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Trading system "Expert Si14"

Trading system "EXPERT"  developed by fund Si-14 LLC specialists and is used for trading at the financial markets since 2009.
The system  operating mode  considers  market as a wave model.
The system works at all financial markets, without exception (FOREX, stocks, commodities etc.)
The market situation study  and the adoption of trading decisions is entirely based on technical analysis.
 
The advantages of this trading strategy is that:
 
Firstly it is based on the  price movements theory, which are subject to certain laws and regulations, rather than one or two indicators on which  most of the trading systems are constructed
 
Secondly as the daily main work period in the strategy - so sitting constantly  in front of computer is not required, one time a day anaysisis enough  and  better work mostly by pending orders or even more effective tools - trading robots
 
 

1.The  Theory.

1.1 The wave  theory of the market.

All trade is based on the wave of the market model, which in turn is based on a simple rule or law that for every three move forward, there are two reverse move.
This rule is a law of nature and exists regardless of our knowledge of  the nature whether we like it or not.
Fig. 1 schematically shows the three movement ahead 1 - 2 - 3 and two backward motion 4 - 5, which is a complete wave 5 with a parameter.
 
 
 
 
Движения 3 2
 
Fig. 1
 
 
 
Based on this law, you can build a schematic model of the market wave. It looks like this (Fig. 2)
 
 
Волновая модель 2 


 
 
Fig. 2
 
 
The figure shows that the full wave (in this case, a wave with a parameter 21) consists of the three impulse waves - three movements forward and two Corrective - two moves back.
Namely:
1-2-3 wave - pulse, wave 4-5 – corrective
3-8-13 wave - pulse, waves 16-21 - corrective, but of greater dimension, in which the waves run 1-2-3 and 4-5.
In turn, 3-8-13 and 16-21 wave work inside waves even greater dimension whose parameters: 13-34-55 - pulse, 68-89 - corrective.
That is small waves work in large waves, large - within the larger, bigger - more inside the larger, etc.
Figure 2 shows the complete wave with parameter 21.
Each wave has three main parameters: the  wave peak, the middle of the wave and full-wave. Peak 21 is the wave of the value of 13, the middle - the value of 17, 21 respectively - is a complete wave.
The main interpretation of these parameters is that when the wave peak is located above the middle and higher midpoint full-wave - price movement is directed upwards. Conversely, if the peak of lower middle and middle lower full-wave - the price movement down.
We will use the wave with parameters 21, 89, 377 for the analysis of the market situation.
Accordingly, the wave peak 89 will be the value of 55, the middle of the 89 waves - 72 value.
Peak wave 377 is the value of 233, 377 mid-wave - the value of 305
Waves less than 21 with the parameters  i.e,  5 or less, 377 or more, i.e. 1597 and more - are not used.
So, for the analysis of the market situation we will track the values 13-17-21, 55-72-89, 233-305-377 for 21, 89 and 377 waves. These values will be tracked using moving averages, based on the fact that if the moving  are directed upwards (peak - above the middle, the middle - above the full-wave), the movement of prices mostly up and we will make purchases. Conversely, if the moving are directed downward, the price movement mainly downwards, and we will sell.
 
The question arises: "Where is the point of reference waves anywhere!  It does not exist, we can only keep  the peaks trackng, the middle and the full wave using by moving .
 
 

 2. The graphics settings. Indicators and oscillators.

2.1 Trends

 
So, we clarified that for the analysis of the current market situation, we will use the values 13-17-21, 55-72-89, 233-305-377 (peak, mid and full wave) and will track them using moving averages, based on from the fact that if the moving are directed upwards, the price movement mainly upwards, and vice versa, if the moving are directed downward, the price movement mainly downwards.
It follows that you need to put on the chart 9 Simple (Simple)  moving with parameters 13-17-21, 55-72-89 and 233-305-377.
But the simple moving has a significant disadvantage - impulsivity and uneven readings.
For more accurate work use the weighted moving (Linear Weighted), as in  weighted moving averages calculation formula  latest price values gives greater weight, but the latest price for us is much more important than the initial - (past year snow!).
Therefore the weighted moving are more uniform, accurate and easy to analysts. Weighted moving average value higher than the value in a simple 1.382 times. That means our nine moving parameters to be multiplied by 1.382 so the parameters are as follows:

13-17-21 x 1.382 = 18-24-29

55-72-89 x 1.382 = 76-99-123

233-305-377 x 1.382 = 322-421-521

Practice shows good  work of exponential moving  (Exponential)
 
So we've got three triples Moving Averages which we should call three trends: red, blue, black and to be shown on the schedule as follows, Fig 3:
 
XAUUSDWeekly 3тренда англ 
Fig. 3   three trends
 
- Red trend with parameters 18-24-29 - fast
- Blue trend with parameters 76-99-123 - medium
- Black trend with parameters 322-421-521 - slow

With these trends we will track wave 21-89-377.
Trends show the current market situation, as well as used as a price reference for opening and closing positions.
A very important point is the intersection of the trend, which is almost always shows a change of trend (Fig. 4)
 

пересечение трендов GBPUSDDaily англ
Fig. 4
 
 
Next we will use the following terminology:
- Easy or quick - indicator or oscillator with a small period
- Heavy or slow - indicator or oscillator with a long period
 
 
 

2.2 Oscillator % R (Williams Percent Range)

  
Next, you need to install the chart oscillator% R, which will show the current market situation  slow % R  and jump in  the trend - the rapid% R.
% R 
Oscillator will be used with different periods: 13 - Fast (blue thin) and 144 - slow (red thick).
Levels rating: -10, -50, -90 (in% R oscillator levels have a negative value) - Figure 5.
 
