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First 2 remarks:
I live in Europe so my english is not always as good, keep that in mind if ever something sounds offensive to you. It will be probably a bad translation from my part. The alternative is that we communicate in Dutch, but that's probably not such a good idea.
Secondly i don't want to be the smart guy who knows everything. I only have 15 years experience as daytrader and i still survive.
About the trend:
the trend has to be found first, that's logical. You can use an EMA, no problem.
Second step is where to get in? You have to get in where the risc is the lowest and the possible reward the highest. So you need an indicator that can spot bottoms in an uptrend and tops in a downtrend. So you look for extreme points opposite to the trend. Because these points are extreme it means that they normally will reverse, so the risc of going the wrong way is limited.
For me an indicator has 2 different interpretations: 1 for the long side, and 1 for the short side.
Fictitious example: RSI
If trend long: buy if going in oversold zone, sell if coming down form the overbought zone.
The explanation is: because the trend is long we will never stay longtime in the oversold zone, so get in as soon as we reach that zone. If we go in the overbought zone we stay in our position because the power of the long will make us go higher and higher. This is due to the momentum. So to take the maximum ride we stay in until we drop out of the overbought zone.
Work with multiple timeframes. Each zigzag on daily charts will be composed of several zigzags on hourly charts. So if the daily zigzag goes up your chnages get better if you het in where the zigzag on hourly charts just turns up again.
I agree that programming a system will never give the same results as "manually"trading. But believe me you can build a sytem that wil , in manual version, make profits in all kind of markets. All depends on the quality of the system.
I will send this already.
I live in Europe so my english is not always as good, keep that in mind if ever something sounds offensive to you. It will be probably a bad translation from my part. The alternative is that we communicate in Dutch, but that's probably not such a good idea.
Secondly i don't want to be the smart guy who knows everything. I only have 15 years experience as daytrader and i still survive.
About the trend:
the trend has to be found first, that's logical. You can use an EMA, no problem.
Second step is where to get in? You have to get in where the risc is the lowest and the possible reward the highest. So you need an indicator that can spot bottoms in an uptrend and tops in a downtrend. So you look for extreme points opposite to the trend. Because these points are extreme it means that they normally will reverse, so the risc of going the wrong way is limited.
For me an indicator has 2 different interpretations: 1 for the long side, and 1 for the short side.
Fictitious example: RSI
If trend long: buy if going in oversold zone, sell if coming down form the overbought zone.
The explanation is: because the trend is long we will never stay longtime in the oversold zone, so get in as soon as we reach that zone. If we go in the overbought zone we stay in our position because the power of the long will make us go higher and higher. This is due to the momentum. So to take the maximum ride we stay in until we drop out of the overbought zone.
Work with multiple timeframes. Each zigzag on daily charts will be composed of several zigzags on hourly charts. So if the daily zigzag goes up your chnages get better if you het in where the zigzag on hourly charts just turns up again.
I agree that programming a system will never give the same results as "manually"trading. But believe me you can build a sytem that wil , in manual version, make profits in all kind of markets. All depends on the quality of the system.
I will send this already.
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