Today we bring you eight classic trading systems that are recognized by the world trading circle. Most of them are circulated in the classic works of trading masters and are well known to everyone. Even some of the world's top foreign exchange tycoons often use them for trading!
1. Turtle Trading System
The first is the most classic Turtle Trading System.
Renowned financial speculator Richard Dennis wanted to find out whether great traders are born or made.
To this end, in 1983 he recruited 13 people and taught them the basic concepts of trading as well as his own trading methods and principles.
The Turtles became the most famous experiment in trading history because in the following four years they achieved an average annual compound return of 80%.
Dennis demonstrated that using a simple system and rules, people with little or no trading experience can become excellent traders.
Core trading philosophy:
Enter the market when the price breaks through the highest point of 20 trading cycles.
Exit when the price falls below the lowest point of 10 trading cycles.
System 1:
Entry: A short-term system based on a 20-day breakout (price exceeds the highest or lowest price of the previous 20 days)
Exit: For long positions, it is the 10-day lowest price; for short positions, it is the 10-day highest price. If the price movement deviates from the position to the 10-day breakout, all units in the position will be exited.
System 2:
Entry: A simpler long-term system based on a 50-day breakout (price exceeds the highest or lowest price of the previous 50 days)
Exit: For long positions, it is the 20-day low price; for short positions, it is the 20-day high price. If the price movement deviates from the position to the 20-day breakout, all units in the position will be exited.
Because the Turtle Trading System is extremely classic, it is very popular among the public. Many trading experts have derived many Turtle Trading Systems based on it.
2. Larry Williams Gap Trading System
Larry Williams is the founder of William Indicator, a well-known futures trader, author, column editor, and asset management manager in the United States today. He is the author of the book "Secrets of Short-term Trading".
He won the Robbins Cup Futures Trading Championship and turned $10,000 into $1.1 million in less than 12 months.
In a sense, the gap trading system is a psychological trading system, which mainly measures price changes caused by excessive emotional reactions.
Basic concept:
Its basic trend is that in a downward trend, the price fluctuates near the lower end of the box range for 5 to 10 days, and then opens sharply lower and breaks through the trend line. The selling pressure sentiment is extremely high. If it then rebounds to yesterday's lowest price, it indicates that the market energy has reversed and another sharp rise is ready to start.
System buying mechanical rules:
The closing price is 4% lower than the five-day average price, ensuring that the signal occurs in a downtrend;
The opening price is 1% lower than yesterday's lowest price;
The closing price rebounded to above yesterday's lowest price.
3. Tom DeMark TD Price Range Trading System
Tom DiMarco, executive vice president of SAC, CPO partner of bond fund manager VanHosington, special advisor to $4 billion hedge fund manager Leon Kubman, and former partner of Charlie DiFrancesca, one of the largest individual traders on the Chicago Mercantile Exchange, has served as an advisor to major financial institutions including Soros, Morgan Stanley, Citibank, Goldman Sachs, IBM and Union Carbide.
Tom DiMark believes that the key is not whether it is overbought or oversold, but the time the indicator runs in the overbought or oversold period.
In order to accurately measure buying and selling pressure, he proposed the creation method of TD DeMarkerⅡ indicator, which links all price movements with certain supply and demand levels.
The value of the numerator is composed of two buying pressure metrics.
In the 8 K-line chart, add the difference between the highest point of the day and the closing price of the previous day to the difference between the closing price of the day and the lowest price of the day.
If the highest point of the day is lower than the closing price of the previous day, the buying pressure part will be assigned a value of 0.
The denominator is composed of the 8-day numerator value plus the respective selling pressure value, and the selling pressure is composed of two metrics.
The first part is the difference between the previous day's closing price and the current day's lowest point. If it is a negative value, the selling pressure part is assigned a value of 0;
The second part is the difference between the highest price of the day and the closing price of the day. Add the two parts together, and then add the resulting value to the value of the numerator to get the denominator.
