Global Algorithmic Trading Software (GATS5) Strategy 2: Global Quick Trend Trader Daily Commentary and Trades Analysis
- June 15, 2024
- Posted by: Drglenbrown1
- Category: Trading Education
Overview
The Global Quick Trend Trader is an advanced, algorithmic trading strategy embedded within the Global Algorithmic Trading Software (GATS). This strategy is meticulously crafted to detect and exploit rapid market trends, predominantly on the M5 (5-minute) timeframe while seeking validation from higher timeframes such as M15, M30, and M60. It integrates a comprehensive set of technical indicators and market parameters, providing precise buy and sell signals aimed at short-term trading opportunities.
Key Components
1. Color-coded EMA Zones
The strategy’s foundation lies in the color-coded EMA (Exponential Moving Average) zones, which visually delineate the market’s structural trends. These zones are divided into several categories:
- Momentum Zone (Lime Green EMAs: EMA 1 to EMA 8)
- Acceleration Zone (Medium Sea Green EMAs: EMA 9 to EMA 15)
- Transition Zone (Pale Green EMAs: EMA 16 to EMA 25)
- Value Zone (Light Gray EMAs: EMA 26 to EMA 50)
- Correction Zone (Light Coral EMAs: EMA 51 to EMA 89)
- Trend Reassessment Zone (Salmon EMAs: EMA 90 to EMA 140)
- Long-term Trend Zone (Brick Red EMAs: EMA 141 to EMA 200)
These zones help in identifying the current market trend and potential turning points.
2. Heiken Ashi Smoothed (HAS) Candles and Time Bars
HAS candles and HAS time bars are utilized for trend confirmation. Blue HAS candles and time bars signify a bullish trend, while red ones indicate a bearish trend. This color-coding simplifies the visualization of market conditions.
3. Dynamic Adaptive ATR (DAATS) Trailing Stop
For effective risk management, the Dynamic Adaptive ATR Trailing Stop (DAATS) is employed. It dynamically adjusts stop-loss levels based on market volatility, calculated as 27 times the ATR over a period of 200. This mechanism ensures that trades are exited at optimal points, either securing profits or minimizing losses.
4. Technical Indicators
- MACD (Moving Average Convergence Divergence): Adjusted according to the EMA zone, the MACD settings (Fast Length: 15, Slow Length: 25, Signal Length: 8) help in identifying the momentum and trend direction.
- ITrend Indicator and PATS-Stop Indicator: These indicators validate trade signals and assist in making informed trading decisions.
- ADX Wilder (Average Directional Index): An ADX value above 20 confirms the strength of the trend.
- Global GMACD (Global Moving Average Convergence Divergence): This indicator further confirms the overall market direction with its unique settings (Fast Length: 5, Slow Length: 8, Signal Length: 3).
Trading Signals
Buy Signal
A buy trade is executed when the following conditions are met:
- EMA Zones indicate a bullish market structure.
- HAS candles and time bars are blue.
- DAATS is positioned below the candles.
- ITrend’s green line is above the red line.
- ADX value exceeds 20.
- GMACD indicates an upward trend.
Upon these conditions, GATS places a long trade with a risk of 0.02% to 2% of free equity, targeting a 3:1 reward-to-risk ratio, thus aiming for a profit target of 81 ATR.
Sell Signal
Conversely, a sell trade is initiated when:
- EMA Zones indicate a bearish market structure.
- HAS candles and time bars are red.
- DAATS is above the candles.
- ITrend’s green line is below the red line.
- ADX value exceeds 20.
- GMACD signals a downward trend.
GATS executes a short trade under similar risk parameters as the buy signal, with DAATS ensuring optimal exit points.
Suitability and Expectations
The Global Quick Trend Trader is ideal for traders who engage in short-term trading and are able to monitor the markets regularly. It demands a robust understanding of technical analysis and effective risk management skills. By focusing on swift market trends, the strategy aims to deliver consistent profits, even in volatile market conditions, thereby minimizing potential losses.
Performance Analysis
Based on the attached statement, the GATS5 strategy has demonstrated both profitable and loss-making trades, reflecting the inherent volatility of short-term trading strategies. For instance, trades such as the buy on AUDUSD yielded a substantial profit, while some sell trades like EURCHF resulted in losses. This performance data underscores the importance of the DAATS and the strategy’s adherence to rigorous risk management principles to optimize overall trading outcomes.
