Uses a moving average, the blue line to try and get filled at favorable prices
The MA is multiplied by a number (e.g. .90) which means the system tries to get filled at a 10% lower price (on the Blue MA line)
This means that stop limit buy orders have to be set in advance on the blue line and hope that they would get filled when there is a temporary drop in price
This obviously works best on tickers with a clear long-term up direction
The multiplier can be set to .95 to try and get in on 5% drops instead of 10% drops
"Prof TRG %" determines what profit target you'd like the system to use, default is 1.2 meaning a 20% target, but 1.05, 1.10, and 1.30 would also be good considerations
"Loss TRG %" determines what stop-loss target you'd like the system to use, default is 0.90, meaning 10% stop loss, but, .95, and .85 would also be good considerations
The Profit Target line is green
The Stop Loss target line is red
Using the combination of the Stop Loss inputs and Profit Target inputs you can determine your own RR (Risk to reward ratios), for example, 1:1, 2:1, 3:1, 5:1
Let me know if anything is unclear and I'll try to clarify.
Again, this system assumes that you'll have waiting stop limit orders that are trying to get filled on the blue line, is below price most of the time -- so it's trying to get in on temporary drops on instruments that have a long term uptrend.
1:1 RR ratio would mean high win % 1:5 RR ratios would mean low win %
Not that win % matters, the important things IMO to pay attention to is Profit Factor and a relatively smooth equity cruve
so like, if the trade doesnt get filled and price moves up, it wont cancel the limit order and execute another opportunity?
Hhhhhsssss
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@Hhhhhsssss, will it execute others trades if the order is not filled?
HermanBrummer
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@Hhhhhsssss, Basically no, stop-limit orders only get triggered when the price goes through xxx set level and then are a normal limit order, which means they get filled at the set price or better.
So this system always has trade waiting to be filled, it sits and waits for the position to be filled. And if it is not filled, I just move the trade position up every week or so.
It would be a good idea to build a repository/collection of different systems and put alerts on them -- that's what I do, I have around 30 systems that send me email alerts to look at setups.
I do this so that I don't have to look at charts all day and because I can see how a system did over time-- gives me more confidence to trust it.
It won't cancel the order now, the limit order will just move congruently with the blue line, in lockstep with the blue line. Eventually, it gets filled, and then it's in a trade.
The system is not designed to trade a lot, but rather to be one of a couple of systems a trader uses.