I've developed a system and it appears to work OK on paper but would you trade this in real life???
The markets I'm looking at using it on are the FTSE, AUDUSD & EUDUSD, all futures markets.
I will explain a Long position. A short position is the same but reversed and displayed in red.
Entry
Entry signal = a Bar with a Blue dot below it.
Entry = Buy 2 contracts @ entry signal bar high + 1 (or 0.0001) on stop. (Only valid for the next bar after the signal bar)
Initial Stop (IS)
Initial Stop is Entry Signal Bar low (Also thinking of a money stop if the entry signal bar is to large)
Exits
This part is a bit trickier.
First I will explain my stops -
1. Stall Exit - Basically this is where we have entered a trade and it is not in a profitable position. I.e. after the entry the market goes sideways or slowly creeps towards the IS. If after 3 bars we are not in a profitable state adjust stop from IS position to the third bars low. As each bar completes move the stop on each new low until either we get stopped out or move into a profitable position.
2. NC ("Naked Close") stop. Basically if on completion of the current bar, the close of the current bar is greater than the high of the preceding bar. Then move the NC stop to the low of the closed bar.
This is represented by the Green dots.
3. TS (trailing stop) is represented by the green line.
So in operation the exits perform like this -
Exit 1 - Initial stop as per above. Sell 2 contracts
Exit 2 - Stall stop. Actioned on 3rd bar, Sell 2 contracts if stopped out.
Exit 3 - Price goes below NC stop. Sell 1 contract
Exit 4 - Price goes below TS stop. Sell 1 contract
If we are stopped out by a NC stop. Now the trade is only running with 1 contract.
If we get a new blue ball buy signal, Buy 1 contract as per above entry method.
Do the same if the TS stop is taken out but the NC stop is still running.
So that's about it.
A pictures worth a thousand words. Tonight's action on the EURUSD.
I've added this as an attachment. Not sure how to put it into the body of the message?