Free Automatic Trading System!

By: Kelly Price

I have been a trader for over 25 years and for most of this period I have used the free automatic trading software system I will describe here, as part of my forex trading strategy and it's been highly profitable. Here I will share it with you.

The system was originally thought up by trading legend Richard Donchian and many great traders have used it and held it in high regard.

While it is simple (one rule) its extremely powerful.

You don't need a computer to use it you can work it out on paper! You can also customize it to fit your risk reward parameters.

By the end of this article you will know the rule it is based on and can test it and you will know exactly why it does work and will continue to work, so here is the rule of the system, called Richard Donchian's 4 week rule:

When the price is at its highest in a four week period, buy long and cover short positions if the price falls below the lows of a four week period, sell short and liquidate long positions.

That's it! - Very simple but that makes it extremely robust and a great trend following system.

Don't think because its simple it doesn't work - it does but it does of course suffer drawdown when the markets are not trending so, you need to have an adequate spread of contracts to trade it or adjust the exit rule.

As a trend following system its not meant to catch tops or bottoms and is not to fussy about market timing - but it does work long term. So how do you cope with drawdown when markets are not trending?

You can try shortening the time period to a more sensitive 1 or 2 weeks for liquidation purposes and then re-enter on the 4 week rule.

You can of course exit on a lagging moving average and you can back test any between 20 and 10days. Many traders I know like to use RSI, ADX and other filters, the choice is yours.

The basics of the system are obvious and it's really the exit levels that need some work if you don't want large drawdowns.

Consider this fact:

Currency markets tend to trend well longer term and this system will always keep you in the strong trends - its objective to, so you don't need to make subjective judgments and will take you around 15 - 30 minutes a day to trade and that's it.

Of course this system doesn't trade a lot and requires a lot of discipline to follow but it works.

Today this system with one rule and its brutally objective approach, won't appeal to most traders - they want to apply science and love systems that have the chaos theory or artificial intelligence in them but this system will beat most of these trendy hands down because it's so robust.

Complicated strategies don't work as they have too many elements to break.

Donchian left a great system that anyone can understand, use and make money with. Before you think about buying a system, try this one and add your own money management if you wish and you will see it's a great tool for forex profits.

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