Introduction to Algo Trader system, trend detector
|The trend is our friend.
But... what is the trend? How to track the trend? There will be dozens of methods.
Today I'll make a brief introduction of my Algo Trader System, which could well define and track the trend on 60 min and 240 min chart.
It was created and backtested in Esignal.
I just translated it into MT4 for several days.
The logic of Algo Trader includes price action, pivot and my own trend following method.
It could work on 9 pairs (H1 and H4 timeframe)：
EURUSD, DXY, GBPUSD, USDJPY, AUDUSD, NZDUSD, USDCAD, Spot Gold, WTI Oil
The basic logic are the same, but the calculation method and filters are different for every pair and every timeframe.
Chart 1: Algo Trader System (Click on the image to enlarge)
1. When short term trend, medium term trend and/or long term trend all turn green, and the price also closed above the upper bands, this should be a perfect buy opportunity, exit on price close below lower bands.
(The stop loss level could also be 5 pips below recent swing low)
Chart 2: Perfect buy trade setup (Click on the image to enlarge)
2. When short term trend, medium term trend and/or long term trend all turn magenta, and the price also closed below the lower bands, this should be a perfect sell opportunity, exit when price close above upper bands.
(The stop loss level could also be 5 pips above recent swing high)
Chart 3: Perfect sell trade setup (Click on the image to enlarge)
3. Timeframe:
H4--Medium term trade
H1--Intraday short term trade
Chart 4: Intraday short term trade setup (Click on the image to enlarge)
4. Combined H1 and H4 timeframe, we could well read the market.
Chart 5: Recent EURUSD Moving (Click on the image to enlarge)
5. Combined with Elliottwave theory to maximize profit and avoid potential immature entries
For a long time, I traded on manually Elliottwave analysis and look for top and bottom signs at potential turning points.
After Algo Trader system was created, I find the whole work becomes very easy.
To my experience, try to trade wave 3 and wave 5 should be more profitable.
Now let's see recently USDJPY uptrend from 104.63 to 111.39.
After all the candles are flagged on the chart, we find it is a textbook 5 wave rally.
However, it is extremely hard to identify it during the trend developing.
Combined with Algo Trader system, we could pick most of the movement in wave 3 and wave 5.
Also could avoid the sell trade of a potential double top formation in wave 5.
Chart 6: track the movement of wave 3 (Click on the image to enlarge)
Chart 7: identify wave 5 (Click on the image to enlarge)
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