Hi,

It's been a while since I contributed an actual SYSTEM here (well other than posting links to various trading systems that is) so I thought I'd post this little one 'just for fun' (and WOULD YOU BELIEVE that it actually appears to work for forex pairs)!!! LOL!!!

Many of you will have heard of Bill Williams (his 'claim to fame' is the 'Profitunity Trading System' or 'Trading Chaos'). What many may NOT know is that Bill Williams has, in fact, released these systems three times in three seperate books. Now a long time ago: I was 'playing around' with this stuff and in the very first book (which in my opinion is definitely the better and far more detailed than the other two) he talks about the 'Balance Line'. The parameters for this line were apparantely tested and tweaked by some 'supa dupa' mainframe computer and apparantely produced good results. Now the ACTUAL 'Balance Line Trades' to me are just a tad too complicated so I came up with this little 'variation'. By the way: the 'Balance Line' is nothing more than the 'Alligator's Jaw' (you have an entire Bill Williams section of indicators as standard with MetaTrader of course).

Simple to set up: choose your timeframe (I'm messing around with this on a 1 hour chart but it appears to work for all timeframes i.e. it just depends on how patient you are I guess). Attach the 'Alligator' indicator with default settings BUT HIDE the 'Teeth' and the 'Lips' (just change their display colors to 'None'). Now you are really only seeing the 'Alligator's Jaw' (which, as noted, is in fact the 'Balance Line').

Now: I would also suggest that you trade IN ONE DIRECTION ONLY (but that's up to you of course i.e. I only trade long anyway).

Simple: to enter you go long at market when the price closes on or above the 'Balance Line'. You initial stop is the low of the entry bar minus 'a couple of ticks'. You stop stays in place until either it is executed and you've been stopped out OR once the 'Balance Line' starts to lock in profits and only then do you move your stop. In addition: you will note that the 'Balance Line' is 'offset into the future' by eight bars. This is handy BECAUSE once the very last value of the 'Balance Line' exceeds your entry price you move your stop to breakeven and again leave it there until the 'Balance Line' is effectivel locking in profit in which case you simply trail your stop by the value of the 'Balance Line'. One last but very important thing: if price goes AGAINST you and CLOSES BELOW the 'Balance Line' but not far enough to take out your stop THEN YOU SIMPLY CLOSE THE TRADE AT MARKET AND REALISE THE LOSS!!! A lot of the time this means that your loss is far less that it would have been had your stop been hit. One other thing that I've noticed is that many times your risk is minimal so you can pretty much 'bet the farm' as it were i.e. depending on your risk percentage (2% or 5% or whatever you use) you can normally open far larger positions which is nice it would seem.

That's it. The only reason (by the way) for my saying to trade in only one direction is simply to eliminate as many 'whipsaws' as possible. This is always a problem with most moving average type systems i.e. if you stop and reverse upon every opposite close the 'whipsaws' can be a REAL 'pain'!!!

Feel free to play around with this little system of course. You may even see something that could improve it's performance and profitability. Oh and choose your pairs carefully i.e. there are some pairs that are a real 'pain' by the looks of things i.e. they tend to trend FAR LESS than others.

OK: I shall attached chart for the purposes of explanation and you can also then get and idea why this could indeed be quite a profitable little system with pretty minimal effort really.

Regards,

Dale.

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