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-- Welcome to the Katana Trading System --
Named Katana because it is the weapon of choice of the Japanese warrior class, the Samurai followed a group of rules which later became known as the Bushido
In trading having a set of rules is paramount for success.
This system is based around using price bars, not time established pubs. Price bars in my opinion are much superior in a few ways when compared to time established pubs.
Price based pubs signify price motion, they won't close until price moves a predetermined quantity of price increments.
Where the time established bars near as we know after a fixed variety of minutes, however we're not trading minutes, we're trading price and price is what's going to pay you.
The main advantage of this is that the pubs are the exact same size. Traditional candlestick charting methods like, outside bars, interior bars and doji don't have any place on a price based chart, some may consider this a drawback.
To understand the logic behind the trading egy, understanding how price moves will help.
Determining the management of price is the number one priority.
From the currency market, price will typically move like this.
Consolidate between group levels, then move to the next set amount. That's basically how price moves. These set levels typically are jumped by price levels.
These levels are formed around entire price amounts. The strongest of these levels is that the xx00 and xx50 levels. That is such as 1.3600 1.3650 1.3700 etc.. Mid point price levels like xx25 and xx75 also affect price, those being 1.3625 and 1.3675 for example.
Here is the way you must view the market. Price consolidation and price moving from 1 price consolidation amount to the next price consilidation level.
To find out the management of price look back on the chart and decide what price is doing. If price is going right to bottom right it is clear that price is trending down. To make things simple, use a moving average of price to simplify this.
The period and type of moving average is of small effect, what is important is the management of these moving averages, and where price is concerning these moving averages.
Once the direction of travel of price is determined, then the direction to exchange in is subsequently determined. Here is the number one priority, decide the direction of price.
Now I do not want this thread to become an EA structure and testing thread. This thread was made to demone an easy and effective egy to exchange and earn money in this market.
Next understanding the way price reacts to price levels and also the signs to look for to look at entering a trade.
As I outlined before price goes in congestion zones, moving out of 1 congestion zone to the next, typically jumped by xx00 xx25 xx50 xx75 levels.
Price can also move between these levels often. After we have determined if price is trending and also the direction of the trend, the next thing to do would be to wait for price to retrace against the trend management.
One time a retracement starts and is recognized as a retracement, the next thing to do is to look for a motive to enter either short or long.
To keep things simple I'm not going to discuss price patterns, bar patterns or anything similar to this. I'm going to say look at the Stochastic Indior as a guide as to whether the retracement is a retracement or not, look at a different Stochastic indior and use this as a guide as to whether the trend is likely to continue.
That is about as simple as it gets.
Determining where to set your exit positions, is easily determined by the price bars. With a fixed number of pips as the exit is also an option, the reason being is that the price bars are the exact same dimensions, and as such it's simple to use a fixed number of pips as soon as you have identified a bar to use as the entrance bar.
Loing a place to depart is also quite simple as well, typically the following price level in the market is where price will respond to next, hence this is the area to use as the take profit.
I'll be posting some charts soon to assist in the understanding behind the logic and the motives behind entering and exiting positions.
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