Principle of System

The S&R is breach and a new trend emerge. At this stage the algorithm has already placed at least one position at the early stages of the trend and already profitable. Usually there will be multiple position taken as a new impeding trend will break multiple S&R. This forms a multiplying effect on our position rewarding the system with profits that is more rewarding when compared to trading within the range of the S&R. Statistically it constitute 35% to 40% of the total trade taken by the system.

The S&R is breach but price move back to prior range. At this stage the algorithm will be able to recognise that the attempt to from a new trend is unsuccessful and will exit the trade in the earliest time possible. This will constitute up to 60% to 65% of the total trades taken by the system. To note, the losses incurred is 60% of a profitable trade. In another words, for every $1 lose incurred the profit made is $1.67.

It is clear that the system has a less than par accuracy. In fact 60% of the time investors will experience a losing trade. However, be assured that when the trend is on your side profits will come in multiples of what you paid in losses. An investor in trend trading usually exercise patient and wait for the profit to come. Thus capital management must be design to ensure such waiting.