fade and trend?

what do you guys think of a system that can be used to fade and trend
use daily to trade:

use bollinge bands 20 period with 2 std deviation
linear weighted moving average 200 and 20

when price closes below the moving average 200:

when price closes below -2 std deviation, sell
limit when price closes above 20 moving average

when price closes above +2 std deviation, sell
limit when price closes below 20 moving average

Reverse the steps when price close above moving average 200

rationale:
when price closes below the 200 moving average, there's a high probability that price is going to go down. When it hits the -2 std deviation, this is a sure signal for a down trend

At the same time, when the price closes above the +2 band, we are going to sell since there is a strong probability that it will correct itself to the downward movement since the price is below the 200 moving average.

Use the 20 moving average for limits. Set stops at 150 pips..

i know it's crude and there can be variety of ways of modifying this..but i just came up with this when i read "mechanical trading systems" by Weissman

So in a way you can use this in both trends and fading environment. It just depends where the price is in relation to the 200 moving average.

whatchu guys think???!!?

Do you have a chart that illistrates what you are speaking of?

no, but basically i just added on the method he presented in the book which falls under the category of trend following mean reversion method.

This basically a method to trade in a fading environment following the general trend. In the book, the method explains that when the price is below the mva 200, you sell when it hits the +2 deviation. as long as the price is below the mva 200, there is a strong bias that it will continue it's downward motion. And you limit your profit at the 20 moving average.
And vice versa when the price is above mva 200. When it closes below -2 deviation, you buy since the price is thought to be in an upward movement.

He tested various methods using CQG charting with various markets like forex, futures, equity indices from the 1992 to 2002. This particular method had 68.26% win average, 1.44 P/L ratio, average of 4 consecutive losses, with 334 average number of trades with around 8 days of open positions. profit to maximum drawdown ratio of 1.44. There were other basic methods presented like moving average crossovers, macd, etc.

Two things that I took from the book are:
1. the simpler the system, the more profitable it is. Too many signals and too many rules tend to keep you away from the market too long and it tends to limit your profit potentials
2. You HAVE to pick a system that best fits your personality and schedule. Since i work during the day, i have to be somewhat an intermediate/short term trader. I dont' like waiting too long (more than a month) to be in the market, but I also don't have the time to be watching the screen all day.

By adding an extra trend trading component to this system, it allows me to trade during a trend as opposed to only trading during choppy market. But i'm not sure if this will affect the overall performance of this system, but sure does look promising