Trading is easy, however, consistently profitable trading is where the difficulty lies. Traders since the beginning of time have tried to come up with a strategy that they could use in order to increase their win rates while minimizing their risk. In this article, we go over one of the ways in which you could do so. We discuss the different indicators, the settings used, and also go over the results. Read on to find out more.
There are 4 main indicators used in this trading setup, and each of these indicators has been explained below in detail.
The EMA is simply the exponential moving average of the stock’s closing price over a given number of trading sessions. It works in a very similar way to the SMA (Simple Moving Average), except it gives more priority to more recent data as this is considered to be more relevant than old data. The parameter that you have to enter for the EMA is the time period. Usually, traders only go long when the current price is above the EMA, and short when prices go below the EMA.
Known as the SSL, the Semaphore Signal Level channel chart is an indicator that is primarily used to identify trends. It does this by combining a variety of moving averages to give a clear visual signal of price. The SSL is primarily just a combination of moving averages, however, using the combined indicator as opposed to the individual average lines makes the charts cleaner and less cluttered. The SSL channel shows green and red lines to show you when a price trend is forming.
Waddah Attar Explosion
The Waddah Attar Explosion indicator is basically an advanced volume indicator. However, it has an advantage over standard volume indicators because it allows traders to visualise both positive and negative trading volumes, which can then be expanded so as to be used for the prediction of market trends.
For this particular trading setup, default settings were used on the indicators alongside the 200EMA. A long was only initiated when the price was above 200EMA. Additionally, the SSl channel should have the green line above the red line, and the Waddat Attar Explosion should have a green bar that is above the blue and white lines.
Shorts were initiated when the price was below the 200EMA. Additionally, the SSl channel should have the red line above the green line, and the Waddat Attar Explosion should have a red bar that is above the blue and white lines.
The risk-reward ratio was fixed at 1:2.
Results and Adjustments
After a 30-minute scalping session over the course of 5 years worth of past data, the overall results were:
Profitability: 1256.94% net profit
Number of Trades: 2399
% of trades profitable: 71.74%
Profit factor: 1.194
Some additional indicators and settings that could be added in order to increase the win rate and reduce the risk employed are:
- Different levels of leverage could be employed to boost the profitability and/or the win-rate associated with the strategy.
- The take-profit and stop-loss levels could be tweaked to further affect the percentages of trades that were profitable.
- Multiple take-profits or stop-losses could be added to change the profitability or the win rate.
- The ADX could be added to weed out bad trades that would have been made whenever the market was flat or the trend was about to reverse.
There are several highly profitable trading strategies that you can use in order to trade the markets and profit, but there are few that are as highly effective as the one discussed above. By implementing it even in its current form, you can make significant profits. You can also tweak the settings and alter the parameters on your own, resulting in a higher win rate and/or profitability.
Time Frame: 30 Minute
50% move to breakeven after 1:1 is hit on the first 50% and then close the trade after the next SSL cross, or wait to stop out at breakeven.
Where to place stop-loss
2 X ATR
- Waddah Attar Indicator – Trend Following System
- Exponential Moving Average – Investopedia
- SSL Channel – Forex Central