A new system
the filter
1.)
Put the 12 ema [1 hour] on your screen with the rest of your indicators. When everything is at the same price [tunnel, current market price, 12 ema] sit up and take notice. When the market breaks away from the tunnel, there is a very high probability of a strong market move coming. I don't need Gann, because this gives me time, the square of time, and price all in equilibrium. When it breaks, it goes.
Need proof? Well, go back on your favorite currency pair and check it out. In the first quarter of 2005, this filter alone produced 20 trades, 19 which were profitable in USD/CHF. In fact, as I write this, 1 trade is still on from about 3 handles ago. Since I am not responsible for Swissy, I'm not the guy pushing the button, only monitoring it when I'm at the screen [changing stops when needed, etc.]. But, the position is still on.
This filter is so profitable, we increase the size of our trading position when we see it develop and then happen.
When you go back and check it out, you will notice many times how it just misses a move by a few hours. It is an extremely profitable filter.
We also define "same price" as being within 5 pips or so of being equal. Sometimes it turns out the signal is exact, but I don't think you have to split hairs on this. Within 5 pips is good enough for us.
2.)
We do not initiate new currency trading positions based on tunnel trading during the Asian time-frame. Anything between 5pm NY and Midnight NY is ignored for entry of new positions. Positions that are on are monitored as normal, i.e., everything else is the same. We will take profits if fib levels are hit. If we miss a move, then we miss a move. A missed move is just an opportunity cost. Chop-chop in Asia will eventually cost you more money than it is worth.
3.)
News days that can have a significant affect on prices are ignored. That's right, we skip them for entry of new positions. Currently there is only 1 day per month which qualifies, and that is US Non-Farm Payrolls [NFP] which comes at 8:30 am NY time the first Friday of each month. Positions that are on are monitored as normal.
4.)
When the tunnel is very narrow [most of the time], do not just put stop on the other side of tunnel. If you do you get whipsawed to death. Use the hourly charts and the most recent hours of support and res. to make the call.
If you are a newbie to trading, you will find this to be the most troublesome filter. If you are not familiar with trendlines, triangles, flags, pennants, and support and res. levels, then go get the eduation and come back. Simple but necessary advice.
I don't mean to infer that just because you know this technical stuff it's going to be a walk in the park. It's not. Let's make one thing perfectly clear. EVERY model has its vulnerable spot that seem to increase losses. For tunnel trading, this is one of the scenarios. Putting in the right stop is an art, not a science.
5.)
We look for clean moves [1 bar] through the tunnel. This means your into profits almost from the get-go. You will not always get the clean moves. The longer the market stays in the tunnel chopping around, the higher the probability our entry decision will be made on a break of support or res. instead of the tunnel boundaries.
6.)
We do not trade minor [contra-major] trend signals in a strong up or down market price trend. If the GBP/USD is in a strong price uptrend, we will not initiate new short positions on a break of the lower tunnel boundary. Why? Because the probability of success in getting past 55 from the ema is not very good. Past history tells us that, so I'm not looking to be the hero here and say "This time it's different." When market comes back through the tunnel on the upside, we will get back in on the long side.
If I have to tell you when the market is in a strong price move, I don't think you have been paying attention to the price movements of late.
In a range-bound market, which we define as a market between 3 - 5 handles [or lower] in a 5 week time-frame, we trade both sides.
Example 1 - Very Aggressive
Tunnel is pivot level for buy/sell. Above tunnel, buy breaks, sell at fib numbers. At 233 an 377, fade the move for retracement. Below tunnel, sell rallies, buy at the fib numbers. Use previous fib numbers in the move as stop loss points. This is very aggresive, and woul be appropriate for very short-term traders who have a time-frame of day-trading.
Example 2 - Very Conservative
Uses basic tunnel system with 12 ema. Only initiates on this signal. Looking for best possible probability trade. Willing to give up more profitability in return for less risk. Trades three units. Uses fib numbers 55, and 89 for 1/3 each. Leaves the other unit on until 233 or market price crosses over tunnel boundary. Allows trader to catch short-term [1-5 day] profit points, and also allows him/her to ride the major trend if one develops.
hi denny
first tanx for sharing and your effort to intruduce the system.i should say it is not a new system.it is vegas trading system and u can find all explanation for H! and H4 and Daily system and all indicators here
https://www.mql5.com/en/forum/172931
https://www.mql5.com/en/forum/173190
https://www.mql5.com/en/forum/173204
thanks
i am sorry, 
and thx kamyar.
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
this system call Tunnel Method, what u think aboub it? more about it u can read herehttp://www.freewebs.com/mswilson/documents/1hrTunnelMethod.htm
Step 1.
First, you need a charting service. Since most all electronic trading platforms have charts with technical indicators, this shouldn't be a problem.
Create a 1 hour chart on whatever currency pairs interest you. Barcharts or candlesticks really make no difference. Overlay on this 3 things: 1) a 169 period [1 hour] ema [exponential moving average], 2) a 144 period [1 hour] ema, and finally 3) a 12 period [1hour] ema.
The 144 and 169 ema's create what I call the "tunnel". The 12 ema is an extremely valuable filter that you will want to have there all the time. I will talk more about this in the filter section.
Step 2.
Memorize or write down and keep next to your trading screen the following fibonacci number sequence: 1,1,2,3,5,8,13,21,34,55,89,144,233,377. For trading purposes, the numbers of interest are 55, 89, 144, 233, and 377.
Step 3.
Wait for the market to come into the area of the "tunnel". When it breaks ABOVE the upper tunnel boundary, you go long. When it breaks BELOW the lower tunnel boundary, you go short.
Step 4.
Stops and reverse are placed on the other side of the tunnel.
Step 5.
As the market trades in your direction, you take partial profits at the successive fib numbers respectively, with the final portion of your position left on until one of the following conditons occur: 1) market hits the last fib number [377 pips] from the ema's, or 2) the market eventually comes back to the tunnel and violates the other side.
Example: GBP/USD is trading at 1.8500. The ema's are as follows: 144- 1.8494, 169- 1.8512. The market breaks 1.8494, and you sell at 1.8492. Your stop and reverse is now at 1.8512. Over the following hours, market starts to go down. 40 minutes after you put position on, cable is at 1.8440. You can use for computation purposes either tunnel boundary or the median of the tunnel. Ema's are still the same, so if you use the median, 55 from 1.8503 is 1.8448. You should have taken part of the position off at 1.8448. Market does nothing rest of day. Stop can be moved down to protect position or left alone at tunnel. You are now looking for price to be 89 pips away from the ema's. Since 55 was already passed, it no longer concerns us in this cycle. A couple of days later, cable is at 1.8300 and the median of ema's is 1.8410 [1.8400 - 1.8420]. You should be out of another portion of the position at 1.8321. Market bottoms here and in the next 2 hours, cable screams to 1.8535. Your remaining short position is covered at upper tunnel boundary of 1.8420, and you are now long from this point as well. Since you are long, you would now take partial profits at 1.8475 and 1.8509.