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The most difficult challenge of any trading system is designing the exit. This is where the individuals risk profile comes into the picture.
I personally prefer exiting 50% of my positions at predefined location and then once my balance holding is free of risk, even if stop loss hits, i can breathe easy and even show guts by adding to my positions if i am in deep profit.
To design an exit, I prefer looking at momentum indicators, preferably rsi or CCI or a custom variation of these 2. I believe Momentum always precedes price as divergence will show a maturing trend.
First we have to build our indicator from the scratch. Target is to simulate our method on price chart on a momentum indicator.
We'll start with simple rsi (21). smooth-en it, by taking the Double Exponential Moving Average (period 7) of RSI(21).
For when you get the piercing of the R value into the and beyond the Bollinger Support, you want to see the color change shown. Which one of these appearances do you prefer? To light up the entire column, or just the pierce.
I think the slight pierce looks better, but the whole column is more obvious.
Only asking cause I ACCIDENTALLY produced the one with the column and initially couldn't figure out how to reproduce the look you showed in your charts.
Just a note, I figured it out and can do it either way.
Next is the direction of trade. I believe that i can afford to be brave if i am trading with the bigger trend. I'll avoid contra trades all together as system will always give opportunity to trade both ways.
If i get a bad trade location, there is a higher probability that my stoploss will be respected if my trade is in the directon of the major trend. Spikes / gaps normally has a tendency to happen in the direction of trend. Even if my stops get hit, i can always re-enter with lesser fear as I know i have the big daddy of trend behind me.
So bottom line... NO CONTRA....!
50 sma (Simple Moving Average ) on 2.5 times the trading time frame will be my principal guide to the trend.
Since i plan to time my entry on 2 min time frame,
50 sma on 5 min tf = 250 sma on 2 min tf
The info generated from 250 SMA will be plotted as text on the price chart and as a small ribbon with colors that tell me the health of the market and what kind of trade management i should employ.
I'll be using CCI indicator to gauge the health of the market. The interpretation of CCI indicator is inspired by a very good trader / mentor who goes by the alias of SMART_TRADE in indian trading circle. He once told me that i should wait for the trend to make sound like a pop corn bursting out of the pan before i go in for the kill, hence i named it ST's Pop Corn.
Essentially CCI measures the distance between SMA and the (High + LOW+ CLOSE)/3 of the price bar. It is designed so that 68% of the trading range falls between the 100 to -100 mark.
Here's a look @ the latest look of the indie. Showing the user interface here with plot options etc.
Also, with the coloring on the main price panel, I am not sure if that is correct? I'm filling in those areas where the accls are inside the bbands, and im not sure if it should fill in the balloon area you didn't want to see earlier?
From your last chart, it looks like you just want to show the areas where the bband is INSIDE the Accl correct?
At any rate, that area can just be set to transparent at all times.
BTW.... those arrows, they are only the arrows when the bottom of the worm breaks out of the top Accl, or when the top of the worm breaks out of the bottom Accl. I wasn't sure about the others.
