Thread: fade and trend?

What do you guys think about a system that may be used to fade and fad
use daily to exchange:

use bollinge rings 20 period with 2 std Position
linear weighted moving average 200 and 20

when price closes below the moving average 200:

when price closes below -2 std Position, sell
limit when price closes over 20 moving average

when price closes above 2 std deviation, sell
limit when price closes below 20 moving average

Reverse the measures when price close above moving average 200

justifiion:
when price closes below the 200 moving average, there is a higher probability that price is going to go down. If it strikes the -2 std deviation, this is a sure signal for a downward trend

At the same time, once the price closes over the 2 ring, we are going to sell because there's a strong probability it will adjust itself into the downward motion because the price is under the 200 moving average.

Utilize the 20 moving average for constraints. Set stops at 150 pips. .

I know it is crude and there may be variety of ways of modifying this..but I came up with this when I read mechanical trading methods from Weissman

So in a way you can put this to use in both trends and evaporating environment. It just depends where the price is in relation to the 200 moving average.

Whatchu guys think???!!?

No, but basically I only added on the method that he presented at the book which falls under the egory of trend after mean reversion technique.

This basically a procedure to exchange at a fading environment after the general trend. From the book, the technique explains that when the price is below the mva 200, you market when it hits the 2 deviation. As long as the price is below the mva 200, there's a strong bias it will continue it's downward motion. And you restrict your profit in the 20 moving average.
And vice versa when the price is above mva 200. If it closes below -2 deviation, you buy because the price is thought to be in an upward movement.

He tested various methods using CQG charting with various markets such as forex, futures, equity indices in the 1992 to 2002. This specific method had 68.26% win average, 1.44 P/L ratio, average of 4 consecutive losses, with 334 average amount of transactions with around 8 days of open positions. profit to maximum drawdown ratio of 1.44. There were other basic techniques presented like moving average crossovers, macd, etc..

Two items that I took in the book are:
1. The simpler the system, the more profitable it is. Too many signals and also many rules tend to keep you away in the market too long and it has a tendency to restrict your profit potentials
2. You need to select a system that best fits your personality and schedule. Ever since I work during the day, I have to be somewhat an intermediate/short expression trader. I dont' like waiting too long (more than a month) to be in the market, but I also don't have enough opportunity to be watching the screen daily.

By adding an extra trend trading element to this system, it allows me to trade during a trend instead of trading during choppy market. But I'm not sure if this will affect the general performance of the system, but sure does seem promising

Do you have a chart that illies what it is you are speaking of?