Need a system to trade and have as a second job

I have given this a go. Unfortunately the week is already halfway, and it has missed a few nice trades. I am battling a bit with understanding/setting up the MA. How many periods? How does it help filter?

Another question… Is the sl placed just outside the range of the last candle/bar or outside a range of the imaginary 4 week candle?

Sorry, I tried finding the system on google, but it is not very detailed.

Thank you

Thank you eddieb, certainly going to try this. I have heard many good things about the 3 ducks system. Are you trading any of them live?

Currently trading GBPNZD, GBPAUD, and USDCAD

The 200 day moving average is used by a very large number of traders throughout the world but you can use a slightly different one if you choose. What you are looking for is MDMA: a medium denomination moving average (that is my own term). The reason the 200 day moving average is so widely used is precisely because it is a medium denomination moving average. All the MDMA tells me is the direction of my trade, I only trade in the direction away from the MDMA. So if the price is above the MDMA I will only trade long and if the price is below the MDMA I will only trade short. The MDMA does not give entries or exits in my implementation, it only gives the direction of trade (long or short).

Donchian used what were ultimately called “channels” known today as “Donchian Channels” or “Price Channels”. He entered into trades when those channels were broken in the direction away from the MDMA and closed trades when they were broken in the direction toward the MDMA. This method, I call Donchian Method Trading or “DMT”. I explain how to place the entries and stops and how to groom the stops as the trade progresses in this blog post with a video.

The short answer is that I enter if the price moves a pip outside the channel away from the MDMA and I exit if the price moves a pip outside the channel toward the MDMA.

While MDMA and DMT give me the direction of trade and the entries and exits, they do not give me the position size or tell me what markets to trade. I try to follow the advice to choose “Position Sizes In Light Of Consequences Your Buffooneries Imaginably Net” (PSILOCYBIN, pronounced: silo-sigh-bin). The question of position size selection is the most difficult of all, that is where we must spend most of our time and effort.

Check out the thread about Donchian’s methods here.

-Adrian

I am genuinely intrigued, my search for a good manual system seems to be over. Thank you for that! Please help me get it set up and working 100%. I have looked all over for a good donchian channel indy, there are quite a few, but the settings… I am not getting the hang of that so well. I have read quite a few articles on this strategy, some prefer to trade daily, some weekly - I would like to go both.

A daily/weekly chart
A 200 ema for daily and 40 for weekly

And the channel indy?

Both is certainly a good idea. In fact, most systematic trend followers trade multiple systems simultaneously (and I do). You can trade a daily, it could be anything from a 7 to a 15 day channel. And then you could also simultaneously trade weekly channels between 4 and 52 weeks or so. I trade a 10 day channel, a 4 week channel, a 10 week channel, and a 20 week channel. The easy way to do that is to trade each system in a different account. Better yet, try to trade them all with different dealers entirely and spread your 3rd party dealer risk out.

The key is not to select “the best channel”. “The best channel” in a group of backtests is simply the one that did the best given that historical data. If you trade that going forward you will likely not get the same result. So instead of picking “the best channel”, we can trade a few different ones and spread out our risk while giving us more opportunities to profit. There may be periods wherein a market moves sharply for a couple months and then sharply the opposite direction for a couple months. A four or five week channel system will get in early and take profits deep but a fifteen or twenty week channel system will give back most of the profits. Then, there may be periods where a market takes a long slow trend over eighteen months kicking the four week channel system in and out and in and out many times and generating little to no gains while a fifteen week channel system stays in throughout the bumpy ride and captures most of the trend. So the solution is system diversification.

We don’t know the future. We don’t know which if any pair will have a big move this year, we don’t know the direction it will move, and we don’t know what system will capture that move. So we trade as many pairs as we can in whatever direction our filter tells us with a few different systems to make certain we manage to snag the big move when it comes.

-Adrian

Thanks Adrian, will follow suit. I will move on to a few more channels whenI get he hang of the original 4 week system.
All I need now is the DC indy and settings then I can get started. I have done it manually, got the 4 week high and lows and placed my orders according to that, but it will be so much easier if I had an indy that can plot buy/sell/sl levels. Can you help?

What platform are you on?

Donchian Channels are available on many platforms but are remarkably missing on a great many also. I use fxTrade with Oanda and it does not have Donchian Channels. So I have to simply trade without the channels. It is actually easy. But with FXCM’s Trading Station platform there are Donchian Channels available and they are nice. MT4 has DCs too.

-Adrian

Hi there.

I started years ago with FXCM’s TS. I liked the platform, but because of automatic trading went to mt4.
I was looking for an reason to go back to TS, so this will be perfect. Thanks.

Just the standard settings on TS for 4w and 10d?

To trade a 4 week channel you open a weekly chart and set the period of the DC to 4…
Same for 10 day channel…daily chart and period 10 for DC…

of course, you can also open only a daily chart and do the maths for the 4 week channel on the daily chart (or whatever channel)…that’s up to you…

mike

I forgot how user friendly TS is compared to MT4.
Wow, this morning was a trip down memory lane. A friend who went on a training course in FX 15 years ago taught me all he learned at the course and we started trading very small in TS.
It lasted for a year or so… Failed horribly, gave up. Then a few years ago I tried again. Now there was something called automatic trading, and it really hit the markets, it really fuelled the belief of so many newbies that they would become millionaires if they just bought this or that… it was like returning to mos overgrown castle. I too was sucked into believing automated trading was the way to go.

Became quite good at backtests and identifying scammers.(forex is so full of them) Tested many EAs.
Luckily didn’t lose too much - mostly on cent accounts, wanted it to work 100% before investing more. I was determined. I put a few (0.01%) of all the EAs I tested on live… All went well for a while, but it was always 3 steps forward and 5 backward.
A while ago I gave up. I was down in the dumps, I wanted to give up on FX completely. Then I thought I’d try manual a bit and came here to ask if you could recommend anything.

I don’t want to become stinking rich out of FX. The belief of sipping margaritas on my own yacht were in my newbie days. I just want something to supplement my existing income.

Question time…Please clarify… Where do I put sl? I have watched the video on Arbitage trader on Acid’s video, maybe I should watch it again.
Do I understand correctly: Say for instance I have a 4 week chart open. My trade is triggered in a downtrend. The stoploss was initially above the last candle. How do I groom? Do I move once a week to the new weekly’s range?

After a bit of trading, I seem to understand it better. The 4 week trade on breaks is a variation of the DCT.
It was confusing for me, mixing the two and trying to make out head from tail. I think I have it now. Thanks again.

The stop should start above the high (including the wick) of the highest candle of the last four candles and should be groomed once a week to a pip above the highest high of the last four candles. Some weeks there will be no grooming, others you will be able to move the stop a lot.

-Adrian

Thank you. I am eventually on the same page. So every week i groom my stops until it is stopped out. What then? Do I wait for it to pierce again?

Hi Rihan,

I just wanted to make sure you were aware it’s possible to automate trades on Trading Station as well as MT4. Also, with your FXCM account, you can access MT4, Trading Station and Mirror Trader (all 3 platforms have trade automation capabilities) with a signal account login, so you don’t have to choose between platforms to meet various trading needs.

Thanks, didn’t know. But I am happy this strategy can work well on TS, It will be great to trade with it again.

Thanks once again for introducing me.
It seems that the most difficult part of this system is to do nothing at all. Cut loser short and let profits run. Watch winners turn into losers and then (hopefully) back to big winners…

Exactly…it will test your patience :wink:

One of my favorite creations is this meme:


-Adrian

Believe me my friend, trading when you have the time is fine don’t quit your job. I learnt my lesson a few years ago.