Dual Reversal Oscillating Band Trend Following Strategy
Overview
The Dual Reversal Oscillating Band Trend Following strategy combines dual reversal signals and oscillating band indicators to implement trend following trading. It first uses the 123 reversal system to generate reversal signals, and then combines the Fractal Chaos Bands indicator to filter signals and follow trends. This strategy can identify both reversal opportunities and follow trends, making it a very comprehensive trading strategy.
Strategy Principle
123 Reversal System
The 123 reversal system is from page 183 of the book "How I Tripled My Money in The Futures Market" by Ulf Jensen. Its trading signals are:
Buy when the closing price is higher than the previous day's close for 2 consecutive days, and 9-day Slow K-line is below 50; Sell when the closing price is lower than the previous day's close for 2 consecutive days, and 9-day Fast K-line is above 50.
This section mainly uses the Stochastic oscillator indicator to generate signals in the overbought and oversold regions. When the stocks rise continuously but the Stochastic oscillator indicator shows there is still room to rise, take a bullish view; when the stocks fall continuously but the Stochastic oscillator indicator shows there is still room to fall, take a bearish view.
Fractal Chaos Bands Indicator
The Fractal Chaos Bands indicator determines market trends by plotting price highs and lows to form upper and lower rails. The specific rules are:
Buy when price breaks through the upper rail upwards; Sell when price breaks through the lower rail downwards.
This section mainly serves as a trend filter, combined with the 123 reversal signal. Only when both signals are consistent will a position be opened.
Advantages of the Strategy
- Combining reversal and trend to capture opportunities comprehensively
The Dual Reversal Oscillating Band Trend Following Strategy can capture both reversal opportunities and follow trends, making it very comprehensive. It can obtain trading signals regardless of whether the market is oscillating or trending.
- Reducing false signals and improving win rate
Compared with a single indicator, this strategy can greatly reduce false signals and improve actual trading win rate and profit rate through the filtering of dual indicator combinations.
- Flexible parameter adjustment and strong adaptability
The parameters of the Dual Reversal Oscillating Band Trend Following Strategy are easy to understand. Users can adjust them according to their own needs and market conditions, making it very flexible. It can adapt to both oscillating and trending markets through parameter tuning.
Risks and Optimization
- Unable to adapt under major trends
The strategy itself relies more on medium-term trading opportunities. Under major market trends, the strategy may generate too many reverse signals and stop out with losses. This can be optimized through parameter adjustment.
- Requires margin capital support
The Dual Reversal Oscillating Band Trend Following Strategy belongs to frequent trading types, requiring sufficient margin capital to support the margin requirements for opening positions. For users with insufficient capital, it may be necessary to appropriately reduce the position size.
- Can combine more indicators for filtering
The strategy can introduce more different types of indicators on the existing basis to enrich signal sources and improve the robustness of the strategy. For example, adding indicators like volume, volatility index, etc. to verify reversal and trend signals.
Conclusion
The Dual Reversal Oscillating Band Trend Following Strategy successfully combines the advantages of reversal trading and trend following. It can capture both reversals and follow trends, making it very comprehensive and efficient. Compared with a single indicator, it can greatly reduce false signals and improve the actual trading win rate and profit level. In addition, this strategy has flexible parameter adjustment for users to optimize according to their own style and market environment. In general, this is an excellent quantitative strategy that is worth live trading verification.
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// This is combo strategies for get a cumulative signal. - 1