Trend magic system strategy
A few words about history Trend magic system. Initially I tried to use a combination of two indicators BB MACD and Trend Magic (TM). The first one was used to estimate trend (determining the uptrend or downtrend), while the TM was used for entries and stop-losses. Later both indicators were combined into one indicator called HA_0001a. This indicator generates a green bar when BBMACD and TM give us a buy signal and a red bar when the indicators give us a sell signal.
Later the idea to work on several timeframes appeared and the HA_0001a_MTF indicator was developed. Although it is a good indicator, which does not redraw, but people found it difficult to work with it.
Marketplace: Forex;
Currency pairsEURUSD;
Timeframe: different, recommended M5-M1 and Daily;
Indicators : Clock_v1_3, Ant-GUBreakout_V.0.4.1, Trend Magic, BB MACD, StDv 1.1;
Strategy: pips;
Protective orders: StopLoss, TrallingStop.
Trading strategy settings and original indicators
In our work we use the currency pair EURUSD - usually it forms a good trend and this pair has a small spread.
We use non-standard indicators:
- Clock_v1_3 - just gives us local time and broker time plus the time of the current candle. We use it for convenience.
- Ant-GUBreakout_V.0.4.1 - place on the chart so that the colored box covers the Asian market in your timezone.
- Trend Magic - CCI 50 . ATR 5.
- BB MACD with settings for the 5-minute chart: 144, 233, 21.
- StDv 1.1.
Trading rules
Opening a long position
We open a buy deal when two conditions are met:
- The BB MACD is blue;
- TM is repainted from red to blue.
Opening a short position
We open a sell deal when two conditions are met:
- The BB MACD is red;
- TM is repainted from blue to red.
Moving out of position
To exit the position we use StopLoss and TrallingStop. To understand how stop positions work, let's look at the figure.
A - The signal to open a long position.
B - Initial stop 1 pip above the last swing high (a good technical point for a stop).
From point A the TM indicator slopes downwards, it goes into a flat and slopes down again, when the slope is fixed, i.e. cannot move, which happens at the close of C candle, we shift the stop to the horizontal line of the TM at point D. From point C the indicator moves sideways, then it moves down, when the slope is fixed, i.e. cannot move, which happens at the close of candle E, then we shift the stop to the horizontal line of the TM at point F. That is, we follow the horizontal lines of the TM and the stop is always one level higher. We will probably close our position at G.
An example of a trading strategy
Opening a short position
The BBMACD indicator was red, while the TM changed from blue to red. On the same bar, we open a short position.
Opening a long position
The BBMACD indicator was blue, while the TM changed from red to blue, on the same bar we open a long position.
If you are working with 1-minute of the chart, then an additional rule applies. When opening a long position the signal bar should be above the TM, when opening a short position the signal bar should be below the TM line.