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Archive for the ‘Tools’ Category

Hello all,

From time to time, I will be posting some a system that other coaches may have developed, heard of, or even tested. I want you to take the opportunity and test it yourself and see how it works on a particular pair of your choosing. As a word of caution, I want to point out that there is no guarantee that this particular system works in this type of trading environment but this system may give you an idea on how to set up a system of your own.

Some of you may have seen this system before or it may be new, I would suggest you read it, test it and re-test it and make it your own system. That way you will own it at that point and understand it. I ask one thing, post your findings in the comments section and share with others what you find. That way, others can learn from your findings. Have fun!!!

~ G

CCI and Simple Moving Average (50) System

The Commodity Channel Index (CCI) and Simple Moving Average (SMA) trading system is a simple approach to trading the currency market. The CCI is used to determine the entry point into a trade, while the SMA is used to filter the signals. The management of risk is accomplished by using a 100 pip stop loss. Winning trades are exited with a 100 pip profit.

The system employs a bracket approach to exiting winning and losing trades. Both the profit target and stop loss are 100 pips away from the entry point, which means that the system must achieve a high win/loss ratio in order to be profitable. The following table displays the rules of the system:

Timeframe: Daily Chart

Indicators: CCI (14); SMA (50)

Enter Long: When CCI crosses above -100 and SMA is greater than or equal to yesterday’s SMA value.

Enter Short: When CCI crosses below +100 and SMA is less than or equal to yesterday’s SMA value.

Exit Point: Set profit target of 100 pips.

Stop-loss: Set stop of 100 pips after entry.

Pairs Traded: EUR/USD, USD/JPY, USD/CAD, EUR/JPY

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canadiancoin.jpg I love future value calculators, ever since I was a broker and used them all the time. Here is one on canoe.ca, one of those crazy Canadian websites. Add to hockey, Canadian geese, and that kooky curling sport another cool thing from Canada, these calculators can be hard to find but here it is.

 

Historically, the markets return around 8-10% annually. As a currency trader your first order of business is to beat that consistently – no one wants to hear anything from you about getting a million-bajiilion percent until you prove this. Then, improve from there. Notice the difference between 10 and 20% a year over a few decades … don’t short sell a reasonable return which will incur much less risk! I’ll take 20 or 30% as a reasonably attained return over pie-in-the-sky 300% a year which I likely won’t consistently get anytime.

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