| In
A Nutshell
The
Cornflower trading system is a trend following system using 8, 16, and
24 hour averages.
It is named after the
color of the 24 hour moving average. The DailyFX
trading system (available only to those who are customers of FXCM) is
used to produce actionable trades, and the cornflower chart system is
used as a filter.
|
Construct
a template according to the following settings:
8 EMA (yellow, dotted)
12 EMA (violet)
24 EMA (cornflower blue, hence the name)
72 EMA (khaki)
Apply to Hourly chart (conservative)
only.
System principles
Cornflower is based on the principle
that trades should be taken when the same trend presents itself on
multiple timeframes. On an hourly chart, the 24 EMA obviously defines
the daily trend. The 8 EMA, which is one-third the length, shows the
intraday velocity of “fast” money. A 12 EMA shows
the trend of the last half-day. Its value is a place at which price
will typically find support when there is a dominant trend. To a lesser
extent, this also applies to the 24 EMA. A long-term trend will
sometimes catch a breather around this area, with big money
accumulating on the opportunity to buy or sell at a substantial
discount. Finally, the 72 EMA defines the dominant trend in the market.
This trend will reassert itself as cumulative memory persuades traders
to resume trading in its direction. If the three shorter-term averages
are above the 72 EMA, we are in an uptrend and should not go short. The
same applies in reverse for a downtrend.
Only the H1 and M30 charts should be
used with the Cornflower template. Shorter time periods will lead to
whipsaws, whereas longer time periods lag behind the market too much.
The following rules are valid no matter
the time of day. The quiet of the Asian session actually provides some
excellent opportunities for entry, which is a boon for the trader whose
day job makes watching the market during London or New York an
impossibility.
Now for entry, I
assume that you are a customer of FXCM. If not, you can download their
platform from
their website for a demo account, or else set
up an account with them.
Login to DailyFX and choose
system signals. When you arrive at the systems page, scroll down the
page and click on the "Breakout2" system. We are only interested in
those signals.
For each trade that has a green light
by it, bring up their chart on a grid that you have loaded the
Cornflower system lines on.
If the Cornflower system
does not agree with the system signal for DailyFX, do not take the
signal.
But, if the Cornflower does agree, then set
up your trade using the stops and limits of the DailyFX system.
This
will save you from many losing DailyFX trades and help you to steer
only toward the winning trades.
|