 
 
USDCADDaily R

Fig. 5   Oscillator % R

 
Slow (144)% the R (red thick line) shows the current market situation as follows: if it is above the 50% line - price movement mainly upwards, and we will buy. If it is below the 50% line - the price moves down and need to sell. Quick (13)% the R (thin blue line) shows the jumps in, sinking or rising in the opposite direction above or below the 50% line. If it falls below 90% or above 10% - a very strong signal.
Two oscillators in one window can be set from the navigator window.
 

2.3 Oscillator AO (Awesome Oscillator)

Following oscillator that must be installed on the schedule - the oscillator AO. We will track reversals - divergence, double top - a double bottom, failure swing (Figure 6 )
 
 
AUDCADDaily АО. англ
Fig. 6 Oscillator AO

 

 

3. General terms and analysis rules.

3.1 Now all indicators and oscillators are compatible on the schedule  (Fig. 7)
XAUUSDDaily МАRAO 
 
Fig. 7 schedule with all settings
 
 
Thus, in Figure 6 shown schedule with all settings:
 
- Three  trends - red (18-24-29), blue (76-99-123), black (322-421-521)
-% R  with 13 and  144 parameters.
- Oscillator AO
                                                                                  
3.2 The terms of "jump in  the trend", "rollback" and "U-turn"
 
Let us return to the wave model of the market (Fig. 7)
It is obvious that the most successful moments to enter the market is the highs and lows of this model.
These moments we will be tracked by indicators and oscillators.
We introduce the definition:
JUMP IN - a short-term movement against the main trend
ROLLBACK - a movement against the trend towards JUMP IN
U-TURN - a change in trend direction
 
 
 
 
 
Волновая модель заскоки
Fig. 8 schematically shows the "jump in the trend", "rollback", "U-turn”
 
 
Figure 8 shows that the most favorable moments to open positions are shown in red, blue, and green arrows.
Blue arrows - show "jump in the trend" - short-term movement against the main trend and its renewal.
Red arrows - show "U-turn". Reversal is almost always accompanied by a double top (double bottom), or divergence failed span.
Green arrows show rollback - prices move in the jump in. direction .
 

3.3     Now consider “jump in”, “rollback”, U-turn” on schedule (Fig.9)

ЗаскокРазворот на графиках англ 1

Fig. 9 “jump in”, “rollback”, U-turn” on schedule
 
 
Jump in  the trend:
- Red, blue and black trends arranged one above the other
- Oscillator% R (144) is below 50% of the line
- Oscillator% R (13) rises above 10% of the line

Rollback - short-term movement towards jump in
 
U-turn - a divergence, double top - a double bottom failure swing.
 
Upon receipt of the above signals the presence of a technical analysis of elements such as:
- The trend line
- Support and resistance levels
- Graphic shapes
- medians
- clusters
also increase the importance of the received signals.
 

4. Algorithm for the transaction opening 

 
So we have learned all the required signals and seems we are ready to trade but there is one "but" – there are so many false among all existing signals  and our task is to bring all the false alarms to a minimum but to exclude completelyis impossible.
To do this, we will proceed as follows:
All known signals, we will track the daily chart, and start working out daily will track signals on intraday charts. If a false signal on the daily chart the  beginning of mining intraday chart will not show.
To start tracking mining daytime signal on the hourly chart will use a very simple algorithm - with periods of 89 exponential moving averages crossing and 144. This algorithm also works on all currency pairs, stocks, commodities, futures and at all time periods, without exception (Figure 10).
 
 
алгоритм английский
Fig. 10   The algorithm for the transaction opening
 
 
Depending on financial instruments intraday periods in which we will monitor mining daytime signals will be different, as follows:
 
For all currency pairs FOREX - hour schedule
For commodity markets - 15 minute schedule
For global indices - 15 minute schedule
For Russian and US shares - 5 minute schedule

Stop-loss is set for the daily high - low. Profit depends on the instruments used. For currency pairs 500 - 5000 points, with the use of a trailing stop.

In order not to keep track intraday signals and put orders manually or open positions the most optimal way is to use of a trade robot. The robot  monitors the intraday signals (MA89 and MA144 intersection) itself , opens up on the signal position, puts stops and profits, lead position, puts a stop to break even including trailing stop.

 

Some nuances that can arise when trading this strategy:

- Not all trades will  be done in plus, will be stops! But more than 80% of all trades are profitable. This is not a bad result
- The ratio of profit - stop does not always work in the  profit direction, but a stop should be wise. If you put a short stops money can be lost on the stops
- There will be days without trade opportunities will not – no worries
- There will be days with possibiliies  to trade with  almost all instruments and the main point  is not download too much a deposit , to comply with money management
This description of a trading strategy completed
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Contact information

Montenegro, Budva  Previor PUT BB 59 Phone:: +382 69-488-67
630007 Russia, Novosibirsk, Shevchenko Street 27a Phone: +7-383-380-6412

Israel, Ramat Gan, st.Zhabotinsky 7 Phone: +972 542 911 650

Costa Rica, Guadalupe-Goicoechea Phone: (506) 702-54160

China, Guangzhou Phone: +86 159 7551 5393
 
 

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