VIX - Ride the profits (VIX - Ride the profits) - MT4/MT5 resources

Hello fellow FF readers,

Before I start introducing the system, let me introduce myself. I am a trader from India but living in the Middle East and I have been trading for about 5 years with average success (since the age of 15). I became interested in the markets when I saw my father losing money and he kept telling me that trading was useless...it was a money making machine. Like any other 13-year-old, I said "No, Dad," and it wasn't that hard. I started researching day and night and started understanding all the basic trading terms, what the indicators stood for...etc. That took about a year and a half and demos started. There were no good demo accounts at the time, so I used to write down my trades in an Excel spreadsheet. Started live trading with a small capital of $500 and experienced 3 crashes before managing to recover within three years.

If you have any criticisms of this thread or the system, please keep them to yourself. If you find a problem with the system and have suggestions or solutions, then feel free to post.

Now let's start with the system I follow.

The first thing to do is to determine the direction of the trend. I have only traded gold over the years, so I will only talk about gold. Gold is clearly in a multi-year bull trend, and if you pick the right bottoms, you'll make money (if the trend continues). You can try using this indicator on various currency pairs, but I personally haven't tried it yet.

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Unless you're very lucky, it's almost impossible to find the bottom. Even if you catch the bottom through your own ingenuity, the hardest part is hanging on during the best times.

I'm using an indicator called SOHO_VIX which was coded by a poster in another forum, so all my credit goes to that person. The only thing I developed was a way to use it!

The indicator settings default to 22, but I set it to 1.

Here is the strategy:

When the gold market begins a sharp decline and closes near its lows or continues lower...and

1. VIX below -2.00
2.VIX fell sharply

Then you wait for the next day's close and look at the VIX. If the VIX has retraced much of its previous downtrend (in the indicator panel itself rather than in the price), then you enter a buy trade on the close and keep your stop below the previous candle's low (the candle where the VIX dropped significantly).

If you get stopped out… I will explain this in the next few articles. If you are not stopped out, then ride the uptrend of the trend and use indicators that show the strength of the trend.

In the image below you can see 2 Stop Loss levels of $10 each (100 pips). Stop losses total up to $20 (200) pips, which isn't too bad if you think about it. If you are a conservative trader or a short-term trader, then you can use 1:1 RR and you will not be stopped out as often. However, if you want to ride the main trend, then you need to be able to handle your stops.

The third trade was really the winner, it had a big stop loss but it caught the $200 (2000 pips) move depending on whether you closed the trade there or not.

This indicator works great for those who follow the motto "stop your losses and take profits".

There are many other aspects to this system that I will write about soon. Now that I am studying for CFA, time is an issue for me. So please forgive me if I can't reply to anyone.

Also, I haven't tried trading with this system yet, I would be happy if you guys could help me with my research on this. I looked at other TFs and once I explained the other aspects it worked just fine.

Have a great weekend everyone!