Track 'n Trade Bulls 'n Bears Trading System
Turning on the Blue Light System
In this video, we’re going to be discussing the mathematically calculated trailing stop system that we call the Blue Light System.
I’ve often said, getting into a market is easy, the difficult and, in my opinion, the key ingredient to trading is knowing where and how to get out of the market.
This brings us to our discussion of the Blue Light System, which is basically our safety net. It can help us know where to get out of the market, before the market has a chance to actually turn around and catch us off guard.
Plan your trade and trade your plan. It seems the single biggest problem people have when it comes to trading is knowing where to place their trailing Stop Loss Orders, therefore many traders don't even bother to trade with Stop Orders, which is simply their way of skipping the one key component mentioned above, that of: Planning our Trade and Trading our Plan.
Trading with a stop helps you define your risk. And with markets like futures and forex that trade nearly 24 hours per day it will help you sleep well at night also.
If you're trading without a stop, you are potentially exposing your account to more risk. One of the reasons people don't trade with Stop Orders is because they aren’t sure where to place them.
So on that note, I want to introduce you to the Blue Light Stop Loss System, which is derived from the Parabolic Stop and Reverse (or parabolic SAR); developed by Welles Wilder.
We here at Gecko Software have modified it somewhat, and have hyperbolically linked it to the Bulls 'n Bears System, which allows us to have a dynamically, mathematically calculated Trailing Stop System. We can use this stop system in conjunction with other trailing stop methodologies as well, but it is the core of maximizing our trading potential.
Here's an example of the Blue Light System in action.
Notice that we have small blue dots on the screen, following the trend. These are hyperbolically calculated mathematical stop order placement points.
Also, notice that they change or move, every single day, or with every single price bar, depending on your chart timeframe.
That's right, we calculate and move our Stop Loss Orders with every new price bar.
I know that may be a different concept than what some may be used to doing, but this is the best way we've found to help maximize our trading potential.
Breaking Stops Apart
The next step beyond a single Stop Loss Order placement point, is to break our Stop Orders apart, using multiple Stop points along the trend.
By combining several different stop order placement strategies together, we can capitalize on the best of all worlds.
Here's an example of how we trade using multiple contracts, once we’ve established our position within the market, we then place our trailing stop orders between traditional support and resistance points, the Blue Light System and I've also included the Parabolic SAR as an additional Stop Placement point, giving us three different Stop points.
We do this in an attempt to maximize our trading potential, which allows us to increasing our staying power, while minimizing our risk.
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