I will be posting my current trading system which I have tested for the last month (demo) with profitable results. What I need is feedback and further testing and refining from you fine folks.
The system uses absolutely no indicators as currently I haven't found any to be useful. Currently the last 10 days trading the NQ the system is up $7,730 trading 2 contracts. This is not a holy grail, there are losing days, just not many and the losses are small, largest losing day has been 11 points. I tested it on on TF and it also seemed profitable, it is probably profitable in a wide range of markets, I just don't have the time physically to manually keep up with it.
Maybe somebody with some technical know how, can back-test these strategies the only problem you might run into is that I was range charts.
Lastly, by the grace of Jesus Christ have I been able to stumble upon this after prayer, I do not take any credit for this system.
General Trading Rules & Info
The system uses Range Bars and Keltner Channels to enter and exit trades. The beauty of Keltner Channels with these chart settings is that they contain about 95% of the price action, so during range bound conditions it won't offer alot of signals. You will still get the false breakouts of course. These channels were originally designed as trend following, which nobody seems to use them like that anymore. Everyone seems to use them for range trades.
Entry: About half or more than half of the range bar closes outside the Keltner Channel.
Exit: Exit all position 6-8 ticks above/below Keltner Channel moving average line.
I tested different exit strategies, such as exiting 1st contract at 5 points, and 2nd at 10, exit all at the moving average, and 5 points and moving average, exit all at the line lets you follow the a massive trend and profits are better then the other strategies. Anyway, feel free to test different exit strategies.
Stops: 1.5 points (6 ticks) initial, with a +1 tick break-even after a 1.75-2pt move.
These are the best settings I have found, usually the strong trends seem to not re-test entry price. In the event that you do get stopped out, I would re-enter another 2-3 times depending on how far the move has gone, but after the 2nd time usually, I will wait for a reversal of the trend to enter a position again, or wait for the Upper/Bottom channel to be fully tested. I will explain this in detail in the subsequent charts.
4 Range Chart
Keltner Channel: Offset Multiplier: 2.4
My charts might look different from yours as I am using a template from a service I subscribed too once. Also, it looks like some of the bars closed below the channel again because of the template but they did not, they were up bars.
On trend days having tight STOP LOSS have little chance of success since NQ whips around 4-8 handles in between till hitting major support etc. NQ ADR is around 40 points on trend days. If one wants to catch majority of this
type of move it helps to keep an eye on market internals and use wider stop loss than normal.
In general trying to trade 2-5 points etc move is competing with algos, HFT etc. I have not found this to be a viable strategy over 5 years of back testing. However, i trade differently and my risk profile is different ( i am assuming)
so my back testing may have little value for your trading.
Last edited by mfbreakout; May 16th, 2014 at 06:38 AM.
How consistent is ADR in predicting range or trend days? I would like to keep out of range days conpletely but as of right now, it's not that big of an issue since even during extremely high whipsawing days, the draw downs are much. Also my main focus is capturing big moves not scalping small trades.
Also, for taking 2-5 points I have another conservative system based on the same channels. It's basically you enter on breakout outside the channel after a bounce from the channels midline. It has been extremely consistent with capturing a few points a day. I think the reason the general system works as well as the scalping system is that most Algos momentum driven with their 10 point targets, just a general thought. I'll post a picture in a bit.
Thanks for your help
Last edited by gselsidi; May 16th, 2014 at 11:59 AM.
Yes I will later on tonight it's a pain with print screen copying pasting, but today was a good choppy day with some minor trends. I'll also post charts of a losing day complete chop fest just to get the general idea, whenever the next one occurs.
Last edited by gselsidi; May 16th, 2014 at 02:55 PM.
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