not in the immediate region of the momentum

Picture examples

http://3.bp.blogspot.com/_3abzd90ZlP...lasysentry.jpgIn this example, we see a rather clean entry signal to buy.

The three primary indicators are not converging and the secondary brown indicator is in the direction of the trade and not turning in towards the price action. Furthermore, the black indicator is no where to be seen.

If you notice, the price action is not cutting beyond the green indicator much. This is good because if the price action do cut beyond the green indicator excessively, it may indicate a failing momentum and hence the signal should be reevaluated.


http://3.bp.blogspot.com/_3abzd90ZlP...0/koalalow.jpgIn this example, we see a typical low trading volume market condition.

Due to a lack of clear direction, the primary indicators start to jumble up like DNA and hence indicating a low trade zone. The price action is simply too narrow and ranging to be of any use for trading.


http://2.bp.blogspot.com/_3abzd90ZlP.../koalaflip.jpgIn this example, we see another no trading zone.

In this case, the price action is choppy and is indicated by the excessive flipping of the primary indicators. Any attempt to trade in this condition may result in one's stop loss getting hit due to the spikes. I will also like to highlight how we can see that the black indicator is acting like a support here.


Conclusion

I personally use The Koala System on the EUR/USD M15 time frame. I have heard of users finding success in other pairs and i would love to hear about it.

Do remember that The Koala System is not a fast way to get rich from forex and it does not guarantees you success. Forex trading is your own responsibility and you still need to understand the fundamentals and concepts of forex trading. Proper money management, patience and discipline is crucial. Having only a few trades in a week is common!

Trade safely.

Related Forex Articles from the Koala Forex Training College.

1. Proper money management is crucial
2. Planning your trades well is crucial
3. Support and resistance lines are never a single pip
4. How to identify support and resistance lines

Hi all!

How was your week?

Koala had a good week and is happy http://cdn.forexfactory.com/images/s.../yim/happy.gif

Looking at the M15 chart for the week, the move from 1.46+ to almost 1.5 was spectacular and i feel that it is an anti-climax that we did not hit 1.5!

I have circled 4 possible entry positions identified by the Koala System.

For the first position, if you had a more relaxed stop loss placing, there was potential to ride this up to almost 1.5.

However, there is always two sides of the story. If you have a more relaxed stop loss, you risk having bigger losing positions.

I like the fact that the 200EMA provided a prediction of a support / resistance at times ( boxed ) and i will definitely consider what it is showing while using the Koala System.

As we remain near 1.5 next week, be on a look out for choppy situations. Remember, the Koala does not like choppy situations.

Trade safe!

If you will like to read more forex articles or EUR/USD views by me, do grace my blog

www.thegeekknows.com

Cheers!


Attached Thumbnailshttp://cdn.forexfactory.com/attachme...1&d=1255850548

Congratulation for your 2nd "v" ...
Hope congratulate it's not commercial
Friendly
JM

Nooooooooo i am so scare of that word now AARRGGHH

crazy friday ! trade safe

You will see ppl come here, your system and knowledge are great pal, you will populate this thread in a couple of weeks

I will visit you often to see your points of view.

Good day fellow Koalas!

The Koala System had a fair week and i certainly hope you harvested some from it.


Shortly under the markets opened, we were presented with a trading opportunity.

Although the week is obviously bullish, the price action is rather choppy and this is not a favorable conditional for the Koala System and hence care must be taken.

The first box is a classic example of a fast moving action which may have the chance to turn on you and hence the Koala avoids it.

Last box is a classical whipsaw day and yes it is crazy friday too.

and smaller If you really need to earn the extra pips for the pub outing, use the Koala on shorter time frames and have smaller TP expectations.

Once again, the 200EMA provided some guidance.

Trade safe!

Read up on forex articles like money management, Gold and the US dollar and more at TheGeekKnows.com

If not commercial, why in the "commercial" section of the forum ?

because of some misunderstanding and i was jailed here! this trend was originally in trading systems.. sigh

Good day to all!

The Koala System had a good week as the week was mostly trending on the M15.

Did you manage to harvest some pips?

Right at the start of the week, if you had been alert and ready to take some risk, you would have catch the early train ticket south.

If you notice, we were presented with multiples opportunities throughout the week, ending it with a last ride south on Friday.

