Developing a trading system using several indicators

Hi everybody

This is not a thread giving out some readymade trading strategy. Rather it is a humble attempt to collectively pool in all the knowledge and experience to develop a trading system.

The philosophy is simple. There are just lots and lots and lots of opportunities and so are the traps. The aim is to just stay away from the traps and protect the capital, entering only when we are supersure.


What I have in my mind is this:

1) Identifying 5 indicators which give clear cut bullish/bearish/neutral signals.

2) We maintain a count, for a Bullish signal given by any indicator, we add 1, for a neutral we add 0 and for a bearish we add -1.

3) We find the final value of the count. The max it can be is 5 and minimum it can be is -5.

4) We then set up a rule that if count >2, we enter long. If count < -2, we go short. We stay out/close our position if -2 =< count <=2.

Some rule for stoploss need to be put.

What is immediately required is from experienced members is 5 indicators that can be put. I am able to come up with 2 :

1) MA
2) Stoch (courtesy pride).

I am planning to have a 5 min time frame.

Looking towards some good replies.

Go for the most widely followed.

MACD
RSI

Other inputs welcome.

Indicator 1 (1st cut rough draft,subject to modification)

Time Frame : 5 min

5 period EMA > 13 Period EMA + 5 => count = count + 1 (bullish)

5 period EMA < 13 period EMA -5 => count = count - 1 (bearish)

abs(5 period EMA - 13 period EMA) =< 10 => count = count + 0 (neutral)


Indicator 2 (1st cut rough draft,subject to modification)

Time Frame : 5 min

Stochastic settings(in amibroker) : %K = 8,3
%D = 8,3,4

(%K value > %D + 5 && %K value < 80) or (%K value < 20) => count = count +1 (bullish)

(%K value < %D - 5 && %K value > 20) or (%K value > 80) => count = count - 1 (bearish)

else

count = count + 0 ( neutral)

Can u pls give formula for RSI like when bullish, when neutral when bearish.

Here you are..

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:relative_strength_in

i would suggest that you remove the EMAs from this system.

stacking 5 indicators is more than enough...waiting for EMAs to crossover will make you miss out on nearly half of the up/downmove.