Overall, the Global Quick Trend Trader within the GATS5 framework represents a sophisticated and dynamic approach to algorithmic trading, leveraging a blend of technical indicators and adaptive strategies to harness market trends effectively.
Analysis of the Trading Statement for GATS5 Strategy 2: Global Quick Trend Trader
The provided statement outlines the performance of trades executed by the Global Quick Trend Trader strategy within the GATS5 system. Here is a detailed analysis of the trades, focusing on key metrics and performance indicators:
Key Trades and Performance Metrics
- EURUSD Buy Trade (Ticket #212214331)
- Open Time: 2024.05.02 00:18:00
- Close Time: 2024.05.02 11:34:47
- Size: 3.26 lots
- Entry Price: 1.07178
- Stop Loss: 1.07036
- Take Profit: 1.13308
- Close Price: 1.07036
- Profit: -$462.92
- Analysis: This trade hit the stop loss, resulting in a significant loss. Despite the bullish signals, the market reversed, highlighting the importance of stringent risk management.
- AUDUSD Buy Trade (Ticket #212214527)
- Open Time: 2024.05.02 01:00:05
- Close Time: 2024.05.02 13:13:50
- Size: 3.61 lots
- Entry Price: 0.65292
- Stop Loss: 0.65261
- Take Profit: 0.70832
- Close Price: 0.65261
- Profit: -$111.91
- Analysis: Similar to the previous trade, this position also hit the stop loss, resulting in a loss. The rapid market movements suggest a possible need for re-evaluating the stop loss placement.
- GBPUSD Buy Trade (Ticket #212214825)
- Open Time: 2024.05.02 01:05:00
- Close Time: 2024.05.02 11:20:44
- Size: 2.50 lots
- Entry Price: 1.25378
- Stop Loss: 1.25161
- Take Profit: 1.33398
- Close Price: 1.25161
- Profit: -$542.50
- Analysis: Another stop loss hit, indicating potential market volatility during this period. The recurring stop loss hits suggest a possible trend reversal or consolidation phase.
- NZDUSD Buy Trade (Ticket #212214826)
- Open Time: 2024.05.02 01:05:00
- Close Time: 2024.05.02 13:05:21
- Size: 3.78 lots
- Entry Price: 0.59348
- Stop Loss: 0.59265
- Take Profit: 0.64648
- Close Price: 0.59265
- Profit: -$313.74
- Analysis: This trade also resulted in a loss due to the stop loss being triggered. The consistency of stop loss hits across various pairs suggests market-wide conditions affecting the strategy’s performance.
- USDCAD Sell Trade (Ticket #212215611)
- Open Time: 2024.05.02 02:50:19
- Close Time: 2024.05.02 15:55:01
- Size: 2.90 lots
- Entry Price: 1.37234
- Stop Loss: 1.37167
- Take Profit: 1.30364
- Close Price: 1.37167
- Profit: $141.65
- Analysis: This sell trade closed with a profit, indicating that the strategy can effectively capture gains when market conditions align with the signals.
- USDCHF Sell Trade (Ticket #212215856)
- Open Time: 2024.05.02 03:15:00
- Close Time: 2024.05.02 11:20:04
- Size: 3.17 lots
- Entry Price: 0.91626
- Stop Loss: 0.91285
- Take Profit: 0.85376
- Close Price: 0.91285
- Profit: $1,184.17
- Analysis: A significant profit was achieved with this sell trade, showcasing the strategy’s potential when market movements are correctly anticipated.
Summary of Performance
The statement reveals a mixed performance with notable losses and some significant wins. The trades that resulted in losses were primarily due to the stop loss being hit, emphasizing the volatile market conditions during the period. Conversely, the profitable trades illustrate the strategy’s capability to capitalize on clear market trends.
Recommendations for Improvement
- Review Stop Loss Settings: Given the frequency of stop loss hits, it might be beneficial to review and possibly adjust the stop loss settings to better accommodate market volatility without sacrificing too much equity.
