Dave Fox is the President and founder of Dollar Trader for Currencies, he is currently registered as a Commodity Trading Advisor (CTA) with the Commodity Futures Trading Commission (CFTC). In 1952 Dave graduated from the University of Maine with a B.A. in business administration. After graduating Dave served in the U.S. Army from 1952-1954. Between 1970-1980 Mr. Fox was President of Fox & Ginn Freight Lines, he was also the trustee of Bangor Savings Bank from 1972-1983. Dave’s trading experience spans well over 2 decades.
The parabolic indicator has been modified as follows: The SAR(Pivot Point) must not be moved within today's range nor the range of the previous 6 days. Therefore, when the Pivot Point is hit it will be on an 8-day HIGH/LOW. The Pivot Point for the next trading day is shown on the chart, as well as the 3-day wait. After a HIGH, if either of the succeeding 2 days includes a new 8-day HIGH, then the point to BUY will be one tick above the 3-day HIGH. If the BUY STOP is elected, the IPS(initial protective stop) for the position will be one tick below the PREVIOUS LOW of the preceding downswing. When the 20-DAY LOW is closer to the market, then the exit STOP is moved up to it.
A 20-day Average Modified Moving Average (AMMA) is employed as a filter. This was defined by Maxwell in "Commodity Futures Trading with Moving Averages." Yesterday's AMMA is multiplied by 19, then today's close is added and the sum divided by 20. If the AMMA points in a direction opposite from the indicated trade then an instruction to GO FLAT will result. Subsequently, if the AMMA turns UP for two days in a row a signal to GO LONG will be displayed. This can only happen if the contract has made and then breaks a 20-day HIGH. After 7 days from the Pivot Point crossing, the AMMA must have pointed in the direction of the trade for 2 consecutive days in order to create a signal. If one is holding a SHORT position, then the appropriate order would be to BUY 2 contracts at the STOP price indicated.
If a SHORT position goes FLAT it may turn back in the same direction. Following a 20-day HIGH, two bars must be put in without a new 20-day HIGH. Secondly, there must be a CLOSE lower than the LOW of the HIGH bar. On that day the AMMA must have turned back DOWN. The instruction will be to go SHORT one tick below the lowest LOW since the 20-day HIGH. If a new 20-day HIGH is struck, the instruction is cancelled, but the sequence can start over again. If the contract hits the Pivot Point going down and no trade has taken place, if the AMMA points DOWN on that day, then the instruction will be to go SHORT on a new LOW. If this does not happen on the next trading day, the instruction is cancelled, and the 3-day wait ensues.
If a LONG position is taken from a SHORT position and the market retraces down to the Pivot Point coming up from below, if the AMMA has turned down on that day, the instruction will be to reverse and go back SHORT. If this does not happen on the next trading day, the instruction is cancelled, and the 3-day wait ensues. If the contract turns back up, this does not apply to subsequent retracements.
The same rules apply in each direction, LONG or SHORT.
Our discipline is not to change direction in the Swiss franc unless a similar signal is shown at that time for the Euro currency or the Euro is already in that position.
The February 2007 issue of Futures Magazine displayed the Top 10 Trading Systems, which were research by George Pruitt of Futures Truth. PFG cannot verify the performance of the programs listed. The risk of loss in trading futures, options, cash currencies and other leveraged transaction products can be substantial. Therefore only "risk capital" should be used. Futures, options, cash currencies and other leveraged transaction products are not suitable investments for everyone. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result clients may lose more than the amount originally invested and may also have to pay more later. Consider your financial condition before deciding to invest or trade.