The “Global Pico Trend Trades” strategy is another algorithmic trading system under the Global Algorithmic Trading Software (GATS) framework, designed by Dr. Glen Brown. However, unlike the “Global Nano Trend Trades” strategy, “Global Pico Trend Trades” uses longer time frames and risks a higher percentage per trade. This makes it a bit slower but potentially more profitable per trade, thanks to the wider market fluctuations it aims to exploit.
The “Global Pico Trend Trades” strategy uses the 5-minute (M5) time frame as the trading time frame, with the 30-minute (M30) serving as the upper/top confirmation. This strategy focuses on slightly longer-term trends compared to the “Global Nano Trend Trades”, enabling it to ride more substantial market moves while also providing more breathing room for trades.
As with its sibling strategy, “Global Pico Trend Trades” also makes use of a multitude of technical indicators to generate entry and exit signals. These include the color-coded EMA Zones, Heiken Ashi Smoothed candles, Dynamic Adaptive Average True Range (ATR) Trailing Stop, I-Trend, ADX (Average Directional Index), and the GMACD (Global Moving Average Convergence Divergence).
The risk management aspect is another important component of the “Global Pico Trend Trades” strategy. It risks a Default Percentage of 0.02% to 2% per trade, doubling the risk compared to the “Global Nano Trend Trades”. However, it maintains the Adaptive ATR Trailing Stop at 3 times the M30 Average True Range (ATR) using period 14, and the Reward-to-Risk Ratio remains at 3:1, targeting a profit three times the risk per trade.
The “Global Pico Trend Trades” strategy is perfect for traders who are comfortable taking on slightly more risk per trade for potentially greater returns. It requires a moderate level of attention compared to the “Global Nano Trend Trades”, making it suitable for traders who can’t monitor the markets every minute but still wish to be actively involved in day trading.
To recap, here are the signal parameters for both Buy and Sell orders:
Global Buy Signal Parameters:
- Color-coded EMA Zones indicate a Bullish Market Structure.
- Global HAS (Heiken Ashi Smoothed) candles are Blue.
- Dynamic Adaptive ATR (Average True Range) Trailing Stop (DAATS) is situated below the candles.
- Global Time Bars for M5, M15, and M30 are BLUE.
- Global I-Trend’s Green Line is above the Red Line.
- Global ADX (Average Directional Index) surpasses 20.
- GMACD (Global Moving Average Convergence Divergence) Signal, Main Trend, and Major Trend Indicator reflect an Upward Trend.
Global Sell Signal Parameters:
- Color-coded EMA Zones indicate a Bearish Market Structure.
- Global HAS (Heiken Ashi Smoothed) candles are Red.
- Dynamic Adaptive ATR (Average True Range) Trailing Stop (DAATS) is situated above the candles.
- Global Time Bars for M5, M15, and M30 are Red.
- Global I-Trend’s Green Line is below the Red Line.
- Global ADX (Average Directional Index) surpasses 20.
- GMACD (Global Moving Average Convergence Divergence) Signal, Main Trend, and Major Trend Indicator reflect a Down Trend.
Upon satisfying these conditions, GATS places a trade with a Default Percentage Risk Per Trade of 0.02% to 2% and an Adaptive ATR Trailing Stop set at 3 times the M300 Average True Range (ATR) using period 14. The Global Profit Target is set with a Reward-to-Risk Ratio of 3:1.
The EMA Zones and GMACD Settings remain the same as the “Global Nano Trend Trades”. These parameters create a robust and comprehensive framework for trading using the “Global Pico Trend Trades” strategy, providing a systematic approach to exploit more significant market movements. However, as always, these settings should be periodically reviewed and adjusted according to the changing market conditions and the trading system’s performance.
