Profitable Trend Trading Strategy

Quote from iusandman:

Historically trading with a version of a MA crossover and/or one MA with price closing above/below the MA as your trigger has shown to be the most consistent method for a positive PE [profit expectancy]. Look at the 5-7 day ATR to determine your required stop size. If the stop size required is more than 2% of your account--DON't take the trade--wait for a proper set-up that keeps your risk within the 2% parameter. Confirm that your target is greater than your stop size e.g. pivot point or some other support/resistance point for a target. Trail the stop to continue to decrease risk as the trade progresses {you can use an ATR based volatility stop for this}. I would NOT recommend basing your entry/exit on your impression of price action. You will have no way of assessing the PE of your system over the long haul with this approach. In the end if you can AVERAGE one point (ES) a day you can have a very profitable career by using sound money management. The key to success is being CONSISTENT in executing your plan. If you have developed a simple plan/method that shows a + PE over time and you the execute it CONSISTENTLY you will then begin to see profits CONSISTENTLY.

Good luck
Chris
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I let price action be my guide, I don't need backtesting:mad:

ATR? That is a lagging indicator. Yesterday was trend, big ATR, today is chop. You will get creamed using that approach!:D
 
Also I make support and resistance from monthly, weekly and daily pivots. These levels are proven to work over time, and never go invalid! The primary pivots are the most important ones. When you have several levels in confluence, with the 20 EMA on the 15 min on top, you got a great level to short or go long on.

However, once in a trade, price action is key to trade management. Because without a stop, all you can rely on is price action, and the reading of the tape, and the order flow.
 
Quote from failed_trad3r:

The strategy can add filters like standard MACD and RSI. If they show divergence you don't trade the touch of the EMA.

But this strategy is all about letting price action guide the trade. Once you're in the trade, if price action is looking good, you stay in the trade for 2 ticks of profit, and if price action is bad, you scratch the trade or your emergency stop gets hit.

Since you scale in more and more contracts the emergency stop will be about 4 points for the first few contracts instead of 3 points.
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2 ticks ? lol so you're a tick fucker eh ? Macd and RSI are about as worthless as it gets. If you can't read what they are telling you without them up, then you better learn. Thats part of reading pa
 
I was not critiquing your method just some suggestions. I agree S&R is really all that is needed. The "price action" approach is often quoted but ultimately seems to be a poorly defined exit over the long haul. That is where ATR comes in as you can set some realistic targets based on recent ATR and S&R. This has proven far more profitable for me over the long haul as watching price action seems to leave more on the table than if I had used a fixed target [again based on S&R and ATR]. If your exits avg. at least twice your stops then you're golden. All that matters in the long run is that you're CONSISTENT, month to month and year to year. Good for you!

Good trading!
Chris
 
Quote from wiesman02:

2 ticks ? lol so you're a tick fucker eh ? Macd and RSI are about as worthless as it gets. If you can't read what they are telling you without them up, then you better learn. Thats part of reading pa
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You can also take 2 ticks on half the position, move stop to break-even, and take 4 ticks on the other half.

Quote from iusandman:

Here's an example of what I am speaking of.

This is Friday's chart: You'll see a MESA Moving Avg. and an ATR volatility based stop (light blue and red)

http://www.sierrachart.com/userimages/upload_2/1258327614_14_UploadImage.png

--Chris
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Wait, the ATR is used to calculate stop only, or also the target? You know there are different kinds of ATR's, like there are different kinds of pivots. There are pivots based on RTH, and on 24hour charts. Maybe ATR is based on RTH, or on pre-market volatility too so 24 hour. Then which ones do you suggest?:eek:

For this strategy we use the 24H pivots, fyi. However only the daily pivots are 24H, seeing as weekly and monthly pivots are always 24H. The reason is that volume in prehours have picked up over the years and seem to be more significant. So pivots based on pre-market too, should also be more valid. I do not have statistical data to support this thesis but it sounds logical, like letting price action guide my trades. I am interested in your approach though. Maybe I can add more indicators to help my trading.:)
 
I had missed the "2 ticks" of profit. Lot of work and risk for 2 ticks. Take a look at that ATR stop I posted. You could be hanging in there for 4+ points per trade with this approach.

Hope it helps
---Chris
 
The setting is 2.5 X the ATR with a 7 period look back. ATR is based on price action so it adjusts dynamically as volatility changes.

You can use it as both trigger and target which would essentially be a stop and reverse method. I do not use that method. I use volume value area lines (VAH VAL POC) for S&R and trade off those e.g. enter at limit 1-2 ticks in front of the level on pull back after it has violated that level.

If we are in a strong trend I will not exit until ATR triggers the stop. I do not scale out but do trail up the stop based on the ATR indicator value.

In it's simplest form this is a 3:1 (average) target:stop method. I went through the whole indicator maze years ago. I simply use the ATR volatility stop with S&R. Simple and removes the discretionary (emotional) management.

--Chris
 
Chris--
In looking at your chart it looks like the blue/red line is your stop. It also looks like it is based on ATR of the intraday bars.

On your first post you mentions "5 to 7 days".

Thanks for clarification.
 
Sorry about that. Yes the 5-7 days is when I'm using it for swing trading on the daily chart. The 1272 tick chart bases it of the intraday bars. essentially a setting of 5-7 either way.

The key if you decide to trade strictly off the ATR volatility stop is to not change the time frame or ATR settings intraday. In other words don't fall into the trap of "optimization". Pick some settings and trade it 50 times. Calculate your PE and if profitable you can then move forward with it. What I did initially is find a time frame that allowed a stop size I was comfortable with based on the ATR volatility stop. I then set my target for 3X this stop size. Once I've entered the trade I trail the stop per the price as indicated by the ATR volatility stop until I'm either stopped out or my target is hit.

It's about as simple a system you can find.

--Chris
 
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