The trading on the financial market is taking new forms each year. The new theories, trading algorithms and methods of market analysis appear. All of them contribute to the successful trading. However, some of the principles and systems, which have been already used for a couple of decades also help to gain profit on the financial market. Today we are going to investigate such complex systems as “Turtle trading system” and “Elliott wave theory, which have become an integral part of the FIX API trading.
The turtle trading system
Turtle trading system is a strategy, which is based on the levels probation. This probation points the system to the new trend formation. The system doesn’t “catch” the turning points, but follows the trend.
The “turtles” use a limited amount of the technical indicators:
– Donchian channel with a 10-day period;
– Donchian channel with a 20-day period;
– Donchian channel with a 55-day period;
This is basically it! There are only 2 indicators with different periods that can be used in the fix api mt4 trading terminal.
The signals for entering the deal
The deals are opened as the donchian channels breakthrough. As a rule, there are two types of signals for opening the deal:
- The price pierces the 55-day channel;
- The price pierces the 20-day channel.
Exiting the deal
Exiting the deal, according to the “turtle” system, is committed when the junior channel gets broken through in the opposite direction of the senior. For instance, if you are opening a deal for breaking through 20-day channel then the existing position or a level of loss restriction would be an upper bound of a 10-day channel.
Elliott wave theory
This theory was developed back in the 1930s and it still has its followers today. The principles of this theory have expanded and developed through years, but we are going to focus on the fundamentals. We would investigate the usage of waves pattern on the Forex market via the FIX API Forex brokers.
According to the Elliot, the market is moving, following particular cycles, which can be depicted in a form of waves. The wave stands for a clearly distinguishable price movement. The market can be located in the two periods – ascending and descending. Besides that, Elliott divides the waves into impulse and correction ones.
- Impulse wave. These waves create the price trend movement, ascending or descending (waves 1, 3, 5, A, C);
- Correction waves. These waves typically move against the trend and have a shorter cycle (waves 2, 4, B).
It is worth mentioning, that the each wave is characterized by different criteria and features. The third wave, for instance, is the longest one and the most suitable for suitable for trading with the trend. The fourth wave, on the other hand, is considered to be the most complicated and confusing one and the most part of the traders lose money in it. If you are having hard times spotting the Elliot waves pattern on the picture, then it is most likely that instrument is moving in the 4th wave. It means you should better not trade at the moment.
So, the trader can identify the reference points of the market waves and adapt his trading signals according to them, looking at any graph. It is also possible to forecast the further direction of the instrument and make the appropriate changes. It is important to note, that the waves computation should be done considering the graph, where there are at least 140 price bars or Japanese candles.
Let’s look at the example:
The first Elliot waves of a downward period can be clearly seen on the graph below. According to the Elliot theory, an ABC wave zigzag should be expected after the full 5 – waves cycle. In the case of GBPSGD this zigzag has most likely already begun in a rising A wave. A search of trading signals for a purchase may take place, considering our forecast
These strategies allow not only to predict the price movement but also to grasp a logic of its market behavior. Each of the complex trading systems can be easily applied by both a FIX API trader and a trading robot.