Double 14 EMA and Parabolic SAR

Spread betting system Double 14 EMA and Parabolic SAR

This system is quiet simple to follow. You have three spreadbetting indicators setup on your charts:

EMA 14 on the high
EMA 14 on the low
Parbolic SAR

Spread betting system

Spreadbet Long when the prices break above the EMA 14 high and close above. The Parabolic SAR must be below the prices and vice versa: Spreadbet short when the prices break to the downside below the EMA 14 low and the Parabolic SAR is above the price. For those

Time Frame to use: You can try this system on various time frames, as long as when you apply your stoploss you know what 1 Average Unit of trading is. Example, I have applied this system to the DAX 1 HR chart, and the average movement of the germany30 is 30 points.

Risk/Stoploss: My stop loss that I apply is around 40 points and I look for a target of 40 – 60 points, depending on how strong the news is in the market

Important is that you apply rigidly your money management rules as like many moving average cross systems this works wonders in a trending moving market or a market that has a lot of news. Try to avoid trading during big news announcements as there will be a lot of whipsaw volatility in the markets

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Type:Trend preferably /reversal
Timeframe of trade: Swing

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see the Spread betting example below see

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This spread betting system of the Double 14 EMA and Parabolic SAR can be applied to any instrument (FTSE, DJI, S&P, Forex: EurUsd, GBP, JPY, AUD, CAD, CHF, Commodities: Oil, Gold, Shares )as long as you apply good money management rules and it is a market that has movement.

Back to simple spread betting system

Alligator Scalping system

Alligator Scalping Strategy

Time frame: 5 Min

Tag: GBPUSD

Indicators used / Settings:

Exponential moving averages

Yellow:	Pink:
Ema 3 Ema 5 Ema 7 Ema 9 Ema 11 Ema 13	Ema 21 Ema 24 Ema 27 Ema 30 Ema 33 Ema 36

Ema 55 Color Red

Possible other spread betting charts:

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Spread Betting Example

Entry Rules:

When the yellow bands cross the pink bands this is your entry signal. I will present this strategy in two ways, for those that are risk averse and for those that don’t mind risk.

Spread-betting long:

Trade Long when the yellow bands cross the pink bands to the upside. The cross over of the bands should occur above the 55 EMA line.
Risk averse: The above strategy could lead to some false entries as you can see in the second diagram. For those spread betters that are risk averse, trade the rebound: After prices have broken to the upside, wait for the retracement, that is prices to come back down into the pink bands then trade long.

Spread-betting short:

Spread betting short is the opposite. Trade short when the yellow bands cross the pink bands to the downside. The cross over of the bands should occur below the 55 EMA line. for those risk averse

Exit Rules:

This is a scalping strategy, therefore keep to your money management rules.
on GBPUSD: use a target of 5-10 points and a stop loss of about 15 points. These targets could change according to what you are trading, You should determine your money management rules.

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*best time for this strategy is on the European open or after a move has started.

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Here is a spread betting example of the Alligator Scalping system strategy on GBP USD

Arrows indicate entries. the risk averse spread betters would only scalp the yellow arrows.

Here is an example of the disadvantage of this system. you might get false break outs. A risk averse trader will avoid these false breakouts, as he trades only the retracements (indicated above by the yellow arrows).

Below the spread betting example shows various entries. and the red arrow is the trader being stopped out.

Back to Spread betting scalping strategies

ADX and Bollinger Band

ADX and Bollinger Band spread betting strategy

Time frame: 5 Min

Indicators used / Settings:

ADX Directional Index (14)

Bollinger Bands (20, 2)

Charts used: FTSE 100

Possible other spread betting charts:GBP

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Entry Rules:

When the ADX is above 25, this indicator tells you that a trend is underway. The whole point of this scalping the FTSE strategy, is to find moments when there is no trend and the FTSE 100 is trading sideways or is consolidating after a move. The whole purpose of this is to be patient. Once the FTSE 100 is consolidating you apply a mean reverting spread betting strategy.

