This trading system is suitable for stocks, cryptocurrencies, futures, US stocks, etc.
This trading system uses the second generation ATR Zero Lag Fast Tracking Trend Indicator combined with Moving Average (ZMA) and the third generation Exponential Moving Average (EMA) to confirm trend changes using color-changing clouds.
1: Let's first talk about the Zero Lag Fast Tracking Trend Indicator.
First, the calculation method of ATR. It consists of two parameters, namely the period and the multiplier. The default values used when constructing the super indicator are an average true range or trading period of 10 and a multiplier of 3.
When the candlestick shows significant energy changes, buy and sell signals will be generated. There will be two candlesticks in yellow and white (colors can be set). When the white line turns into the yellow line, a bearish signal appears, indicating that the uptrend is turning into a downtrend. When the yellow line turns white, it indicates that the downtrend is turning into an uptrend.
Generally, the larger the cycle, the higher the accuracy. The chart above is the weekly chart of Bitcoin, and we can see that there were only 6 trading opportunities in 4 years. Bitcoin changed from a downtrend to an uptrend on January 23, 2023.
If you entered the market at this position, the price of Bitcoin was $22,300. Based on a 1-year annualized return, that would be a 3x return.
Currently, Bitcoin's price is above the high yellow line and is undergoing a shift. If the bearish trend lasts for half a year and turns bullish in the next month, we can imagine Bitcoin will soon reach a price of one hundred thousand.
For friends doing short-term intraday trading, we generally look at the trend changes on the 4-hour chart.
In this trading range, we will judge the change in trend. If the market is at the white line during this time period, we judge it as an uptrend; if at the yellow line, we judge it as a downtrend.
How do we determine whether this market movement is a real uptrend or a false uptrend? Because if a bullish signal appears, it may soon be followed by a bearish one. How can we confirm whether the market is truly rising or falling?
This requires using Moving Average (ZMA) combined with the third generation Exponential Moving Average (EMA) to confirm trend indicators with color-changing clouds.
This indicator uses Zero Lag Moving Average (ZMA) and the third generation Exponential Moving Average (EMA). The cloud between these averages changes color based on trend direction.
In a downward trend, if the ZLMA starts to increase, the cloud will partially turn red, indicating potential weakness. Conversely, in an upward trend, if the ZMA decreases, the cloud will partially change to a downward trend color (default is green), indicating potential strength.
Similarly, looking at Bitcoin from a weekly perspective.
In 4 years, there were only 2 opportunities for a green change, once in 2020 and once in October 2023. So when the weekly level shows green, it is a confirmation signal to be bullish. This is also why last year I strongly bought and entered Bitcoin.
When day trading, at the 4-hour level, when this type of resonance occurs, it can be judged that the direction is consistent. In the lower area, when a bullish signal appears and it seems to be in a green channel, we can judge it as an uptrend.
When a bearish signal appears at the top while still within the green cloud, it indicates that the market is in a consolidation mode. At this time, trading can easily lead to losses. To be more precise, we must look for trading opportunities in smaller time frames.
For example, 10 minutes.
When the 4-hour market is in a consolidation range, we can trade within this range, and the time frame can be set to 5-15 minutes to observe market changes.
For instance, at the point where I marked the arrow in 10 minutes, when ATR and EMA show a resonant crossover, that is our opportunity to enter the market. The stop loss will be placed at these crossover points.
The above is the tutorial for our super trading system.
