Track 'n Trade Bulls 'n Bears Trading System
Using The Advantage Lines
In this trading training video, I want to introduce to you one of my favorite tools! A tool of my own design. I call it my Advantage Lines. As an introduction to my advantage lines, I want to quickly take you through my thought process, to give you some insight on how and why this tool works. Also, why it's not just the same old tired moving average system.
As a developer of Trading Software, and a teacher, who help traders understand all the many tools available to us, as traders; I wanted to create a tool that could reliably and consistently help us simplify our trading strategies. I'm a firm believer that a simple effective tool can be way more powerful and effective than a hugely complicated and complex tool, which requires a lot of steps to understand and execute.
Fibonacci Retracements, Projection Levels, Elliott Wave Theory, Gann Fann Formations, Pitchfork Support Levels, and I could go on and on. These tools are all wonderful tools, used successfully by many traders each and everyday. But they're just a bit complicated and have a pretty extensive learning curve for the average trader. In an attempt to help simplify the trading process, I wanted to create a simple system that would help us take the guess work out of trading.
My thoughts went back to the very first ever trading system. That being a simple moving average. The concept of the simple moving average system, is very easy to understand and implement. As long as the price of the market was above the simple moving average, this was an indication to stay long the market; and vise versa. When the market price was below the simple moving average, then this was an indication that you should be short the market. Very simple.
Later, traders became a bit smarter and realized that 2 moving averages were better than 1. That the crossover point of a shorter moving average and a longer moving average, could actually provide a trigger point, for market entry and exit.
But this fantastic new system had several inherent problems. First, the great advantage of the 2 lines, short term simply moving average system, is that it gives you wonderful early entry signals. The disadvantage is that it gives you a lot of false signals, or what we call Whipsaw. It jumps you in and out of the market, way too often.
In an attempt to solve this problem, traders change the short term moving average system to a long term moving average system. The great advantage of making this change was that it reduced the Whipsaw, so we're no longer jumping erratically in and out of the markets.
The problem of course, is now we have late entry points. We end up leaving a significant number of our profits on the table.
In contemplating this dilemma, I had a strange thought. You see, I'm the kind of guy who is always trying to figure out ways to have my cake and eat it, too. I wanted a system that had the advantages of a short term moving average crossover; early entries. Plus, the advantages of a long term moving averages system. Less frequent crossovers, or limited Whipsaw.
While contemplating this dilemma, a light bulb suddenly went off in my mind. I figured out a way to change the mathematical formulas, that would surely solve our dilemma. But in my mind it was such a simple mathematical modification, that I was positive someone else would've surely figured it out by now. They would've published this great idea somewhere on the web or in a book, already.
The next day I ran into my office and engaged my programmers to the task of programming my great new idea, into Track 'n Trade. Once complete, I began to play with it, and found it to be astoundingly accurate. Which prompted me to begin my research into who might have published this great idea, prior to me. Of which, I found none. I could not find any reference of anyone having done such a modification, anywhere on the web. Or in any published book that I had in my trading library, which I have many.
My programmers asked me to give this new tool a name. So, I figured since it had the advantages of both moving averages systems, without the disadvantages, I apply named it: The Advantage Lines.
A simply moving average crossover system, mathematically modified to give us early entry signals as seen in the short term moving average system, without the whipsaw, which we see in a long term moving average system.
Another advantage of my Advantage Lines, is that it gives us 1 Buy Signal for each and every Sell Signal. You'll never be confused as to which side of the market you should be on, as you are with more traditional indicators. Such as the CCI, which gives us multiple Buy and Sell Signals in a row. The Mac-D, which gives multiple Buy and Sell Signals in a row. Here's the RSI, which too, gives multiple Buy and Sell Signals in a row.
Take a closer look, here's my Advantage Lines, again. Notice that we only have 1 Sell Signal for each Buy Signal. Getting into the market is easy, using my Advantage Lines, tuned properly through the Control Panel Settings, can provide us with what I believe to be, some of the most accurate entry points possibly able to be obtained.
But getting into the market, it's only half the battle. Getting out of the market, is the key to our overall success. Using the same Exit strategies, as I teach with the Bulls 'n Bears System, also holds true, when trading my Advantage Lines.
I firmly believe that the use of multiple contracts with split exit points placed both on mathematically calculated Stop placement points, along with traditional areas of support and resistance, is still the best way of trailing a market for maximum price protection and profit potential.
I love my Advantage Lines, and I hope you enjoy using them, as much as I do!