Spread-betting long:

When the ADX is below 25, as the UK100 has stalled after a strong trend, or there is no news and the FTSE is trading sideways. Wait for the prices to drop and touch the lower band. As you see the prices reversing going back up towards the middle 20 moving average line, spread bet long.

You don’t want the price to break the band and close below the band. If the current candle closes below the lower band wait for the first candle to close back above the lower band. Then trade long.

Spread-betting short:

Again the ADX is below 25 and the FTSE is trading sideways. Wait for the prices to move up towards the upper band. As you see the prices reversing going back down towards the middle 20 moving average line, spread bet short.

Ideally you want the prices to touch the bands and move lower / higher. If the prices close above the bands wait for the next bar to close inside the bands.

Strategy does require patience.

Exit Rules:

This is a scalping strategy. Use 5 – 10 point profit and 10 – 15 point stop loss.

stop loss: 15

target: 5-10

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Here is a spread betting example of this ADX and Bollinger Band strategy applied to the FTSE100

In the spread betting example below of the uk100. Prices did bounce off the lower Bollinger band, but failed to move higher. Be careful when prices do not follow through past the middle SMA heading towards the top band. , could indicate a change in trend.

This spread betting strategy can also be applied on :

FTSE, DJI, GBP, Oil

Back to spread betting scalping strategies

Mean Reverting

Mean Reverting

Mean Reverting refers to theories that say price will normally return back to their mean or average. In Statistics, the mean or average is the average price over the last n days (Days you have chosen as average).

A mean reverting strategy is widely used when spread betting with the Bollinger Bands. Here is a spread betting example of a mean reverting strategy.

Fibonacci Arcs

In the spread betting example below you can see how the Fibonacci levels are used in a form of Fibonacci Arcs. As you can see the Arcs are the projection of the Fibonacci levels: 38.2% 50% and 61.8%

In the spread betting strategy below the 38.2% retracement and the 61.8% retracement proved to be strong support and resistance areas in King fisher.

The Fibonacci Arcs are applied in the same way the Fibonacci retracements are applied. Draw the line from the highest to the lowest point then the projections will show the retracement points. These arcs can be applied also to spread betting stocks, Indices, commodities and bonds.

Spread betting example of the Fibonacci Arcs applied to King fisher stock

Next Fibonacci Fans

Fibonacci

Fibonacci Retracements are ratios used to identify potential reversal levels. Trader’s use these to predict where support or resistance levels are. The most popular Fibonacci Retracements are 61.8% and 38.2%.

Fibonacci numbers were identified by Leonardo Fibonacci, represent ratios that naturally occurred in Nature. Fibonacci numbers are simply a series of numbers that when you add the previous two numbers you come up with the next number in the sequence. Here is an example: 1, 2, 3, 5, 8, 13, 21, 34, 55

1 + 2 = 3; 2 + 3 = 5;

The main ratio also known as the Golden Ratio or PHI is 1.618 or the inverse 0.618. (calculated: number divided by the previous number approximates 1.618 55/34 = 1.618 or the other way round 34/55 = 0.618). Fibonacci numbers occur in nature and in the various markets as Forex, Stocks, Indices and commodities. There are many tools that incorporate the Fibonacci levels:

Fibonacci Retracements
Fibonacci Arcs
Fibonacci Fans
Fibonacci Time Extensions

Fibonacci Retracements

The Fibonacci retracement tool is the most popular tool used applying the Fibonacci levels. To use the tool, just place the high and low on the highest point and the lowest point of the move, with the 0 at the extreme point of the move. The Fibonacci retracement tool will then project the retracement levels, as you can see in the spread betting example above.

In the graph above of the Spread betting index FTSE 100, you can see various levels projected which have become resistance while the FTSE was retracing it’s downward movement. Here is a spread betting strategy where the resistance areas where the FTSE Index stalled and retraced and presented itself as good trading opportunities are: 23.6% to 38.2% to a strong 50% then to 61.8%.

Once one resistance broke, this level then becomes support. Note in the spread betting example how 23.6% was initially resistance then became support, the same with the 50% level which became support and 61.8% resistance.

