My System: It really isn' complicated

10:37 AM


The System

- Here is my system – setup, entries, exits

- I only play 4hr chart as I find it the most accurate

- Based on adaptation of 2 different strategies

- Must read book for all aspiring traders(Link)



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So lately i have been working a new "All Weather Strategy" but a good definition is, 1) Robust, 2) simple (taken from an excellent book available here)

I have tried pure technical and pure fundamentals what i have found is robustness works the best, fundamental truth backed by mathematical concepts.

Simple means not as many variables. Too many indicators does not equate to better results.

 I believe i have achieved that here. A simple countertrend strategy with no fancy indicators based on a mixture of 2 different strategies. Individually, they work, but in conjunction they produce really great results. 


This is not the only workable system, but i find it gives me asymmetrical risk returns and is high percentage!

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Setup - Indicators

EMA 10
4Hr chart
MACD - default settings 

Works on all currencies generally but i only use the following due to higher spreads on Etoro: 
EURUSD GBPUSD USDCAD USDJPY AUDUSD EURJPY 

If you are not on etoro, i used to trade 16 different crosses.


Part 1 - Finding an entry, adaptation of “Nanningbob 4h trading system(Link)”

If I see that price is moving beyond a point that has not been seen in a while that's my first criteria. This takes a bit of judgement but think about it as it passed the last major resistance/support level.

Underlying belief is that as long as nothing super major is happening fundamentally, currencies should not fall beyond what was seen previously without some kind of retracement first. Currencies falling rapidly without the digestion period can be dangerous (see 1997 financial crisis), also stop losses, bottom fishing, taking profits.

There are many reasons why retracement is necessary and in my opinion is the basis behind the Elliott wave principle


Part 2- finding a point, adaptation of "Bladerunner(Link)"

When prices run, they can run fast. Blind entry just based of levels can be dangerous.
I used to do blind entries till I traded the USDJPY in late 2012. There was no retracement,and I even averaged down so the loss balooned.  This is why I believe averaging down is poisonous.

Now to improve that I noted that I can enter only if I can see prices are stabilizing and getting ready to reverse.

I am using the bladerunner strategy to find a counterpoint. Retrace to the 10EMA & MACD shows momentum slowing beyond 20/80 point and if i am lucky some candles patterns as well.


Barricade - behind a strong resistance level (good principal no matter what system)

Now, doesn't mean all trades work out, we win some we lose some. I will always have a preset Stop Loss at the next support/resistance and give It a couple dozen basis points leeway.

I read this sometime back, if you need protection why not set it behind a barricade

Exit fibbo - Fibbos are one of the best retracement levels cause it gives us some sense of where we are going.

Since our system involves going beyond levels that haven't been seen in a while. Fibbos provide good levels.



Barricade – Profit taking

Going again with Fibbos


Sizing 

5-10% of invested amount. 



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Notes:

Do i recommend the bladerunner itself on like the 5/15/30M chart? I used it previously to good effect at 15M, BUT I have not tested it throughout an economic cycle and don't know how it reacts to crisis events.

The true masters of trading I noted have traded throughout crises such as the GFC in 2008 they have come out alive, this is a must see this book for inspiring traders(Link).

On etoro I have met some who says they have successful from 2/3/4 years experience. The real experience is when you can say you have seen the economic boom and bust cycle.

And really does a system need to be so complicated? Follow my blog and my etoro feed for posting of my trades, copy me if you want an optimized portfolio!

Stay Safe People

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