Friday, June 5, 2015

The K-Trend System - I

Before we proceed with further exploration of the K-Trend Indicator let me share with you my Trading system based on the K-Trend Indicator. It was one of my early Indicators developed during my early days of TA journey.
The system is a simple Reversible one. The rules are follows

BUY Setup
When the momentum turns positive from negative, In other words when the K-Trend Indicator is negative and changes from negative to positive.
Buy setup = KT < 0 and KT (today) > KT (Yesterday)
The setup condition remains active for 6 Bars

Entry
Enter when the value is above the High of the Buy setup Bar+0.5 times a 5 bar Average True range.
Buy = High(Buy setup bar) + (0.5 x ATR(5) ) .  In fact the value 0.5 is adjustable.

Exit  setup
When the momentum turns negative from Positives, In other words when the K-Trend Indicator is positive and changes from positive to negative.
Exit setup = KT >0 and KT (today)<KT (Yesterday)

Exit
Exit when the value is below the Low of the Exit setup Bar-0.5 times a 5 bar the Average True range.
Exit = Low(Exit setup Bar) – (0.5 x ATR(5))

After experimenting I found that many trades were missed because the Ktrend quickly crossed above or below the zero line in less than 6 bars and the value was still less/more than the entry/exit threshold values and the stock went on to make big moves. So I added further conditions to take care of these opportunities as well. The revised Entry and Exit condition are as follows

Entry
Buy = High(Buy setup bar) + (0.5 x ATR(5) )  OR  KT cross above +40

Exit
Exit = Low(Exit setup Bar) – (0.5 x ATR(5))  OR  KT cross below -40

I found that the system was able to catch the big Trends and losses were quite limited  in the sideways moves. The system was useful for stocks which had the tendency to have some trends and useless for stocks which moved sideways most of the times.


The system has the facility to set the ATR multiplication factor which has a default value of 0.5.  Also one can set the traded quantity so the current Profit/Loss situation  is indicated exactly. 



A quick backtest on the Nifty (The Indian stock Index) is provided below.


The System can be downloaded and tested if one likes from the below link.  Looking forward to feed backs..


19 comments:

  1. my observation in this study please change the exit strategy using Bs volume trend reversal indicator and re entry option also need. Most of time more profit missed.

    ReplyDelete
  2. sir How can i get vchannel indicator

    ReplyDelete
  3. Vchannel Indicator? Can you provide any reference/link?

    ReplyDelete
    Replies
    1. Sir
      The one you've used in upper panel along with regularized RSI

      http://karthikmarar.blogspot.com/2013/05/regularized-indicators-part-2.html

      Delete
    2. Dear Sir

      Still waiting for your reply.

      Regards

      Delete
  4. Sir Is possible to make a TRADING SYSTEM using this MULTICYCLE indicator http://www.wisestocktrader.com/indicators/1545-multicycle-1-0

    ReplyDelete
  5. Amitabha, It was one of my experimental Indicators. LaterI found that it was looking to the future and did not proceed with it...
    Regards

    ReplyDelete
    Replies
    1. Dear Sir,

      Thanks for your reply. Can you suggest any indicator that is good for option trading.

      Regards

      Delete
  6. Dear Sir

    Can you suggest any good indicator/system for option trading?

    Regards

    ReplyDelete
  7. Sir,

    max drawdown -37%.i think this code need to be modified or need to be used with other analysis.

    thanks

    ReplyDelete
  8. Dear Sir,
    I can't download file K-Trend System from 4shared.com.
    The file link that you requested is not valid.
    pls reupload file K-Trend System.
    thanks,

    ReplyDelete
  9. Sir "The K-Trend System - I" is not available for download is the system backfired ??

    I need this AFL

    ReplyDelete
  10. "Amitabha, It was one of my experimental Indicators. LaterI found that it was looking to the future and did not proceed with it.."

    Sir what do you mean by it was looking to the future and did not proceed with it.
    I am getting some good result. are they wrong

    ReplyDelete
  11. Let me explain the basic principle how most Forex systems work. They are tuned

    up to work in a specific market condition. They often make money in a trending

    market, but loose money in a choppy market. It is not a problem as long as the

    market is trending and the system is making more money than it loses. Such a

    system can be profitable for several months and you would be happy with it. BUT...

    PREPARE FOR THE WORST...

    Market change over time. A well designed system starts with trend analysis to

    stay away from potentially losing trades. There are two problems of how a Forex

    system recognizes the trend.

    PROBLEM: FALSE "STRONG TREND" INDICATION.

    The system responds only to immediate price action. An explosive price

    movement that is usually the result of news release is tempting people to jump in

    and make a profit. It looks like a "strong trend", but what usually happens next is a

    hard fall.

    To avoid falling into this trap, check for the SOLUTION to find a REAL trend:

    ==> http://www.forextrendy.com?nsjjd92834

    SECOND PROBLEM: TREND RELIABILITY

    Most systems use various indicators to determine the trend. Actually, there is

    nothing bad about using indicators. One Simply Moving Average can do the job.

    The problem comes with the question: "Is the market trending NOW?" Whether the

    market is trending or not trending is not like black and white. The correct question

    is: "How well the market is trending?"

    And here we have something called TREND RELIABILITY.

    Trends exist and they can be traded up and down for a profit. You have to focus

    only on the most reliable market trends. "Forex Trendy" is a software solution to

    find the BEST trending currency pairs, time frames and compute the trend

    reliability for each Forex chart:

    ==> http://www.forextrendy.com?nsjjd92834

    ReplyDelete
  12. Hello

    Is there k-Trend version with exploration function?

    It is a great indicator, would be great to scan stocks for buy/sell.

    Cheers

    ReplyDelete
  13. Halo,I'm Helena Julio from Ecuador,I want to talk good about Le_Meridian Funding Service on this topic.Le_Meridian Funding Service gives me financial support when all bank in my city turned down my request to grant me a loan of 500,000.00 USD, I tried all i could to get a loan from my banks here in Ecuador but they all turned me down because my credit was low but with god grace I came to know about Le_Meridian so I decided to give a try to apply for the loan. with God willing they grant me  loan of 500,000.00 USD the loan request that my banks here in Ecuador has turned me down for, it was really awesome doing business with them and my business is going well now. Here is Le_Meridian Funding Investment Email/WhatsApp Contact if you wish to apply loan from them.Email:lfdsloans@lemeridianfds.com / lfdsloans@outlook.comWhatsApp Contact:+1-989-394-3740.

    ReplyDelete
  14. Great job,
    Thanks for this kind or Information with us. Your technical analysis blog is easy to understand and great readability. Presently I am working with FinBricks financial education institute in Indore. We are providing best technical courses and our high qualified faculties teach you and improve skill and technical ability.
    For More Information visit our website....https://finbricks.co.in and also call us 9111006537

    ReplyDelete