"Pure" Trading System

Looking for a system that will never lose?
Or will lose less than 1% of the time?




Then this is the wrong place for you.

However

My system works.

It IS profitable

It DOES make pips.




It is profitable simply because of a simple rule:

The losing trades are cut short
The winning trades are let run

Provided



You Follow the rules To The Letter













Okay, here it is.





Pure Targeting

On the chart:

 

1. Japanese Candlesticks
2. 50 SMA of the High
3. 50 SMA of the Low
4. Fibonacci Extension Pulls

The SMA's create a channel.





Entry Rules:


When a candle Opens and Closes above or below the channel, enter the trade respectively long or short.

e.g. Candle opens and closes above the channel - Go Long


Cautionary note: I will not advise buying a long break of the channel when price is sitting just below a resistance line.
Support and Resistance lines rule the markets in my opinion, and I trade them in addition to my channel, so if a channel break occurs near a S/R level, I would advise waiting for the break of the level as well as the channel.




Exit Rules:


If at anytime a candle Closes within the channel, exit the trade.

I also completely exit the trade at the 423 Fib.






Take Profit and Stop Loss Rules:


When in a position, I will have Fibonacci targets pulled (prior to the move).


After I have achieved the 123 Fib level, I then maintain a stop loss distance of Two Fibonacci levels away from the price.

e.g. If the price achieves the 161 level, my stop will then be at the 100 Fib (the middle value is the 123).


I have found that this allows my trades enough room to breathe amd achieve my 423 long-term target.

Yet if the trade is going to fail, then I will take a substantial percentage of the profit available as my stop is dynamically moving with the price at a 'close but not too close' distance.

However, this is just personal preference. Use whatever works for you, the main thing here is the entry signal.


I will say again, the 423 Fibonacci level is my overall target with my trades.

Explanation


There are many systems around, some brag impossible results, some genuinely work. However, what's the annoyance in all of this?

Finding a system that apparently never loses or loses very little, investing in it, then losing money with it!

Happens to everybody.


This system can lose.

However the losses are minimal, say 8 pips here 12 pips there.

But the winners can be Golden.





Here we are targeting Fibonacci Levels for stop loss levels and take profits.

If I have missed anything or you have any questions/comments, fire away.

does it work in 15 mn only? where you put primary stop? how many and what pair do you follow
thanks
thierry

Nope, this will work on any timeframe. It works better on higher timeframes as the system is far more stable on them. The trades you take on the higher frames will quite often be more profitable - if you are willing to hold the position for a fairly long period of time.
I prefer the 15 min however as it caters for my need to trade daily, yet is more stable than the 1/5 min charts and gives greater rewards than these charts. I do plan to move up to hours/4hours soon though =]

My initial stop is on the other side of the channel. I often set it as the fib level that is closest to the furthest channel band, or I simply set it as the furthest channel band. I have found that I rarely get stopped this way, yet give my trades room to breathe.

I am trading cable day-to-day at this moment in time. However this system will work on almost any pair, yet works best with the more stable markets i.e not JPY =]

How long have you been trading this, what are your favorite pairs
and your track record.

Much appreciated!

Brian

I have traded this properly for about 2/3 weeks now.
Backtested this system with 2 months worth of data.

Favorite pairs would be Cable (GBP/USD) EUR/USD & EUR/JPY.

I have identified these as key currencies and they coincide well with eachother.

My track record I am assuming you are talking in pips terms.

Using this system in 2/3 weeks I have made 600 pips give or take a few.

This system is hard to average as each trade is vastly different but I have produced:

Average loss is 11 pips.

Average win is 70+ pips

However the winners vary from 30 pips to 200 pips.

One thing I have found though, you may take 4 consecutive losses and lose 40 pips, you will hit a trade which will go on to make your losses back, and then make you profit.

This is why it is crucial you take every signal. This system does catch major breakouts, but you don't know which signal is a major breakout or a fakeout.

So, the only solution I have coem up with to catch every major is to take every signal.

Great Idea Xivali,

I notice that when the market is ranging the system really kills. It would be very difficult to stay and watch the screen for a long time waiting to enter/close ranging signals. However, if the sytem will compensate for losses in the ranging market then I suppose an EA will be very appropriate for the system.

The system is indeed a tad painful in ranging markets. I trade 6am - 1pm GMT, and if the market insists on ranging for this period it's not a great experience. However the fact that you catch the big breaks which pay for your losses and more, makes this system viable to trade.

But as mentioned, when are the breaks?
So as mentioned, my solution is to take EVERY signal to catch the breaks to pay for the losses that incur.

The system is trade-able and profitable, provided you take every signal, and are prepared that losses will occur.

Let me know any successes/results you have achieved with this, be them back tested results or whatever.


One thing I will say, I am not here to make this system work, make everyone trade it and sell it for a million dollars.

I am here to trade profitably, and to learn.

