Well after the introduction of market structure, let´s get in deep to trading itself.
First and after analyzing the market with every know bar type, i decided to stick to Range Bar Charts ( offline charts on MT4 ). This bar type give us a better perspective of the FIF movements and further analysis. The selection of range size depends on each trading style. I´m more conservative and prefer to ride the large market movements.
A trading system must have 3 concepts : Trade Activator, Trade Direction and Money Management.
Trade Activator : This is what make us to pull the "trigger" and Buy/Sell an instrument. After long searching ( and yes i was looking for the holy grail indicator like all, which till now i didn´t found and never will because there is no such thing and believe me i saw a zillion of indicators ) i decided to look for market structure only and i have an "eureka" moment. If i was looking for "help" in define the market movements, the FIF movements, the best one is the ZigZag Indicator. Well again you are going to call me crazy
because ZigZag will redraw as market develops, but that´s is not an issue because the zones are determined way advance. So our Trade Activator is found is the ZigZag Indicator.Trade Direction : This was more difficult and required a lot of research. As you will notice later, we can define the market direction with the flow of the market and with the help of our zones, but sometimes ( in large fixation areas ) was very difficult to know if we should consider the zone a support or a resistance and act accordingly. So in order to support us in this decision, i use 1 and only 1 indicator, coded by Mladen ( Thanks for that in advance ) and is a truly gem to complete our trading system.
Money Management : As this is so important i will dedicate the next chapter to this, but the main concept is really simple. As we trade with zones, the targets and stops will be determined by them.
Fifty Trading System
Like i said before i trade with Range Bar Charts. There are plenty of indicators/EA that can create this type of offline charts for MT4 but the one i prefer, and im not making any kind of promotion or have anything related to the company is ovo . cz - Range Bar Charts No Gap ( you can google it ).
Related to the range bar values i use the following :
DOW - 25 - 30 index points per bar
SP500 - 3.5 - 5 index points per bar
NASDAQ - 20 - 25 index points per bar
STOXX50 - 3.5 - 5 index points per bar
DAX - 25- 30 index points per bar
JP225 - 75 index points per bar
Bitcoin - 500 usd per bar
XTI( Crude Oil) 30 cents per bar
XAU ( Gold ) 3.5 - 5 usd per bar
FX Pairs - 10 - 20 pips ( depends on the pair volatility - example : EURUSD 10 pips per bar )
So after you applied the indicator to create the offline chart it will look like this :
With this you already take a lot of noise out of the chart, and you can identify more clearly the FIF movements.
But to help us to see clearly the FIF movements ( or group of FIF movements ) we are going to use the ZigZag Indicator ( !!ZigZagTriad ) with the settings :
And after apply our chart will look like this
As you can instantly see the FIF movements are very clear and the chart is clean. When i say the chart is clean is we can see the price movements and not a bunch of indicators, that overlay each other, resulting in a confusion for our brain and thus nobody can trade effectively.
So after this we need to determine our Trade Activator and for that we will use the simple fibonacci retracement tool with the following settings :
The next step requires some screen time but after a while you are doing it mentally. You are going to see the high and lows of the ZigZag movements and you are going to draw the fibo tool from the high to the low in case of down movement and from low to the high in case of up movement.
As you can see, and this is current market situation, we can clearly and prior of the movement to determine where are the zones we expect for market to come and enter in our trades - simple and effective and most important without rules and rules and rules that only complicate our brain and freeze us when it´s time to take fast decisions without any hesitation.
Trade Direction
So we already have our Trade Activator, so now it´s time for Trade Direction. First i begin to trade only with the zones, but sometimes it get tricky and i was looking for something reliable that i can introduce to the system without create any complicated rules ( by now you can see that i like to keep things very simple). I tested several common concepts but not reliable. So i saw some comments regarding half-trend nrp ( coded by Mladen) and give it a try. And voila, the Trade Direction appear and the system gain about 20% more profitability and more important, much more clear. ( Currently is about 90% - yes it is extremely reliable, and no i never thought in sell it ).
So simple we took trades in agreement of the Trade Direction only. When we have them in disagreement we can trade both ways but ALWAYS respecting the zones. Don´t forget that this is only a tool and we don´t trade for instance when they change signal.
Half-Trend nrp settings ( we will use two one for short period and one for higher period )
and it will be like this on the chart
So after presenting both Trade Activator and Trade Direction you have a real trading edge
This is my trading view ( i present the MT4 version as i couldn´t till now get the indicators for Tradestation )
Template : Trade Activator Trade Direction
Money Management
The money management for this system is really simple. I recommend not risk more then 5% on each trade.
The zones of 50%/57.9% are our key zones, so when price reject those areas and we enter a trade we will put stop above 57.9 % level( in case of Sell ), Below 57.9% level ( in case of Buy ) PLUS Range Bar Chart Range PLUS maximum spread for the instrument - example Dow Jones Range 25 Index Points, 57.9% at 35000, Sell Trade, Stop will be at 35000 + 25(Range) + 2(Max Spread) = 35027
For better understanding i will do a video and post later.
Indicators :
