SHI Channel Strategy

Trading Systems Free Forex Trading Systems
1

Alrighty… here goes.

As this is one of my first posts on the forum I seem unable to submit posts with links… So please excuse the unlinked post.

I call this the SHI channel strategy

  1. Philosophy behind the system.

Most currency pairs trade between certain ranges. Know the ranges know the market. We can use trend channels in conjunction with other indicators to determine the current range and overall direction of the market e.g. uptrend/downtrend etc.

  1. Indicators and parameters.

I use 2 main indicators, moving averages and a custom trend channel indicator which can be found by going to codebase.mql4.com/download/1937

The moving averages I use are the 5 and 10 period exponential moving averages applied to the close.

  1. Entry and exit signals.

This is a swing trading strategy. So firstly load up your chart of choice on the daily time frame. For the purpose of this forum I have chosen this weeks winning trade of the week pair the AUDUSD

daily audusd.jpg700×390 50.9 KB

Hopefully you can see from the above chart that the pair has hit a double top and the moving averages are signalling a downtrend.

Now move to the 4 hourly time frame and apply the trend channel indicator above.

4 hourly audusd.jpg700×390 50.5 KB

Now as long as the indicator confirms a downsloping trend and the pair is trending above the midline of the channel AND the fast EMA is below the slow EMA then you are good to go short. The best possible point being at the crossover.

(The reverse would be true for a long entry - i.e. up-sloping trend, and crossover of the moving averages such the the fast EMA is above the slow EMA below the midline of the trend channel.)

Position size is normally 2% of the account balance and calculated using the babypips tool

Exit would be signalled on the daily chart when the fast EMA crossed back above the slow EMA. (Or the reverse for a long entry)

  1. Stop loss and profit target placement.

As this is a swing trading strategy the SL has to be quite wide. I tend to use a 120 pip SL. I move the SL to breakeven when I have a clear 120 pips in the bank.

Profit target - not limited, relax, sit back and aim for a manual exit with EMA crossover on the daily.

  1. Sample chart with signals.

Just incase you missed it…

4 hourly audusd - inds.jpg700×390 51.7 KB

This system effectively allows you to jump in to a trend at the most opportune moments. If you are a sit back and wait for a trend to properly establish itself kinda person then this will suit you. If you are someone who like to get in right at the apex then this system will help confirm the best point of entry.

Hope you like it…

I’m sure there will be questions… I will do my best to answer any and all.

1 Like
2

Thankyou for the share,what prs do you trade with this system or are you going with all prs,
How long have you been trading this and what results are you getting.
Does the ma,s have to cross on the daily ?
Regards
P.S usdchf double top might turn in the next few days…
P.P.S i added the whole numbers indicator as this looks from going back on charts adds more confirmation on entry

3

Thanks for posting it froggy! There’s precious few long timeframe systems around, and this looks simple and effective with nice clear rules.

I’d like to backtest it, but the redrawing SHI Channels make that impossible. If I get a chance I’ll forward test using a simulator and see how it performs (or rather how I perform trying to trade it).

4

Hi there,

I tend to trade the majors but it should work well with all pairs.

I use the daily chart for confirmation so yes the MA would cross on the daily to signal a trend, I then use the 4 hourly for entry.

Unfortunately I do not have a pure forward test to show you - but wouyld be happy for slipshod or others to FW test… All I can say is I have been trading using the above for several months and my pippage has improved significantly :slight_smile:

Regards

5

Thx Froggy51 i will sure test the system and give you my feedback,i like what i see KISS system.
Will follow the thread with intrest.
Regards

6

Thanks Froggy,
I as well like the long timeframe systems due to my work schedule. Look forward to good results here. Will try it next
week. Hope u had a good Thanksgiving.

7

Greetings Froggy,
Question, Looking at the us/swissy it has been in an uptrend and the daily ema crosses at approx 8838. Dropping downto the 4hr looks like it crossed around 9156. Is this still a valid entry as it is still below the mid mark of the channel?
Thanks for your reply. I wish i knew how to post a chart. Best Regards,

8

This is a great catch! I just placed the trade myself. :slight_smile:

9

Ok good luck,
I take it my analysis was correct? Still observing the system at this point.

10

froggy51
Thanks and good luck for this. I shall follow it with interest.

11

Greetings Froggy51
Was looking at the us/swissy trade and was wondering if you would exit at the top of the 4hr channel around 9330 or if you use the daily for your exits?

Best Regards,

12

Normally I use the daily for exit. But you are likely to get some retracement when it hits the top of the channel. So … Nothing to stop you locking in some pips at the top of the channel and keeping a careful eye on a suitable point of re-entry…

13

Hey Froggy, thanks for your contribution, I came specifically to learn more about using SHI, as I already have it in my platform.
I would appreciate a little more insight on how the mid-line figures on your decision making process.
Thanks.

14

It’s really just a guide. If a pair is ranging in a channel, and bounces off the bottom of the channel to a degree that the moving averages cross over such that the fast is above the slow again - then you can be more certain that the pair is starting the slow inexorable rise to the top of the channel. In order to gain more pips it is prefarable to take the trade below the midline - even more prefarable to take it at the point of crossover. Hope this makes sense.

15

Very interesting strategy and well explained. Plus it doesn’t seem to be a work-in-progress but rather a well thought out and tested. thank you. I have been following the Trading Made Simple threads here and over on FF but I don’t like HA candles and much more descretion is involved in “reading” the indicators for a trade setup. I’m following this and will demo or trade one micro to see how I do with it. Good work. d.

16

Very kind of you to say so, thank you.

17

Hello,

Thanks froggy for sharing the system, it seems very interesting, I would like to know the exact location where i can find the indicator you are using in this system.

Thanks in advance

18

Thanks for sharing Froggy & Good Luck.

19

You can find it at www.mql4.com

Click on codebase, then indicators. Download the SHI trend indicator and install in you mt4 (it goes in the /experts/indicators folder). Restart mt4 and then it should be under custom indicators.

Regards

20

Just realised I can post links now.

Go here:

To read about the indicator or here:

To download it.