In this article, we will take a closer look at the “travel trade profit formula”. Despite the word “Travel” in the name, the strategy does not involve trading while traveling. On the contrary, a person hardly has time to look in the commercial terminal during the trip.
The author of the strategy offers to trade currency pairs such as EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY, USD/CHF and USD/CAD on any time frame of М1 to MN, although I personally see no obstacles to using it with any other instrument not only in Forex, but also in stock and futures markets. Apparently, the author only trades major currency pairs, so he decided not to recommend any other financial instruments.
The Strategy Office “Travel Trading Profit Formula”
The Strategy Office:
- The Parabolic SAR indicator with: acceleration factor (AF) = 0.02, maximum acceleration (MA) 0.2
- The moving average indicator with: period=20, lag=0, МА method=Simple, apply to=Close
- The MACD indicator with: fast ЕМА = 12, slow ЕМА = 26, MACD SMA = 9, apply to = Close
- The Force Index indicator with: period = 13, МА method = Simple, apply to = Close
A buy signal under the “Travel Trading Profit Formula” strategy
The following conditions must be met for a buy signal to appear on the chart:
- According to the strategy, the Parabolic SAR indicator should be below the price chart
- The moving average indicator should also be below the price chart, pointing up
- MACD indicator signal line should be below 0, outside the histogram area
- The Force Index indicator should move up
- The candlestick, where all these conditions are met, must be fully formed. Only after that one could open a long position
An example of a buy signal under the “Travel Trading Profit Formula” strategy
The strategy’s author places special emphasis on the fact that all five conditions must be met before a trader opens a long position.
A sell signal under the “Travel Trading Profit Formula” strategy
The following conditions must be met for a sell signal to appear on the chart:
- The Parabolic SAR indicator should be above the price chart
- The moving average indicator should also be above the price chart, pointing down
- According to the strategy, the signal line of the MACD indicator must be above 0, outside the histogram area
- The Force Index indicator should move down
- The candlestick, where all these conditions are met, must be fully formed. Only after that one could open a short position
An example of a sell signal under the “Travel Trading Profit Formula” strategy
A signal appeared during the first hour of the trading week. Although it appeared on a bullish candlestick instead of a bearish candlestick, one could make a lot of money.
Stop Loss and Take Profit in the “Travel Trading Profit Formula” strategy
The strategy author recommends placing the Stop Loss order 15-20 points (150-200 5-digit or 3-digit pips for USDJPY) from the entry point, but I strongly disagree with that him, because this advice is a little disconnected from reality.
Of course, this method can work for tiny timeframes, but when it comes to longer timeframes, the recommendation can ruin the whole trading process. I believe that the Stop Loss order should be placed in the safe, proven and, most importantly, reasonable method: below the previous local low when selling and above the previous local high when buying. And don’t forget the spread when opening short positions.
The trading strategy does not require a trader to hold a position. However, I think it won’t get much worse if you use new local extrema to mitigate risk and protect profit. However, each trader must test for himself whether it is effective for him.
At the same time, the strategy does not involve Take Profit orders. However, if you test it out and find that trading could be more efficient with Take Profit orders, I see no reason why you shouldn’t add them to the strategy.
A trader can close an open position under this trading system if the moving average has risen after the sell or fallen after the buy. However, only if the “Parabolic SAR” indicator and the signal line of the “MACD” indicator are respectively above the chart and 0 when selling, and below the chart and 0 when buying.
However, a signal to close a position has the following peculiarity: if you close a position under these conditions, when trading with this strategy, you will not be able to profit from any major trend movements. So if a position is already “in the dark” and there is a close signal, I would recommend moving the Stop Loss order below the previous local low and above the previous local high in the case of buying and selling respectively.
If the last extremum is in the extremum group, use the lowest extremum of all local lows and the highest extremum of all local highs to place a protective stop order. And if a position is “in the red” after a possible activation of a relocated Stop Loss order, it would be wise to just close it. It would be better to have a missed opportunity instead of losing money.
Money management according to the “Travel Trading Profit Formula” strategy
If you are trading with a specific lot size, the difference in risks in each position can have a significant influence on trading results, regardless of the percentage of successful orders or with what ratio a trader has successfully entered positions. profitable.
Therefore, I would recommend a specific lot size for each order, which would imply the risk as the same percentage of the current deposit for each order. At first, you absolutely must not exceed 1% of the deposit. Later you can increase it, but no more than 2%. However, if you plan to risk more, spend more time learning and testing the strategy so that you can increase the risk percentage for each position, but no more than once a month.
By the way, although the total number of conditions for entering the market is rather small, I would advise you to write them down and keep them handy. Since the strategy forces you to act quickly when a signal appears, you risk missing one of the conditions in a hurry and this can lead to unsystematic entries which will negatively influence trading results.
It often happens that you forget some requirements for a trading signal. To avoid this, use stickers with all entry requirements and requirements for each model somewhere on your table or desk where you can see them regularly.
An example of trading under the “Travel Trading Profit Formula” strategy
It should immediately be noted that such successful and “smooth” orders do not often occur in this strategy. The longer the delay, the less they occur. However, this does not mean that a trader should switch from timeframes they have become accustomed to to shorter timeframes. It is better to stick to a comfortable period and increase the risk a little than the other way around. I personally came to this conclusion, but you don’t have to take what she says.
By RoboForex Analytical Department