EMA Zones: Color-coded and divided as follows:
Momentum Zone (Lime Green EMAs: EMA 1 to EMA 8)
Acceleration Zone (Medium Sea Green EMAs: EMA 9 to EMA 15)
Transition Zone (Pale Green EMAs: EMA 16 to EMA 25)
Value Zone (Light Gray EMAs: EMA 26 to EMA 50)
Correction Zone (Light Coral EMAs: EMA 51 to EMA 89)
Trend Reassessment Zone (Salmon EMAs: EMA 90 to EMA 140)
Long-term Trend Zone (Brick Red EMAs: EMA 141 to EMA 200)
Default GMACD Settings: Fast Length (4), Slow Length (6), Signal Length (4)
Here are some points that stand out:
Timeframes
Utilizing a 5-minute (M5) chart for the base timeframe and a 30-minute (M30) chart for confirmation allows traders to better capitalize on trends without being too exposed to market noise. It also provides a better perspective for traders who can’t monitor the markets constantly, offering a sort of ‘best-of-both-worlds’ approach between intraday trading and swing trading.
Indicators
The indicators chosen are diverse, offering a multifaceted view of market conditions:
- Color-coded EMA Zones: These serve to filter the market context and understand its current condition, ranging from momentum to long-term trend zones.
- Heiken Ashi Smoothed: This helps visualize market direction without much noise.
- Dynamic Adaptive ATR Trailing Stop: A dynamic risk management tool that adjusts itself based on market volatility.
- I-Trend: A useful trend-following indicator.
- ADX: Good for measuring the strength of the current trend.
- GMACD: A custom twist on the traditional MACD, likely providing a more nuanced perspective on momentum and trend reversals.
Risk Management
The 0.02% to 2% risk per trade is significantly higher than the ‘Global Nano Trend Trades’ system but is justified by the longer timeframe and higher profit potential per trade. The 3:1 Reward-to-Risk ratio is also commendable, offering a balanced approach to risk management.
Signal Parameters
The Buy and Sell parameters are logically and comprehensively defined, with multiple confirmations needed for a single trade signal, thus offering a robust filtering mechanism.
Considerations and Possible Questions:
- Backtesting: How well does the strategy perform in backtests across different market conditions?
- Overfitting: With many parameters and indicators, is there a risk of overfitting to past data?
- Drawdowns: How does the strategy handle drawdowns, and is there a maximum drawdown limit after which the strategy stops trading?
- Market Types: Is the strategy universally applicable, or does it work better in specific types of markets (e.g., trending vs. sideways)?
- Human Oversight: How much human intervention is required? For instance, are there any market conditions under which the algorithm could falter, requiring human intervention?
- Adjustment: How frequently do the parameters of the strategy need to be reviewed and possibly adjusted?
Overall, the Global Pico Trend Trades strategy appears to be an intricate and thorough approach to trading, particularly suitable for traders who are looking for a more aggressive, yet structured, approach to capturing market trends.
About the Author: Dr. Glen Brown
Dr. Glen Brown is an industry veteran in finance and accounting with an illustrious career spanning over 25 years. With a Ph.D. in Investments and Finance, Dr. Brown is the President & CEO of Global Accountancy Institute, Inc. and Global Financial Engineering, Inc. These organizations are specialized in integrating the fields of accountancy, finance, investments, trading, and technology, functioning as a global multi-asset class professional proprietary trading firm. Importantly, these firms do not offer services to the general public nor do they accept external funds or clients.
Besides his role as an executive, Dr. Brown wears multiple professional hats: Chief Financial Engineer, Head of Trading & Investments, Chief Data Scientist, and Senior Lecturer, marrying practical application with academic rigor. Guided by his unique philosophy — “We must consume ourselves in order to transform ourselves for our rebirth” — Dr. Brown remains committed to innovation, personal growth, and excellence in both financial practice and academic endeavors.
Disclaimer for Global Pico Trend Trades Strategy
The Global Pico Trend Trades strategy is a proprietary trading system developed by Dr. Glen Brown under the umbrella of Global Algorithmic Trading Software (GATS). This strategy is exclusively intended for internal use within Global Accountancy Institute, Inc. and Global Financial Engineering, Inc. It is not designed for, nor is it offered to, the general public.
The strategy and all related material are for informational and educational purposes only and do not constitute investment advice. Financial markets involve significant risks, and past performance of this strategy does not guarantee future results. Neither Dr. Glen Brown, Global Accountancy Institute, Inc., nor Global Financial Engineering, Inc. shall be held liable for any losses or damages incurred through the application of this trading strategy. Users of this strategy are expected to conduct their own due diligence and consult with qualified financial professionals for individual advice.