This post is for those people who would like to trade using a well defined system, without relying on guessing, intuition, or gambling.
While it probably won't appeal to the "price action experts" that make huge returns of more than 1000% for a month or so, I hope if could be useful for beginners who struggle with trading and often lose their entire accounts.
This is a slow system that doesn't promise huge returns, but a consistent realistic profit without taking huge risks.
What I mean by "system" in the above sentence is having a
structure, that is, how you trade, how much you trade, when you trade, and when you exit your trades.
It is the closest you can get to an objective system that doesn't rely on arbitrary trendlines, or arbitrary resistance and support levels.
All credits for the trading system I'm going to present below go to
VP, a professional forex prop trader. I highly recommend going to his youtube channel and checking out all of his videos. They are for Forex traders, but you can translate a lot of things to crypto as well.
The "No Nonsense" way is solely based on indicators (but it is omitting the common indicators almost everyone is using).
Please note that the NO NONSENSE FOREX system is going to give you only the structure, not the actual indicators. You should be able to find your own "non-standar" indicators and test them thoroughly before engage in trading!
Here is how this system looks like.
You trade the
Daily Time Frame. Why? Because this enables you to avoid most of the market manipulations, and at the same time, you can trade for only half an hour each day. You are not glued to the computer screen if you trade this way.
Algorithm1. ATR
2. Baseline.
3. Confirmation Indicator
4. Volume Indicator
5. Second Confirmation Indicator
6. Exit Indicator
Here are some more details about the algorithm:
1. ATRThe Average True Range (ATR- 14 period) is the heart of the system. It defines your
stop loss and
take profit levels.
ATR, in fact, defines your entire money management strategy.
When you enter a trade set your stop 1.5 ATR below (for longs) or above (for shorts) the entry point.
Your first take profit level is at 1.0 ATR.
Once the price reaches 1.0 ATR,
a) you sell 50% of your trade there and
b) move your stop loss to break even position. At this point, you know for sure you haven't lost in this trade.
You leave the remaining 50% of funds active on the exchange until your exit indicator tells you to exit. This leaves your trade ample opportunity to bring you a lot of money, but you are sure now you cannot possibly lose.
Imortant: You have to calculate how much you are risking with every trade. The amount should be 1 to 2% of your entire account. No more than that. So, should 1.5 ATR (your stop loss level) be triggered, you should lose no more than 2 percent of your entire funds.
Example: The following chart shows the BTC/USD chart:
As you can see, the current ATR is around 160. If you were to ENTER LONG at this particular point at 1BTC = 8850 USD, your stop loss would be at 8850-240=8610 and your first take profit level would be at 8850+160=9010.
2. BaselineYour baseline should define the overall sentiment of the market: bullish or bearish.
When the price is over your baseline, you should take ONLY LONGS, when the other indicators tell you to do so.
When the price is under your baseline, you should take ONLY SHORTS.
Example: Just as an example, the baseline should be, say,
EMA, TRIMA, SMA or a similar indicator that can show you whether to take long or short positions.
3. Confirmation IndicatorA confirmation indicator should be your main entry indicator. When it gives you a signal, you enter a trade.
Example: Just as an example,
Aroon Up/Dn, or SSL channel, or something similar.
4. Volume IndicatorA volume indicator should be able to tell you whether or not there is enough volume in the market. If there is no volume, you shouldn't enter the trade, even though the other indicators say so.
Example: Just as an example, this indicator could be something like
"Waddah attar explosion", "Better volume", KVO, or something similar.
5. Second Confirmation IndicatorIn parallel to your main indicator, you should have additional entry confirmation. This feature is sometimes called confluence. Here is where the second confirmation indicator enters the picture.
The second confirmation indicator should confirm the signal from the first confirmation indicator. As simple as that.
5. Exit indicatorAn ideal exit indicator should give you the greatest possible profit before the market turns the other way.
It should also prevent from triggering your stop loss in most cases, so you exit before that happens and you save money.
Example: Just as an example, you can try using something like
"Haiken Ashi" or "Relative Vigor Index".
ConclusionThere are many nuances in this trading system, especially how to go and what to do when the price crosses the baseline. There are many additional rules that tell you when to trade and when not to trade in such situations. For simplicity, I have omitted those rules. If you are serious about trading this way, you should go to the no-nonsense website here:
https://nononsenseforex.com/ and to the corresponding youtube channel here:
https://www.youtube.com/channel/UCc8IRYpgBr4NGbaQFnd2b-A and study this system in details.
If you decide to use this system after studying the original materials, don't forget to do a back-testing first. Use the tradingview charts and trade a couple of years back, as if it was a live trade.
I have been using it mostly on the BTC/USD pair. It is the only pair that resembles the forex market to an extent. All the other altcoin pairs are much too riskier and proner to manipulation.
People who use this system in trading have an
active discord channel. You can search for indicators that fit in this system and ask for help there:
https://discordapp.com/invite/G437UUT
Disclaimer 1: This was my interpretation of the
"No Nonsense Forex" Trading system by VP. I could be wrong in some aspects of the system, or I could have misunderstood the original ideas. You should study this system from the original source materials before using it in live trades.
Disclaimer 2: Everything given above is just for informational purposes. This material should not be thought of as an advice on financial, legal, or even trade-related nature.
