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
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 triggerFollow-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 MACAdditional 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.