Trend Chaser FX

TrendChaserFX

“There is no greater honor than to serve; no greater sacrifice than to die. Not for ones' country. Not for ones' god. But for the inalienable right of all men to be free.”

The risk of financial loss in trading currency can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your financial position. Do not use any money for currency trading which you cannot afford to loose. The high degree of leverage used in currency trading can work against you as well as for you and therefore can result in very large losses as well as gains. FOREX trading may not be suitable for you. If you have any doubts, stop trading immediately and start buying lottery tickets.

Theory behind the TrendChaserFX system:

I have always been a huge proponent of the Dow theory and its' common sense approach to trend establishment and following. I have noticed throughout my years of trading, however, that most traders, especially currency traders, have little to no understanding of the basics of the Dow theory or of trends in general. What this amounts to is trader after trader entering the currency field with “new” systems and “killer EA's” trying to win the big pot. Some get lucky for a time a score until the trend changes on them and trashes their system as well as their self confidence. They live the pseudo life of the forum rockstar, boosting of big trades and huge profit taking until reality takes hold and they quickly realize once the market has changed sentiment, that it's not they who rule the market, but the market that rules them.

The Dow theory addresses cycles that the market repeats over and over throughout history. These cycles are contained within larger cycles that are contained within even larger cycles. The inverse is true down to the tick chart. Repeating cycles is nothing new to the market or when implied to nature. The Buddhists, along with many other religions, have held that life and nature are in ever repeating cycles that we cannot control, only move within. It's our contemplation and understanding of these cycles that enable us to live and trade within them successfully. Charles Dow illustrated how the market repeats in cycles and the rules that govern the trend. See Investopedia University.

Using the chart above, I'll briefly explain my usage of the TrendChaserFX system. The system makes no claims as to the future trend of any particular currency. It merely points out the present intermediate trend with momentum being illustrated by the RAVI Fisher. I don't care where the currency is going or for how long it will go in any one direction. My only concern is where it is now and how to properly trade it. These trades may last a day or two, or possibly several. Your personal discretion will aid you in determining when to exit the trade and where to place your re-entries.

The TrendEnvelopes indicator shows the current intermediate trend direction. You will always trade in this direction until advised otherwise by the TrendEnvelopes indicator. The RAVIs' job is to aid you in determining when and where to place a re-entry or when to exit a current position.

You're first position should be immediate when the TrendEnvelopes indicator has changed direction. Given that the trend continues in your current direction, you should start to realize profit within a short time, within hours to days. You should check your position daily as well as the position of the RAVI for signs of exit. If the trend does not continue in your current direction and the TrendEnvelopes indicator reverses direction, reverse your current position to align with the TrendEnvelopes indicator. The exception to this is if the TrendEnvelopes indicator reverses but the RAVI is in the opposite position, take no trade. If you have a current trade open, close it and wait for the next signal. There are two division lines on the RAVI. If the TrendEnvelopes indicator indicates a LONG, but the RAVI line is on the bottom of the division lines, you shouldn't take the trade.

Now, let's assume we are in a long standing SHORT indication by the TrendEnvelopes indicator. We can either hold the position until the TrendEnvelopes indicator reverses, which may cost us most, if not all of our position, or we can hope in and out of the position utilizing some common sense.

Let's discuss two methods. The first using the RAVI as an exit indicator. Our position has been going for a number of days and the RAVI has been dragging the ground the entire time. We notice upon checking our positions that the RAVI has closed out the day with a slight upward bend and our position lost some ground. This is the sign to exit. Close your trade and prepare to place a SELL STOP in the event that this was a minor pull back and the trend is going to continue. I place re-entry orders normally 50-100 pips from point of closure depending on the currency. The GBP/JPY is very volatile and needs some room to move. You don't want to be bumped in prematurely only to have it pull back even farther. There is no reason to hold a trade during a pull back that is conflicting with your position. Secure you profit, place a re-entry at the low of the day if it's more than 50-100 pips away and wait. When the pullback ceases and the trend continues, you'll be re-entered for more profit. If it's not a pullback but a complete change of direction, they you have exited at the proper time and can wait for a LONG signal from the TrendEnvelopes indicator.

The second method is a bit more robust in that you don't necessarily wait for the RAVI to start a direction change, but take profit when the high or low of the day has been reached and place re-entries slightly below or above that level for a re-entry the next trading session. This is a bit more aggressive and can leave you holding some negative positions if you don't place your re-entries in the right area. It can also cost you dearly if the trend changes direction all together.

Now, a brief word about leverage and lot usage. Leverage, use as much or as little as you like. It really has no bearing whatsoever if you use the proper position sizing. I would trade as small as you possibly can at first until you get a feel for the system and start to understand the concepts. If you MT4 broker will allow micro lots, trade a penny per pip until you feel you're ready to risk more. There is no rush. All things will come within their own time. If you're eager to make as much as quickly as possible, please accept my condolences as your as certain to lose your account at some point soon.

Okay, key points to remember:

Take a position immediately upon a change of the TrendEnvelopes indicator UNLESS the RAVI is on the opposing side.

You may enter at your discretion once the RAVI aligns with the TrendEnvelopes indicator, but monitor for trend change closely!
If the RAVI starts to change direction and go against your position, close out immediately (EOD) and place a re-entry order.
Re-entry orders need to have enough room not to get bumped in accidentally. This will require a bit of trial and error at first until your familiar with the pairs.
Use as little % of account as you can stand until you are completely comfortable in all aspects of the system. Including the reversal of the TrendEnvelopes indicator.
Leverage has no bearing with an intelligent trader.

Study the charts and observe how the price effects the RAVI and it will make exiting and re-entering much easier. The OHLC bars are fine, as are candles. I don't personally care where it opened as much as where it closes. A basic understanding of price action is helpful. Knowledge, not technique or fancy indicators is the key to long term success in the currency market.

One last word of advice: ignore the news and pay no mind to the fundamental whack jobs that will try to peg direction of a currency as well as cause for that direction on some thing or another; be it oil, a hurricane, sunspots, Alan Greenspan, etc. They will mess with your mind and cause you to make bad decisions. Only you and price should determine where and when you make a trade. Let nothing else influence you. You will regret it as 99.9999% of the so-called fundamental analysts are themselves, pseudo forum rockstars. They cannot be trusted and often themselves are on the losing side when the trend goes against their higher form of intellect. Too many accounts have been damaged and/or destroyed due to new and naive traders heeding the words of these false prophets and soothsayers. They really should all be stoned.

~Mudd

Here are the templates for my current set-up.

I use Deviation04_TCFX.tpl for the EUR/USD and GBP/JPY.

I use Deviation05_TCFX.tpl for the GBP/USD, NZD/USD, AUD/USD, and EUR/JPY.

Here are the indicators for my set-up as well as others.

TrendChaserFX MT4 Indicators

Ravi.mq4

Here are the indicator Windows:

Indicator list