AckelSystem

AckelSystem v.5.1
by alexmackel

INTRODUCTION
Hello all!
I began this thread in July 15, 2013, to explain my system - AckelSystem - and share my point of view about trading forex.
I am having very good results with this trend following system. Naturally I have much more to improve and learn.
Because I learn everyday, this system can (and will) evolve to reflect my discoveries. I hope the ideas I will share here can be usefull to someone.

GENERAL RECOMMENDATIONS
Use two timeframes, one to filter the trades and a smaller for entries. Stay away of news and the period between end of NY session and opening of Tokyo session. Test this system in a demo account. Forex involves significant risk.

INDICATORS
1) Candles or bars. You can also use Heiken Ashi with common bars above it, so you can have the smooth effect of HA and with bars I can follow the price action signals.
2) Moving averages: SMA 3 close, SMA 3 open, EMA 20 close, EMA 40 close, EMA 110 close, EMA 200 close.
3) MACD 6,13,4 with 3 levels. The MACD must be below the negative level for sells and above the positive level for buys.

COMMENTED CHART

See the chart above.

1 - EMAs 110 and 200 are the representants of the long term.
2 - EMAs 20 and 40 represents the mid-term.
3 & 4 - SMAs 3 (close and open prices), together with the MACD crossing the signal line, gives the short term perspective. Also the MACD gives the strenght and momentum, indicating the levels and the degree of inclination of its lines.
5 - The AckelSystemArrows indicator (the colored arrows) shows the first time the signal appears.
6 - Another indicator, AckelSystemSignals, shows the entire progress of each signal, with colored bars in a separate window.

This system was designed for money protection. You can see, in the 4 retangles of this chart, the phases of trading:

1. In the 1st phase (7), we are in an uptrend. Low risk trading, but you need get the correct time to enter properly in each trade. The trend is your friend because the impulses are bigger than the corrections.
2. In the next phase (8), I dont trade the pair. There are so many others to trade, and this is the most dangerous time to trade. You don't know if the market is in a correction or if it will reverse completely. There is less previsibility. The EMA 20 is under EMA 40 but above EMA 110.
3. Trading is possible in the next phase (9). There is a partial alignment, then you can proceed but consider risk less, like 1% of your money, not the regular 2%.
4. In the last phase (10), we are in a downtrend, all the EMAs are aligned and we are in our preferred environment again.

HOW IT WORKS
(Bearish examples in trending markets)
1) Be aligned with a higher timeframe (EMA 20 < EMA110 && EMA200).
2) Be at the right side of the market sentment in a given time (Price < EMA 20; MACD < 0).
3) Go with the trend (EMAs aligned and sloping down).
4) Identify opportunities to enter and exit the market (SMAs and MACD crossing in direction of the trend; MACD < Sell level to enter a sell order).
5) Identify the most lucrative opportunities (SMAs near EMA20, MACD near 0, EMA20 near EMA110).
6) Signal: When you have a candle indicating strengh near the SMAs, this is the signal candle. Sometimes I enter selling where a candle or sequence of candles shows rejection to a lvl of resistance above (upper wicks). A trendline breakout (at the end of the correction, resuming the trend) is also a common event here.
7) Trigger: after close of signal candle, the entry candle opens near SMA 3 close and there is a breakout of signal candle.
Stoploss can be above the signal candle or above the entry candle. In a M5 chart, normally is from 70 to 100 points (7 to 10 pips). In a M30 chart, something around 200 points (20 pips). But watch the support/resistance levels. Don't put blindly a fixed value of stoploss only because you are accustomed with a "X" value.

ATENTION: This system doesn't work blindly. You have to use your experience to see the results. Knowledge of price action, support and resistance and market structure are essential.

TRADES BASED IN DIVERGENCES
I can trade against the trend when the market is over extended and there is a divergence between prices and MACD, like in posts #257 and #270.

ABOUT MONEY MANAGEMENT AND LOTS
Every trader should limit the total risk of an account, using stoploss in each trade. The general recommendation is risk until 2% of your account each time.
If you have $1000, should risk until $20 each time. I am saying "each time", and not "each trade". So, if you have two opened trades, each of them should represent a risk of 1% or $10.
THEN you have a entry setup. What should be the size of your investment for a $20 risk?
If you entry setup requires a stoploss of 200 points (20 pips), divide $20 by 200 and you have 0.1 lot. If your stoploss should be of 400 points, do $20 / 400 = 0.05 lot.

MY EXCLUSIVE INDICATORS
Attention: The use of these indicators is optional. Please dont ask me for the .mt4 files. The .ex4 files are at the end of this post.