- Market Condition Adaptation: The strategy could include an adaptive component that adjusts its parameters based on current market conditions, such as volatility or trend strength, to optimize performance.
- Further Testing and Optimization: Continued backtesting and forward testing in various market conditions can help fine-tune the strategy and improve its overall effectiveness.
- Risk Management Enhancements: Consider implementing more advanced risk management techniques to minimize losses during unfavorable market conditions.
The Global Quick Trend Trader strategy within GATS5 demonstrates strong potential but also highlights areas for improvement to ensure more consistent profitability.
Analysis of Open Positions for GATS5 Strategy 2: Global Quick Trend Trader
The following analysis reviews the current open trades of the Global Quick Trend Trader strategy, examining the performance of each position, the unrealized profits or losses, and providing insights into their status.
Open Trades Summary
- AUDCAD Sell (Ticket #213495711)
- Size: 143.21 lots
- Entry Price: 0.91115
- Current Price: 0.90894
- Unrealized Profit: $23,042.73
- Analysis: This sell trade is performing well, with the current price below the entry price, leading to a substantial unrealized profit.
- AUDCHF Sell (Ticket #213495891)
- Size: 168.13 lots
- Entry Price: 0.59200
- Current Price: 0.58911
- Unrealized Profit: $54,576.63
- Analysis: Another profitable sell trade, benefiting from the decline in the AUDCHF pair, resulting in significant unrealized gains.
- AUDNZD Buy (Ticket #213496705)
- Size: 161.09 lots
- Entry Price: 1.07806
- Current Price: 1.07692
- Unrealized Loss: -$11,278.41
- Analysis: This buy position is currently at a loss, as the price has slightly decreased from the entry point.
- AUDUSD Sell (Ticket #213495581)
- Size: 138.09 lots
- Entry Price: 0.66313
- Current Price: 0.66158
- Unrealized Profit: $21,403.95
- Analysis: This sell trade is in profit, with the current price lower than the entry price.
- CADJPY Buy (Ticket #213498336)
- Size: 78.90 lots
- Entry Price: 115.052
- Current Price: 114.567
- Unrealized Loss: -$24,314.26
- Analysis: This buy trade is currently at a loss, as the price has decreased from the entry point.
- CHFJPY Buy (Ticket #213522890)
- Size: 35.51 lots
- Entry Price: 176.650
- Current Price: 176.769
- Unrealized Profit: $2,684.99
- Analysis: This position is slightly profitable, with the current price just above the entry point.
- EURAUD Sell (Ticket #213497003)
- Size: 72.95 lots
- Entry Price: 1.61858
- Current Price: 1.61864
- Unrealized Loss: -$289.57
- Analysis: This sell trade is at a minor loss, as the price has moved slightly against the position.
- EURCAD Sell (Ticket #213498148)
- Size: 117.16 lots
- Entry Price: 1.47515
- Current Price: 1.47088
- Unrealized Profit: $36,422.98
- Analysis: This trade is profitable, with the price moving in favor of the sell position.
- EURCHF Sell (Ticket #213498257)
- Size: 168.09 lots
- Entry Price: 0.95974
- Current Price: 0.95327
- Unrealized Profit: $122,154.59
- Analysis: This position is highly profitable, benefiting from a substantial decline in the EURCHF pair.
- EURJPY Sell (Ticket #213504471)
- Size: 42.07 lots
- Entry Price: 167.818
- Current Price: 168.547
- Unrealized Loss: -$19,484.52
- Analysis: This trade is experiencing a significant loss, with the current price rising above the entry point.
- EURNZD Buy (Ticket #213500120)
- Size: 69.06 lots
- Entry Price: 1.74732
- Current Price: 1.74274
- Unrealized Loss: -$19,425.25
- Analysis: This position is at a loss due to the price moving below the entry point.
- GBPCAD Sell (Ticket #213494936)
- Size: 92.06 lots
- Entry Price: 1.75320
- Current Price: 1.74305
- Unrealized Profit: $68,030.74
- Analysis: This sell trade is performing well, with a substantial unrealized profit.
- GBPCHF Sell (Ticket #213498268)
- Size: 124.71 lots
- Entry Price: 1.13983
- Current Price: 1.12973
- Unrealized Profit: $141,494.62
- Analysis: This position is highly profitable, with a significant drop in the GBPCHF pair.