Next: Fibonacci Arcs

Bollinger Bands breakout strategy (the squeeze)

Now we will show you completely the opposite of what we showed you earlier. This is a Bollinger band breakout strategy. This spread betting strategy works especially when prices have been trading in a range and there has been no decision on direction. Then suddenly they move either lower or higher and break out of the range.

The Squeeze: This strategy is also known as the squeeze, as prices will start trading in a range before the breakout, the Bollinger upper band and lower band will squeeze

Look at the spread betting example of Xstrata (XTA.L) below:

Bollinger Band Break out – LONG

Traders trade the prices long when prices have gone into a rage or consolidation, the bands squeeze and prices break to the upside closing above the bands.

Bollinger Band Break out – SHORT

on the other hand a short occurs when prices break out of the squeeze to the downside closing below the bands. In this case, as we can see the spread betting example above, Xstrata broke it’s range to the downside, the prices closed below the band and the prices continued lower.

How to control your risk. This depends on your risk tolerance. Some traders, with a higher risk tolerance put their stop above the range, others with a lower risk tolerance would put their stop loss just above the middle of the band

Measuring the strength of a trend

This same method can be used to measure the strength of a trend. Once the break out occurs and prices remain in the top half or bottom half of the Bollinger Band. Not crossing the middle line, this indicates that the strength of the trend is strong and it likely to continue.

Previous: Bollinger Bands Mean reversion

Bollinger Bands mean reversion strategy

As we stated in our previous page the Bollinger Band is created by two bands around the 20 moving average centre line, and these two bands are the 2 standard deviation. In statistics, the 2 standard deviation contains 95.4% of the price movement. Normally, the price will move away from the centre line towards the extremes and then snap back to the middle (The mean) like an elastic band. This snapping back is a “mean reverting strategy”. So when to spread bet long or short?

Mean reverting Spread Betting strategy

Long:

When the prices move down towards the lower band, this is when spread traders will either go long to open a new position or buy to close out their short position.

Short:

When the prices move up towards the upper band, this is when spread betters will either go short to open a new position or sell to close out their long position.

Below is a spread betting example of Xstrata (XTA.l) and how to trade the bands:

The bands can be traded in many ways, above I have showed you a spread betting strategy, on the next page I will show you something completely opposite. When trading this mean reverting spread betting strategy, aggressive traders would enter as soon as the prices touch the bands, instead less aggressive spread traders would wait for the prices to turn around look for a candle that closes in the direction they want to trade, then take the trade.

For example, (in a long trade) when prices are falling a less aggressive trader would look for the prices to touch the lower band and the next candle to finish up not down, above the band. Then the trader would enter the trade long, following a long spread betting strategy.

Closing your trade. Some spread traders will close the trade when it reaches the mean (middle line – 20 MA) others will wait for the prices to reach the above band. This all depends on your risk tolerance

Next, as we said we will show you the complete opposite.

Next: Bollinger Bands breakout strategy

Previous: The Bollinger bands

Parabolic SAR Stop loss

As we mentioned earlier the Parabolic SAR Technical Indicator can function as an area where to place your stoploss, this is both to protect your wins while the trend increases or to minimize your loss when the trend goes against you.

The Effectiveness of the Parabolic SAR as a stop loss tool:

1) Initial stop loss

As the market turns around the Parabolic SAR indicates where to place your initial stop loss above or below the stock, indices, commodities trading price. This is placed according to your spread betting strategy, as in the spread betting example above.

2) Trailing stop loss

As the stock, indices, commodities trading price moves higher so does the Parabolic SAR, as it is an adaptive indicator that follows the price trend. It has an Acceleration Factor of 0.02, that is, as prices move higher so does the Parabolic SAR. This giving new levels where to put your stop loss.

3) Protective Stop and Time stop

as the prices move against you, you have protected your profits.

We said the Parabolic SAR indicator is also a Time stop, as time goes by and the prices move higher until they stop behaving as they should, the Parabolic SAR moves closer and closer until it changes direction, letting you out of the trade. thus time is a big factor too in the Parabolic SAR indicator.

This is good spread betting tool to add to your spread trading bag of indicators.