Different systems for different market conditions

[VingTsunKuen]

Yo,yo,yo,gals and boys!

This is not mine idea but it have tickled mine mind.As we all know we can see different conditions of market.
So do you think that one should have system which follows the trend,one that works in range bounded market and eventually one for range breakout?
Basically i think that having systems(that are proven to work) which can cover few market scenarios can give you advantage over traders which are oriented on just one system/strategy and thus they are able to trade just the specific market condition for which they have oriented.Also this way we could play FX game more often,don¨t you think so?
As always comments,suggestions and all other kinds of participation are more than welcome!
Regards,
VingTsunKuen

 

[westernforce]

Ving
What you are trying to do is become proficient in all market conditions. Although not impossible, this scenario would be unlikely.

Have a look at some of the threads by Phil Newton, Trader Dante and Captain Currency, to name but a few. These guys concentrate on one type of market and try to get the most out of that. That in itself is hard enough.

Try and capture every move in the market and you will be a nervous wreck soon

 

[Hoggums]

The problem with this idea is that these market conditions only become apparent once they have been in full flow for a while. And generally speaking once they are easily identifyable they then tend to move onto the next market condition.

 

[VingTsunKuen]

Ving
Have a look at some of the threads by Phil Newton, Trader Dante and Captain Currency, to name but a few. These guys concentrate on one type of market and try to get the most out of that. That in itself is hard enough.
Try and capture every move in the market and you will be a nervous wreck soon

I know for Phil and Captain C. methods.I like them.I do not think that they trade just 3Ducks and Range breakout.
The point is not to capture every single move.That would be greedy and foolish.
If there is trend i would apply valid trend following system.But if market is range bounded,and it could be in range for quite some time,why i should not trade this range bound??
With right approach of course...System which follow trend is quite useless in range bounded market(specially if range is narrow)
And as they are only 3 specific directions in which market can go(up,down,sideways)it should not be so complicated to identify them and trade them with right approach.
Cheers!
VTK

 

[tomorton]

Hi Ving -

This is a good question that comes up (and should come up) right after anyone develops a system that works. My answer is both Yes and No.

Yes, you need a system that works better in different market conditions, but No, you don't have to have a radically different system.

For example, in an uptrend -
(I accept that, as Hoggums says, you won't know you're in an uptrend until much of it has already occurred)
I look for swing buy signals - that is, breach of the previous high after at least three days with lower highs and lower lows. But I also look for a range of earlier signals , for example, what I call a shuttle trade - a close lower than the previous close, but both closes being above the 14MA. Naturally, the shuttle buy signal always occurs earlier than the swing buy signal, which sometimes does not occur at all. The point is, I always look for both signals and always act on both signals.

Having accepted the signal to open a long position, I can size the position according to market conditions - at the moment, volatility is very high and significant news events are occurring frequently, so it could be a good idea to use a smaller position than normal to limit risk.

What I would never do is use radically different systems - such as position trading this month and scalping next month - or trading forex this month and equity options next - or TA this month and fundamentals next.

 

[VingTsunKuen]

What I would never do is use radically different systems - such as position trading this month and scalping next month - or trading forex this month and equity options next - or TA this month and fundamentals next.

Of course!That would be like dog chasing 10 rabbits without focusing on one rabbit.
It should focus on one and chase it until the end.
Greetings,
VTK

 

[VingTsunKuen]

The problem with this idea is that these market conditions only become apparent once they have been in full flow for a while. And generally speaking once they are easily identifyable they then tend to move onto the next market condition.

I turn on mine charts and i see that there is an up trend in xxx/zzz currency.So if i get long signal i will go long.Or may be i will stand aside.Simple as that.
Same for up and sideways.And as i am am day trader(wannabe:cheesyi need to catch rather small moves to accomplish weekly % goals.May be your statement is more correct for folks that are longer term traders.
Regards,
VTK