In the book “Trading for a living” by Dr Alexander Elder states it pays for retail traders to design a system that will give signal relatively infrequently. This will save you a ton in fees and whip-sores. A trading system that trades infrequent doesn’t mean there will be no drawdowns or the system will always produce winning trades. Since there are fewer trends than ranges, a trend based system fits perfectly this criteria. It helps a lot if that system is simple to understand because it means it will be easy to stay discipline to.
The 7/21 System designed by Simon Brown is one such system, it tries to catch trends as they start, and ride for as long as possible. It uses 2 simple moving averages, the 7 & 21 simple moving average applied on close… Read more