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I have received some private posts from other RT users as follows:
"Hi Tom
Last week you referred to three indicators to base a trading system on with
a price based filter stuck on the end. If it isn't prying too much what do
you use?"
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I thought this might help,
I suggest that you set out your objectives.......loosely speaking I set out
the following objectives/ideals before looking for the correct indicators-
(a) trend-following or range-trading....I chose the former,
(b) How to you determine that a trend is in place (you must have a
short-term directional dynamic as the final set-up),
(c) Ensure that momentum has kicked-in,
(d) Make sure that "exit" and "stop" criteria are enough distance away from
"entry" to give the trade "room to breathe" if you know what I mean.....so
avoiding the situations where a small amount of price movement up, then
down, then up again, knocks the position in, then out, then in again very
quickly.
I would recommend you use the following in your system testing to achieve
the above objectives -
(1) either a single moving average or preferably an optimised moving average
combination i.e. dual moving averages,
(2) MACD (I prefer to optimise the parameters),
(3) Slow Stochastics (optimisation is again possible but not crucial)
...the price-based filter is the missing-link...for this I suggest some
experimentation with Candlesticks (this is a good place to start) but as I
like to mechanise my signals I use an optimised price channel which is like
a 'range-break' indicator.
Place these indicators in the right order and you have a winning system with
high returns and 65% winners which I believe can be utilised in almost any
markets.
Regards,
Tom Nagle
Tullett & Tokyo Forex International,
Cable House,
54-62 New Broad Street,
London EC2M 1JJ.
Tel: +44 171 827 3409
www.tullett.com
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