IN THIS ISSUE

CREATE A MOVING AVERAGE ENVELOPE
TRACK YOUR DAILY LOSSES – EVEN WITH MULTIPLE TRADES

INDICATOR TWISTS THAT SAVE TIME
Our November 2016 traders’ tip from Technical Analysis of STOCKS & COMMODITIES magazine demonstrates how simple but sophisticated uses of two types indicators can build successful trading systems.   A lesser known crossover indicator makes it easy to specify a breakout through a small percentage above or below a moving average.  A simple subtraction indicator lets you keep track of daily losses on an intraday timeframe chart, even with multiple trades.

The article entitled “Does Fully Automated Trading Software Work?” by James Breen calls for a trading rule that says to enter a trade is a specified percentage above or below the 10 period moving average.  He notes that the indicators should be customized for different instruments, which is easy with NeuroShell Trader’s optimization capabilities.

NeuroShell Trader includes two indicators called Avg Envelope High Breakout and Avg Envelope Low Breakout that allow you to select a time series, the number of periods for the moving average and an envelope fraction.  The indicators output a value between 0 and 1 that may be used as a condition in a trading strategy rule.  The indicators are listed in the Crossover and Breakout indicator category.  Another version in the same category substitutes an exponential moving average for the simple moving average.

Another rule in the article’s trading system limits maximum daily loss to $500.  On a 5 minute chart, there can be multiple trades per day, so you can’t use a simple net profit indicator.  However, if you choose the Subtract indicator from the Arithmetic category and subtract the Day Open (Intraday Basic category)  from the System Equity indicator (Trading Strategy System Information category), you obtain the daily amount of profit/loss.  To keep the amount of loss under a specified amount, you can use a relational indicator such as A > B where A is the result of the subtract indicator and B is -500.  The condition exits a trade once the daily loss is greater than $500.