1) AckelSystemPanel - with Market infos, a Signal monitor and a Main Signal alerter. It also plots the high and low of the previous day.
2) AckelSystemSignal - a main signal alerter in a separate window, relative to each bar.
3) AckelSystemArrows - show the entry bar for each trade.
4) AckelSystemMACD - a customized MACD specially configured for this system. Automatically plots the levels for pairs and timeframes.
5) AckelSystemHA - Heiken Ashi customized.
6) AckelSystemSR - show some levels of support and resistance of H1, H4, D1, W1 and MN timeframes.
7) AckelSystemRainbow - show multiple MAs, just to reinforce visually the role of main MAs.

FINAL WORDS
I hope this system can be usefull for you. Please leave your opinion and impressions about this system and ideas about how to improve it.
It is working very well for me, but I am always opened to learn and improve my trading.
I wish you all a lot of success and peace.

WHERE TO GO FROM HERE
I started this topic (in July 15, 2013) using a system based in Bollinger Bands and EMA50 in the main window and RSI with Bollinger and SMA8 aplied to it in a separate window. I am not using these indicators anymore. As I said from the beginning, the system would evolve, and it did. In Aug 15, 2013 (Post #117) I started adding larger EMAs to give me a broader market perspective, and this gradually became a key aspect of the system. In Dec 7, 2014 (Post#179) I announced the version 4 of this system, when I discarded Bollinger Bands and adopted the MACD instead of the RSI.

Because of these changes, after this initial post you can continue from post #209 . Older posts are an optional reading.

ATTACHMENTS:

2 good setups and 1 bad setup



Trade 1 and 2 are examples of a "Trade A" Setup. Trade 3 is not good because MA 20 is not ascendant (P.S. - I realized that in "Trade C" setup MA hardly could be ascendant, because price crossed from below). Also there are resistance lvls between entry point and target.

By the way, I took the number 3 trade too, in the blue candle, of course. When I got this pic the red candle already was in formation.

I am yet fighting against the lack of discipline.

Have you passed this phase?

Same screen, but with some more details:



I think there are a 'Trade C' setup in trade number 4.

Also, about trade 3 we could place our stoploss in lower lvls, but the ROI would not be good. EMA 8 is under lvl 50 of RSI (and OMG there are a divergence difference between price and RSI ?). So,we shouldn't take this trade.

Note: I am speaking about the setup, ok? Eventually I can even win this trade, but the setup is not good.
P.S. - I moved SL to BE +5 and got stopped. Not bad for a bad setup.

In the screen below I draw some blue trendlines in price and in RSI, in GBPUSD daily.

Note the correlation between both indicators (yes, I think candles are indicators too).



Notes:

1. Most traders think in trendlines and patterns only in price, but you can explore these possibilities in indicators too.
2. Trendlines can also be drawned in EMA 8 (the green trendlines), helping trend identification.
3. In "N" I draw the breakout of a "W" pattern preceding an uptrend. In "O" and "I" you can see "M" patterns preceding downtrends.
4. Divergences in 13-B, 14-O, 5-G, and 7-I preceding revertions. These are outer divergences. M-10 is an inner divergence and I dont know how to interpret it at this moment. I want read what do you think about this.

I Like your idea, your explanation and attachment.
I will try it in demo account. I will post here after got the result.

Please do this.

Oh, and I realized that in "Trade C" setup (Trade 3 in post #3) MA hardly could be ascendant, because price crossed from below.

Yeah, I am yet learning everyday.

Hi,

Could you please tell me which indicator you are using in the top-left corner of your charts? The one that tells you how much time remaining until the next high impact FF event? If it is not already attached, would you mind attaching it?

Many thanks.

ABOUT MONEY MANAGEMENT AND LOTS

Every trader should limit the total risk of an account, using stoploss in each trade.
In a US$1000 mini account, 0.01 lot means that your stoploss of 50 pips represents a risk of 0,5%. For a US$10k mini account, 0.1 lot means that your stoploss of 50 pips represents a risk of 0,5%.
I am trading mainly with 1 hour timeframe. If you trade other timeframes, adjust your stoploss according. I am using the 50 pips SL like an example. I dont use hard SL, but I set it to respect the support levels.
In other words, to risk 2% overall you can open up to 4 trades simultaneously. This is what I am doing now.

I can be out of the market, or with one or two trades opened simultaneously, most of time. Eventually I can add in a position but I am trying respect the 2% limit.

So:

1. I can have one trade with up to 4 x 0.1 lot added, totalizing 0.4 lot (I have a 10k mini demo account);
2. Or I can have up to 4 trades with 0.1 lot;
3. Or any combination that totalizes 0.4 lot for stoplosses of 50 pips;
4. Changes in the size of stoploss requires lot adequations.

It is the "FFCal.mq4" indicator attached in post #1.

Thank you! I've been looking for something like that for a while.

Your system looks interesting and I will read more about it tonight. However, I noticed that you said you are "fighting against the lack of discipline" and I can tell you that I have been trading for a while now, and this is still one of the primary things that I struggle with. Overcome this issue, and you'll be golden. Otherwise, it is very hard to make any progress.

