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
I always prefer simple systems. Ones I can explain to my 8-year old niece and she gets it within 10 minutes. One such system is the lazy system. A system developed by Simon Brown. It is a trend-based system that uses 3 Exponential moving averages, 15, 30 & 60.
It first identifies the direction of a trend and trades in that direction. It tries to ride on trends for as long as possible and allows for pyramiding(re-entries). Works best in low volatility markets... Read more