4. Lawrence McMillan Volatility Trading System
Lawrence MacMillan, an options trading expert, once served as senior vice president at Thomson Mckinnon Securities Company, in charge of stock arbitrage trading. He is the author of "Option Strategic Investment" and "McMillan on Options".
Volatility refers to the speed of price change, which can be calculated using the standard deviation formula, and historical volatility can be compared according to different time lengths, such as 10 days, 20 days, 50 days, and 100 days.
System buying mechanical rules:
The historical volatility is in a bearish arrangement, that is, the fluctuation range is getting narrower and narrower, suggesting the calm before the storm;
Calculate the historical volatility for periods of 5, 10, 20, 30, and 100, and find its standard deviation;
The ac and ao indicators have been declining for 5 consecutive days.
5. Martin Pringle Swing Trading System
Martin Pringle, one of the most influential leaders in the field of technical analysis today, has won the Jack Frost Memorial Medal from the Canadian Association of Technical Analysis.
System concept: When the price is at an extreme oscillating price, a reversal is imminent. This concept can also be used in conjunction with volume swings to verify the convergence effect of the two and increase the odds of success.
System mechanical buying rules: the ratio of the day's closing price to the 28-day moving average is less than -10.
6. Constance Brown Derivative Oscillator Trading System
Constance Brown is a master of securities analysis and fund trader, and the creator of the aerodynamic investment website.
System concept and thought:
The RSI relative strength index is triple smoothed, and the calculation steps are as follows:
Calculate the 14-day RSI indicator;
Calculate the 5-day average of the 14-day RSI indicator;
Take the 3-day average of the results calculated in step 2;
Find the difference between the calculation results of steps 2 and 3 and show it in a bar chart.
7. Dolphin Trading System
Core concept: Trade with the trend and place orders on the right side
By using the moving average and MACD trend indicators during the trend judgment period to determine the trend and trade in the trading period;
By placing orders in line with the trend during the golden cross and dead cross of the KD indicator during the entry and exit periods, you can place orders on the right side of the trading period.
1 Trading period selection rules
Choose the main trading period according to your personal trading habits.
The principle of judgment is that the trading period you are good at is the main trading period to be selected. The previous period of the main trading period is the trend judgment period, and the next period of the main trading period is the entry and exit period.
2Trend judgment rules
During the trend judgment period, use MA26 moving average and MACD to determine the trend of your current main trading period:
Price is above MA26, MACD Value> Signal>0: The trend is a bull market, go long;
Price is above MA26, MACD Signal> Value>0: The trend is rising and falling or rising and adjusting, close long positions and try to go short;
Price is below MA26, MACD Value<SIGNAL<0: The trend is a bear market, short sell;< p>
Price is below MA26, MACD Signal<VALUE<0: The trend is a downward rebound or downward adjustment, close the short position and try to go long. < p>
8. Victor Sperandi 123 Rule Trading System
Victor Sperandi, a professional securities trader and fund manager, was hailed as the "Terminator of Wall Street" by Barron's magazine. He once created an impressive record of 12 consecutive years of investment profits without any losses in any year.
Identifying and following trends is the pursuit of every technical analyst. Based on Dow Theory, Victor Sperandi makes trend identification a complex and arduous task.
Simplified to the 123 rule:
(1) First, the trend line is broken;
(2) The upward trend no longer reaches new highs, or the downward trend no longer reaches new lows;
(3) In a downward trend, prices break through the previous rebound high point, or in an upward trend, prices cross through the previous short-term retracement low point.
The basic concept is:
If in a downward trend, the price has reached a new low and fails to continue falling, and rises again above the previous low, the trend may reverse.
Although the 123 rule is simple and effective, its entry point is relatively late, and usually a considerable market trend has been missed. Therefore, Victor further proposed the 2B rule, the essence of which is to observe the false breakthrough phenomenon.