Hello FOREX traders!
My first post here, and I must thank Edward for this great site he has provided.
This trading strategy is primarily based upon a method created by Jacob Bernstein in his recent book 'The Ultimate Day Trader'. I have taken one of his ideas and 'synthesized' it a little to fit me better. I do not take credit for fully developing the idea for the MAC strategy.
Bernstein creates his strategies based upon what he calls his 'STF Method' or Set-up, Trigger, and Follow-through. This allows the trader to follow his/her system from picking their trades all the way to exiting them in 3 steps.
Without further adieu..
The MAC (Moving Average Channel) Trading Strategy
Markets: Any
Time-frame: Any
Indicators:
Rate of Change (28) with an applied Simple Moving Average (28)
Simple Moving Average (10, high) Simple Moving Average (8, low) -> This is the Channel
Bollinger Bands (20, 2.0 STD)
Pivot Points (Floor)
Set Up
- Two bars closing outside (above or below) the MAC but remaining within the Bollinger Bands
- Any bar that closes back inside the MAC cancels the set up and you must wait for a new set up to occur. Any open orders that have not been filled at this point are also cancelled.
Trigger
- Long: The ROC must be above its SMA -> Place order on the high of the 2nd set up bar
- Short: The ROC must be below its SMA -> Place order on the low of the 2nd set up bar
- If the ROC has not confirmed the set up WAIT for it to cross its moving average and place an order at the high/low of the last bar
- If while waiting for the ROC to cross your set up becomes invalid by a close inside the MAC, wait for a new set up to find another trigger
Follow-Through
- Our stop-loss is placed at the bottom channel line (when long) or the top channel line (when short)
- We move our stop-loss after each close with the moving channel.
- We exit our position (either at a loss or profit) when a bar closes inside the MAC
Additional Discretionary Rules
- Never go long if price is trading above R2 or R3
- Never go short if price is trading below S2 or S3
- A bar that closes outside the MAC but also outside of our Bollinger Bands does not count as set-up bar. (This helps filter out actual momentum from volatility spikes in price)
Note: This system has not been thoroughly back-tested by myself, I am currently in the process of doing so manually.