I will like to remind all that The Koala System is not meant to be a fast hit and run system and therefore you can see that the trades average out to be once a day.

I am exploring the use of the 200EMA as an overall trend indicator.

If the price is below it, we take only shorts. Above, long.

Stay tuned and trade safe!

Read up on forex articles like money management, Gold and the US dollar and more at TheGeekKnows.com

I have been reading through your other thread, and now this one. I enjoy following your thoughts. I have almost made up my mind to trade only the EUR/USD. It would just make it easier for now. I don't understand what your major time frame use is. Is it the M15, M30, H1?

hello.. thanks for your compliments.. i mainly use Koala on M15... M30 H1 are more for the risk adverse.. hope to see you interact more on my main thread... kinda lonely at times thanks!

Good day to all fellow Koala System users

How did your Koala fare last week? If you have been following the rules, i think quite some pips are to your name now!

I have identified 3 good opportunities and one of which is almost 300 pips if you let your trailing stop loss run with allowance.

This again shows that The Koala System best performs under a trending condition.

Remember i always say that Koala is good because it will identify dangerous days too?

Look at the NFP Friday.

Koala was flat for the first half of the day, indicating low volume / hesitation. Typical of NFP days.
When the time draws nearly to NFP, movement picks up as folks begin to take or exit positions in preparation for it.
The finally spectacular comes with a big whipsaw post NFP. This has the potential to wipe up margin accounts on both sides and hence i usually don't trade during NFP.

Hope The Koala System made your week a wonderful one

Trade Safe.

Read up on forex articles like money management, Gold and the US dollar and more at TheGeekKnows.com

hey trader101,

sorry if this sounds dumb, but I don't get the part where your system signals a non-trading period.

How does it identify a non tradable scene? When the MAs are not parallel and diverging?

no question is ever dumb in my world..we learn from each other ! give me a few hours i will reply.. sorry am out now..

hi boringz sorry i am back..

ok let me try to share more.. As The Koala System is a collection of different SMAs, it is great for showing tread.

When all 3 koalas are flat, meaning they are almost on each other.. moving up then down not making a stand, this means that the price action is undecided.. this is risky as we will not know the likely direction...

When the 3 koalas are diverging, it is ok.. but if it is diverging BIG TIME, this suggests that the current movement is TOO fast.. perhaps crazy reaction to news like NFP.

although this may be a start of a good trend, all my koalas buddies know i promote SAFE trading.. hence No No.. the price may change the other direction just as fast and sharp.. if you read my story about my 3 margin calls, one of which is thru such all the best and feel free to ask more questions

thanks a lot for your reply!

I do understand the "3 margin calls" feeling, cause I've emptied my account trice after topping it up trice. haha. Each time I achieve my "breakeven" amount, I begin to lose everything.

Might be all due to my emotions instead of skillsets..

Thought simple trend lines, chart patterns with limit orders should work. But they seemed to fail me once and again. << I suspect it's really due to 1) habit of trading against the trend 2) getting very emotionally involved 3) money management(SL set too loose/SL set too tight/R:R ratio)

Finding systems... reading everywhere for articles... reading lengthy forum threads... testing the systems on MT4... creating my own systems.. do lengthy backtests... do paper trading-forward testing... Been doing that recently for the past month or two.

I don't really trust systems, cause I generally thought forex is all about chart patterns(TA) and news followers(FA).

Anyway here I am, very tired but still determined to try again.

From a very determined man to someone who's confidence is wiped clean. Forex is a demon in itself. haha.....

ah i think koala system may help as it is designed to show the trend and prevent you from hopping on the wrong bus!

i know that "tired" feeling.. join us over at the main koalas' thread then... we provide mutual support there HeeHee

Good day,

The Koala System caught 2 major intra week trends this week! Did your koala catch it too?

I sure hope yours did because these two trends were worth more than 100 pips each.

Looking at the chart, we can see that Tuesday, Wednesday and Friday were wild ranging days and the Koala identified it correctly with the multiple flipping of direction.

I highly recommend that you stay out during those days as you can easily be on the wrong side of the fence.

Folks remember that The Koala System is not meant to be a holy grail system but rather a system to help highlight the trend and hence help prevent you from entering the wrong train.

Sometimes, to be not trading is a wise choice!

Trade safe.

Just wanted to say hello, great analysis-check every day. Sorry your pm is disabled.

Keep up the good work.