So if you find a fatal flaw in the system or anything else, please share, I'm not so proud that I will refuse to admit it etc

In the end of it, if buying a currency everytime the phone rings will make me a positive figure of pips at the end of the month, then I'll do it =p

Feedback please!

=D

Hi Xivali..


I have a few questions.

1. On what time frame do you draw your Support and resistance lines?

2. So I take it you don't take every trade when price crosses the 50 SMA. Can you show an example of a trade you wouldn't take and why???

3. Do you only trade crosses of the 50 SMAs or do you take counter trend trades when price is far away from the 50 SMA?

4. Can you show what extensions you have on your fib tool and how you pull them?

5. Do you look at higher time frames to determine overall trend and trade only in that direction?

1. I draw my S/R's on the Daily and 4 Hourly charts.

I draw them on the Zigzag tops and bottoms, dairly highs/lows and obvious key S&R lines. I also have an indi that draws Fib Pivot S&R's automatically everyday which are extremely effective.

2. No I Don't, if price breaks long out of the 50 Channel but the price is sat right under R1, Forget taking the trade long unless price sufficiently Breaks the level. The first image will show a trade I would not take.

3. I really use two systems. I trade the 50 Breakouts which has been explained. I also trade off of S&R lines.

Here is something else interesting, if price strays too far away from the 50 channel, it will always return to it. Price will either sink back to it or the 50's will run back up to catch up with price - or both.

So, if price is miles higher from the 50's and price is aproaching a daily resistance level, I would most definitely look for a short bounce =]

4. I pull my Fibs from the previous move. So, if I am looking for short, I will pull them the length of the previous short. However, if this creates crazy unrealistic fibs that will never be achieved, I will sometimes just pull them from the long that just occurred. Either way, the price respects them, but If I can, pull them in the same direction as you are trading (I'll show below in picture 2)

5. I do indeed.

Unless of course the daily trend is short, and it's approaching a S/R level, then I would be wary for a sideways market and do some other analysis.

Sorry guys, images aren't great.

Fib Numbers Are:

23.6

38.2

50

61.8

76.4

100

123.6

176.4

200

223.6

261.8

276.4

300

323.6

361.8

376.4

400

423.6

Why so many fib levels...is there a use for each one of the extension levels???

Why so many?

Well, there is an expression you may or may not have heard.

"Cut your losses short and let your winners run and you will be profitable"

(or something to that effect)

It is also said that traders lose money as they let their losers run and cut their winners short.

I cut my losers short as I exit the trade when price re-enters the channel (asd this often means that the move has failed or is not ready to break).

So how to let my winners run?

If i took profit at the standard 161 level everytime I would most definitely lose out on some whopping 300 pip moves or something. Fact.

So what to do?

I simply extended the Fibonacci percentages using the sequence ratio i.e:

23.6 fib

223.6 fib

(they all fit trust me =p)

So, whether the market remains within 200 percent range within say..50 pips

or whether it shoots off and I'm in the 300-400 region, I can still apply stop management as the figures and percentages are still relative.

So

Price breaks away from the 61.8 fib for example and gets to 100 fib so i move my stop to the 61.8.

Hour later after some nice movement, I'm still in the trade (letting my winner run)

however, the price is beyond the 261 fib, and at this level the gap between hat and the next standard fib level is miles away.

However with my extended calculated fibs, I can still apply my stop management all the way up here.

Price zooms off of the 261.8 fib and breaches the 300 (which wouldn't otherwise be there on standard fibs) so I can set my stop to 261.8 fib.

The additional fibs simply allow me to maintain stop management to the same relativity at 200-400 region as 61-161 region =]

That was a tad long winded I am sorry, but hopefully it will answer your query =]

I find it very convenient to display the prices associated with the respective fibo levels, as shown in the attached screenshot.

The way to do this is to append "%$" in the description field of the fibo properties. For example:

Level | Description
0.236 | (23.6) %$

jesper

I should have mentioned that, so thank you

Please find an attached tool called 'set fib price', just attach it to a chart and re-start the charting software, and it will plot the price of a drawn fib level for you.

The fib indy is not working for me. Applied it to chart and re-started. Not fib levels appear.

Have you taken the break of the 50 SMA to the short side on the 15M GU or are you waiting for it to clear the last low swing?

Firstly are you running a meta platform?

I run this indi on Metatrader 4, works fine.

Here is my installation process:

 

1. Download file, and save it into

crogram filesMetatrader4 [platform folder] ExpertsIndicators[Save in here]

So you should have saved it into that folder, then close the platform, and re-open it.

It should then appear in the indicators navigation bar on the left [or wherever you have placed it] along with all the other indicators in your charting software.

Hope this helps, if it doesn't - let me know.

At the moment ozzie I am not trading - Reading trading books =]

But if you send me a really quick screenshot I'll give my opinion without hesitation =]