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The trend is your friend!

“The trend is your friend”. This famous phrase is in almost all trading books. But how important is it to trade in the direction of the trend? This is the question I asked myself. Before answering this question, we will discuss some generalities. Whereof is usually composed a trading strategy: An entry that gives us

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Random entry + ATR Trailing Stop

Can a strategy based on a random input  with a suitable output and money management be profitable? Dr Van Tharp in his book Super Trader, said he did the test in 10 markets over a period of 10 years, and says the results were positive in a consistent manner. “It didn’t make a lot of money and

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Moving Average Crossover

If there is a popular technique in trading, it is the moving averages (MA) crossover. We saw in a previous article that the problem of the strategy based on the MA was whipsaw. We then presented a technique that corrects the issue in the article on the Keltner bands. The technique of using crossing of two

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Reinventing the MACD

The MACD is the famous indicator invented by Gerald Appel in the 70s.  It measures the amplitude of divergence between two moving averages. This indicator is very popular, systematically found in all trading platforms. It can be used in different type of strategy: like momentum indicator for trend following, oscillator for range-trading, etc. … In this article

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The Donchian Channel

The Donchian Channel was developed by Richard Donchian, who used a 50 weeks period in the original strategy.  The idea is to buy when the price breaks the upper band of the channel (maximum 50 weeks) and sell when it breaks the lower band of the channel (minimum 50 weeks). However, this is Richard Dennis who popularized

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Keltner Channel

One weakness of the strategy of price crosses its moving average, is the many whipsaw, closing the position at a loss before the trend has a chance to settle. This is why trading slope of the moving average gives better results; It takes position when the trend is sufficiently established. The whipsaw is a component of

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All flavors of moving average!

The moving average is perhaps the most popular  technical analysis tool of markets. According to this article, its use for smoothing data goes back to the early 20th century. Its use to define the market trend is everywhere, on traders screen  as well as specialized media screens. It is impossible to find a book of

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Bollinger Bands

There are several strategies based on Bollinger Bands.  I choose two of them for my first test.   Strategy # 1: The classic strategy uses Bollinger bands as support and resistance. Indeed, we trade the bounce of bands. The basic rules are as follows: Buy: when the price tests the lower band and closes above it,

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The great masters

Published on June 16, 2012 by in Generalities

Trading is much like the practice of martial arts. To succeed, you need discipline, perseverance and a lot of practice. You’ll be lucky if you could find a good mentor (the master). The analogy becomes even more striking when I think to the concept of the great masters. In the world of trading, we think

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The reason to be

Published on June 5, 2012 by in Generalities

Some time ago when we were started to look at Forex-Trading, we had read a hundred of books, spend many hours online looking for information and especially looking for a trading system. We found several, from simple to complex. But few sources show the validity of the systems they have. What we are left unsatisfied

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