It may appear to many that I’ve been flying under the radar of late, but I can assure you that I’ve had my head down and working hard to complete the website and develop new strategy software.
I have some significant news relating to Escalator operational changes, and I can tell you that it has now been optimised for trading on H1 charts. I’ve also had developed a major improvement to the FlexiTrade EA (renamed the FlexiTrade Position Manager), which should be available later this week – I’m just waiting for final touches to be made to the EA’s security settings. As soon as it’s live, I’ll send you the download link and installation instructions, but first, let me explain the above changes, and why I believe they’ll make your trading less stressful, more enjoyable, and hopefully more profitable.
The FlexiTrade Position Manager
The FlexiTrade EA was designed to live up to its name, i.e. permit a flexible range of trading styles and user options for order types, reward settings, and risk parameters. It met most of my criteria for trade management software in that it was easy to apply to a chart, adaptable to changing market conditions, and simple in its functionality. In other words, it did all I needed it to do, and it did it efficiently and without fuss. The only exception was that by using retracement to the Take Profit levels as the sole method of trailing the stop loss, it didn’t lock in enough profit, and in the variable and volatile conditions we are currently experiencing, this often resulted in significant chunks of our on-paper profits being returned to the market.
I realised I needed to base the TSL on recent volatility, and the best way of achieving that was to use Average True Range (ATR) calculations. Therefore, the answer to the problem was already part of the FXO system. I just needed to incorporate my favourite indicator – the SuperT – into the FlexiTrade EA and utilise exactly the same method that I employ in the Escalator strategy. I’ve now done that and it’s working beautifully. The EA properties have changed as per the screenshot below.
(mouseover to see order type dropdown menu in action)
On the surface, it appears that not a lot has changed. The Stop/Limit Order switch is now conveniently placed inside a dropdown menu at the top, so you can easily see in which mode you’re trading, and SuperT trailing stop configuration has been included in the properties. But of course, the latter change is what makes the FlexiTrade Position Manager so efficient. The ability to trail the stop loss dynamically according to the ATR is a very powerful money management tool. If, however, you prefer to use just the Take Profit Levels for your TSL, simply change the UseLookBackBars property to true and the EA will cease using the SuperT. Flexibility is the key!
Which brings me to…
The Escalator and VT VelocityTrend Indicators
The Escalator is a powerful strategy. It is one of the top two strategies I use in my day-to-day trading – the other being the RED strategy (see ACTP Trading Strategies in the online training course).
The Escalator EA evolved over the years in an attempt to make it easy for new traders to recognise the signals, and enter or exit positions. Coding complexity was added by several programmers, paradoxically in attempt to make a simple strategy even simpler. The result however, in my opinion, was a strategy that had lost it’s soul. It had lost the essence of what trading is all about – the human element.
The best trading strategies are those that have strict rules of entry, but allow the flexibility to utilise a traders intuition and experience to a.) filter the best trades and stay out of the marginal, and b.) re-enter positions based on previous entries that had been stopped-out on increased volatility. Decisions such as these are almost impossible to program, and even if they could be, they would still lack the hands-on approach that provides traders with the experience they need to ensure long-term profitability.
So I had the Escalator reprogrammed to become a simple indicator. The new FlexiTrade Position Manager does all that is needed to enter and protect the trade, and the indicator… well, it indicates the entry signals. But the strategy still requires the trader to make a conscious decision. Rather than dragging a script onto the screen, the trader must instead draw an entry line at the desired level and rename the line. It may not seem like there’s a great deal of difference, but believe me, going through that process engages the brain, and obliges the trader to actually THINK about what he or she is doing. There’s a big difference between purely mechanical trading, and what I like to call, using ‘mechanical discretion’!
In the case of hourly charts (for which the new Escalator strategy has been optimised), I’ve also applied an indicator I had developed years ago, which I’ve called (in the absence of a better name) the VT_VelocityTrend. Below is a screenshot of the setup I’m currently using, with the VelocityTrend confirming or invalidating Escalator signals.
Without going too deeply into the logic, the VT_VelocityTrend measures the angle and strength of the trend. The histogram indicates trend direction, and zero line dots indicate strength. I intend to make a video tutorial in the near future to explain the strategy in depth.
There is much more to tell, but I’ll leave that for another post. In the meantime, check out the ACTP course and keep an eye out for my next email containing the download links for the new Escalator, VT VelocityTrend and FlexiTrade Position Manager. All free for ACTP members!