I totaly agree with you. It is not enough have a good system if you can't stay with the rules.
The first purpose of this thread is help me to commit with the rules. When your system and trades are public, you force yourself to respect more the system rules.
So I am using this as a part of my training.
The psychologic aspect plays an important paper in this game.

I agree with everything you just said. It is so important that it is worth repeating. I would even argue that the psychological aspect is THE most important part of the system. It is the thing that most traders lack, including myself -- PDC: Patience, discipline, and conviction. All the intangibles that cannot be taught. I came here on these forums hoping, like you, that publicizing my trades would force me to respect my system more, and I do think it is helping, but it still takes a lot of time. So if you can teach yourself that in the beginning, you will already be ahead of the curve.

I use a system that can be so precise it's sometimes scary (in fact, it's so good I'm hesitant to post it on these forums) and you'd think that that would be enough, but it is not. You could have all the intellect in the world, but if your emotions are not on the same page, it doesn't mean a thing.

I want to make sure what I understand is same with your concept.
I add 2 circles at the bottom.
My question is, Is this condition do you mean?
Would you like to give more explanation for this concept,pls. I mean, Would you like to give arrow/cycle on the condition that best match with the concept.

I hear you. I have maybe also such a system. Works well. I have a 'student' that I help. But guess what, my 'student' does better than me!! Why?? Because I made the system, i keep questioning myself when i get a signal, as i know the 'good' and 'bad' of the signals. End up I miss many good trades and sometimes just catches the bad ones. My student takes the signal with minimal questions. And does much better! Today I had 2 good signals, I took it and then started questioning myself. I cut the trade short at 2.5% gain. But the 2 signals would have guven me a 10%! Damn it. I wish I would think less. I just need to let go!!

Yes, in both cases there are RSI/EMA crossing, a Trade A setup. Your circle is in RSI/upper band crossing, in the first case, what is not mandatory, but suggest a stronger movement. The other circle is in the RSI/MA 20 crossing, what is not mandatory. I could take this trade in the previous candle, at the 'buy' line or at beginning of a new candle. So probably the RSI not crossed the MA 20 yet.

Thanks for your sugestion. I will use circles or arrows in my next charts.

REASONS TO ENTER, REASONS TO NOT ENTER

Once again the same chart, adittional explanations. I put two blue lines to mark trade 1 and trade 2, respectivelly.
These two trades give us reasons to enter, in the first case, and to not enter, in the second case.
Both trades were filtered using H1 timeframe.


TRADE ONE: You can see in (1) that, after a time of consolidation, there are a price action that suggests a sell. You already saw that RSI is below MA8 (3) and RSI crossed lower BB (4). You could take this trade in breakout of the support or in (2), when the candle touch the MA 20 (mw) and begin its fall. Stoploss above significant resistance and target before next significant support. By the way, excelent ROI. Good "Trade C" setup!
TRADE TWO: In (5) we have a candle that suggests a breakout after a candle that represents indecision. You already know that RSI crossed EMA8 (6) and upper BB (7). There are a previous candle that indicates a strong bull sentiment. Well, "by the book" this is also a "Trade C" setup.

Now let me see the first trade in a lower timeframe (15 min):


Oh, I will take this trade asap in (1). Bollinger bands in mw are expanding, and RSI crossed EMA 8 before and now is crossing lower BB. Bollinger Bands in iw are also expanding.
Yeap! The same trade that in H1 was classified like a 'Trade C' setup, in 15M timeframe it is a 'Trade D' setup! Very good! Sell, sell, sell.

Now let me see the second trade in a lower timeframe (15 min):


OMG! No way I would take this trade in (1) (what I did watching only the H1 timeframe) if I had saw this chart!
RSI has crossed EMA 8 long time ago (2) and there are so many candles indicating resistances above! In (3) we can't see signals that trade can be over, but look those wicks and resistance lines! Look the ROI, how distant is the support line in comparision with the many resistance lines!

Well, analizing these two situations, first in H1 timeframe, then in 15M timeframe, is evident the importance to change for a smaller timeframe before enter in a trade. Based in this conclusion, I am now agregating this method in the Double Bollinger System.

All my entries in the future will be taken after 1) filter the trades in H1 timeframe and 2) see what the 15M timeframe is 'saying'.

I know exactly you are talking about, friend. I am also trying educate myself in the psychologic aspect of this game.

Another trade I took recently. AUDJPY H1.



After a period of consolidation (1) I had a breakout of the resistance. RSI crossed EMA8 and upper BB. BB are expanding.
Entry in (2) and exit in (3). ROI was 1:1. I could enter earlier (circle #4) to better ROI, but I missed the momentum.

43 pips profit.

Bookmarking this page. Will learn more, Thank you Alexmackel.

You are welcome, Antonov