After a decade of lurking I thought I would contribute a
short description of my personal trading system.
First, I trade anything that moves and have a very diverse
style on the weeks and months I am home and I pair back the breath of the
trading when I am working and have poor connections.
I am a trend follower.
I believe in RENKO to determinate trend. All speculation aside, RENKO will tell you
what the price direction is doing with a minimum of noise. I have a couple of RENKO robots and some
other trend following systems on various timeframes M30 to M4H. Some are moving average crossover and some
I use the EAs for entry signals with a minimum
position. I open a selection of markets,
sometimes wider and sometimes more narrow but always balanced with at least 1
index, 1 energy, and 2 pairs.
I watch the markets most of the time but usually I am also
doing something else: work, movie, eating, and sometimes I am just not
looking. If I am not comfortable not
looking I cut my positions and then not look.
After entering I use the gross profit and a red light or
green light to take more positions.
Typically my follow up is x5 or x10 but I have gone to x20 for each
additional entry. Like Battlestar
Galactica and NASA I only add to a Green Board: a red number is a
stoplight. I hold any position that has
a single red number. If it gets two red numbers I consider reducing my
My out is by watching RENKO even if the trade is initiated
by a different type chart. This keeps me
in trades until the actual price goes against me. One brick counter trend and I
cut my position, two bricks and I slash my position more, by three bricks I am
I also never carry more than one red number in a position
because I try to space out my additional lots with some space. This varies by
commodity and by RENKO bars. Every bar
is a good guideline but I am mindful that many trades only go for 5 bars so I
am cautious when adding after 5 bars in any direction (my bars are not too
My brick size is adjusted for every market separately. I decide on the brick size by comparing the number
of bricks before a true reversal.
Example: If I have 5 pips per
brink that results in a lot of 2 and 3 bar reversals—which I hate—because they
produce charts full of whipsaws. I raise
the pips per brick until I get a reasonable number of 1 brick reversals with
good long trends more often. I think
this produces some tradable charts that are hidden by trying to scalp above
This means you have to use minimum lots to start and watch
your overall position and money management.
The more constantly you watch the more margin you can use IF you have a
With this system you last position is always a loser until
the reversal. This is why the last minimum position is the backstop and my
additional positions area multiple rather than just more lot.
Remember on 1 brick reversals I have banked some profit. Two
brick reversals I bank much more but I always leave my minimum order in—not my
first order, but usually the system adds a position as some point so I keep a
position with a high cost. I am only
interested in adding when the last little guy turns green again.
Overall this means that the EA does NOT have to be
profitable to be traded profitably because you start with the minimum and then
only add to profitable positions. Some
people worry here about chasing trades but I like to make it compounding
profits. You do have to be careful about
raising your average cost too high, especially with larger secondary lots to a
smaller initial lot. But think of the
P&L as the “indicator” and NOT the EA ruling the trade at this point.
Never add to a losing position. Do not hedge. Do not open
trades in both directions—wait until you have a real idea a trade is working
and you want to get onboard.
If anything looks bad, get out. If you are too distracted, get out. If you can’t sleep during the weekend with
open trades, stop adding to trades Friday at 10 am and then close trades all
Some miscellaneous points:
Expecting any EA to make you rich is a pipe
dream. Did a diet pill every make you
lose weight? You have to do it yourself.
You can use them as tools but they make poor trading decisions overall.
Don’t fear the exotics for small positions if
they are making good charts. The AUDNZD is remarkable for making long trending
moves which RENKO picks up that others ignore. But pick your own longshots for
fun and stimulation, and keep the big money on the big winners.
Keep track: A performance report can be selected
and pasted into an Excel sheet and with a little tweaking you can sort
everything by market and EA and see who makes what on a weekly or monthly
MT4 System Testing and demos do not work for
me. I don’t believe they give good
results and I think too much promotion bias or fake their results. After briefly checking out an EA I test it
with real money. Since I am real serious
about that I pay close attention.
Check out trading psychology videos on YouTube.
A search will give you lots of choices. They are a bit on the mystical and
touchie-feelie side sometimes but they have some very good observations about
human trading psychology.
This is what I do…. I am
interested in feedback and discussions with others interested in this
Good luck with what you do.
This is a revisión since I have discarded the Renko EAs I was using to use MOI from the Marketplace to place manual orders. I am trying to get an EA written that would be my system automated but I am not sure it can be done on an online chart.
The Laguerre moving average line from the Market is a new addition with a gamma of .55 and filters set to 8. This gives a smoother line to a Renko chart.
Interesting! I have no experience in Renko charts, but as a trend follower, I often work with the Heikin-Ashi charts. After some visual analysis, easily we found out very simple but effective patterns. As the charts are not Picasso drawings, they are usually cleaned of gibberish. I usually use the Hull moving average as a top-down analysis (from W1 to H1) and the limits are defined by linear Regression Channel or the resistances and supports when such are absolutely clear. Using the Commodity Channel Index as oscillator on H4 / H8 / D1 time frames is common (MT5 is now my platform). As for the charts is all. Additionally, a simple matrix of sentiment analysis that I developed over the years is used as a filter (subjective, of course).
On the other hand, Martingale strategies are out of the question, however, Hedging is used in certain market conditions (a small divergence with you).
There are a lot of charts on my profile page if you are interested.