Iam a trend lover so far and most of my strategies published here are mostly related to trend following system. However to focus on diversify my portfolio with different type of trading systems to control my risk further i was in search of explorining mean reversion trading system.
Here is a volatility based long only reversal trading system inspired from Sylvain Vervoort’s Volatilty Band. Sylvian generally built volatilty for swing trading however here we built a system on top of his volatility band and made it as a long only reversal trading system.
1)First candle close below the Lower Band of the volatility Band
2)Second candle close above the lower band
3)Third Candle closes above previous candle
1)One can have a static stops initially followed by an trailing stop based on the risk the people are willing to take
2)One can exit with human based decisions or predefined target exits. Choice of deciding the stop loss and profit targets are left to the readers.
Which Market Once Can Practice?
One Can Practice in Equities and derivaties stock markets/indices, However it is not advisable to follow in forex or commodities market
Which timeframe i can practice?
You can practice across different timeframes. Pure Intraday Traders can stick to 5min, 10min or 15min. Positional Traders can stick to hourly or 4 hourly and short term Investors can stick to Daily Charts.
Bank Nifty Hourly