Trading system based on Bill Williams's classical works. Used Indicators: Fractals, Alligator (Jaws period-13, Shift-8; Teeth period-8, Shift-5, Lips period-5, Shift-3)
Trading system: Entry orders execute at the breakout of fractal level. Overcoming of a given level by the next price movement indicates the formation of pulsed price movement in the direction of the developing trend, which contains the potential profit. In practice, entry orders are exposed above (below) the extremum of working fractals. Protective stop orders are placed at a distance of 40 pip of entry orders and take profit orders – at a distance of 100 pip. These values are the result of optimizing on historical data and validated by many years of practice and supervision of the market. Most of the time markets are in a trading range, and only the remainder of the time we can observe the direction of motion, which are most favorable for profit.
In order to improve the results of this “trend system” and significantly reduce the number of false alarms in the range we use a set of filters: 1) Orders are placed only on the first fractal - only by the fact that after the first touch of alligator's red average line. 2) Internal fractals are ignored - fractal between price and the opposite edge of the alligator is nonworking.
The system also provides escalating of volume of positions. The input volume is calculated so that after first profitable transaction to deduce the account in plus a standard input. Based on the ratio of loss / gain, equal to 40/100 points, increase in volume after each taken loss occurs to factor 1.4. After the first profitable realization the volume comes back to a reference value.