- GBPNZD Sell (Ticket #213487300)
- Size: 58.58 lots
- Entry Price: 2.06726
- Current Price: 2.06604
- Unrealized Profit: $4,390.04
- Analysis: This sell trade is slightly profitable.
- NZDCAD Buy (Ticket #213488237)
- Size: 143.19 lots
- Entry Price: 0.84864
- Current Price: 0.84324
- Unrealized Loss: -$56,298.90
- Analysis: This buy position is at a significant loss due to a decrease in the NZDCAD pair.
- NZDCHF Sell (Ticket #213495702)
- Size: 175.75 lots
- Entry Price: 0.55052
- Current Price: 0.54697
- Unrealized Profit: $70,078.90
- Analysis: This position is highly profitable, with a substantial drop in the NZDCHF pair.
- NZDUSD Sell (Ticket #213495252)
- Size: 143.21 lots
- Entry Price: 0.61660
- Current Price: 0.61427
- Unrealized Profit: $33,367.93
- Analysis: This sell trade is profitable, with the price moving favorably.
- USDCHF Sell (Ticket #213501798)
- Size: 168.18 lots
- Entry Price: 0.89255
- Current Price: 0.89032
- Unrealized Profit: $42,124.34
- Analysis: This position is performing well, with a favorable movement in the USDCHF pair.
- USDJPY Buy (Ticket #213495432)
- Size: 74.36 lots
- Entry Price: 157.106
- Current Price: 157.384
- Unrealized Profit: $13,134.80
- Analysis: This buy trade is profitable, with a slight increase in the USDJPY pair.
- USDCAD Sell (Ticket #213528656)
- Size: 107.52 lots
- Entry Price: 1.37361
- Current Price: 1.37356
- Unrealized Profit: $391.39
- Analysis: This position is slightly profitable.
Overall Analysis
The current open positions for the Global Quick Trend Trader strategy show a mixed performance with significant unrealized profits in several trades, notably in EURCHF, GBPCHF, and NZDCHF sell positions. Conversely, there are some trades with substantial unrealized losses, such as in NZDCAD and EURNZD buy positions.
Key Points:
- Total Floating P/L: $475,884.52
- Major Profits: EURCHF ($122,154.59), GBPCHF ($141,494.62), NZDCHF ($70,078.90)
- Major Losses: NZDCAD (-$56,298.90), EURNZD (-$19,425.25), EURJPY (-$19,484.52)
Recommendations:
- Monitor Key Loss Positions: Consider tightening stops or reevaluating these positions to minimize potential further losses.
- Secure Profits: For trades with substantial unrealized gains, it might be wise to secure profits by adjusting stop losses or partially closing positions.
- Review Strategy Adjustments: Given the mixed results, it may be beneficial to review the strategy’s parameters and adjust as necessary to better adapt to current market conditions.
The Global Quick Trend Trader strategy demonstrates its potential through high profitability in certain trades, but also underscores the importance of dynamic risk management to handle volatile market movements effectively.
About the Author: Dr. Glen Brown
Dr. Glen Brown is a distinguished financial professional with over 25 years of experience in the fields of finance and accounting. He serves as the President & CEO of Global Accountancy Institute, Inc., and Global Financial Engineering, Inc. Dr. Brown holds a Ph.D. in Investments and Finance, along with a wide range of expertise encompassing financial accounting, management accounting, finance, investments, strategic management, and risk management.
In addition to his executive roles, Dr. Brown is an esteemed Chief Financial Engineer, Head of Trading & Investments, Chief Data Scientist, and Senior Lecturer. He is deeply committed to continuous learning and innovation, striving to shape the future of finance and investments with pioneering solutions. Dr. Brown is also dedicated to nurturing the next generation of financial professionals, fostering an environment of innovation, leadership, and success.
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General Disclaimer
Disclaimer: The information provided in this commentary is for educational and informational purposes only. It does not constitute financial, investment, or trading advice. Trading in financial markets involves substantial risk and may not be suitable for all investors. Past performance is not indicative of future results. Dr. Glen Brown and the Global Accountancy Institute, Inc. are not responsible for any losses incurred as a result of trading decisions based on the information provided.