Our today’s review of indicator strategies will be devoted to a trading strategy that we found on a popular English-language site. Meet “KAS 37 Trading Sуstem”, or in abbreviated form – “KAS 37 TS”. Its peculiarity is the fact that it was specially designed for trading on the M5 timeframe with the GBP / JPY currency instrument.
In this review, we learn:
- On the structure of the TS “KAS 37 Trading Sуstem”;
- About the signals of its instruments and the rules of trading on it;
- Test results of this trading system;
- Its usefulness for the trader.
So, let’s get down to familiarizing ourselves with it and start with the most important thing – by examining the tools on which the system is based. Next, we will study the signals on which the algorithm of the strategy is built.
Tools of the TS “KAS 37 Trading Sуstem”
This strategy includes 4 indicators that are included in the standard package of instruments of any trading terminal:
- Bollinger Bands trend indicator does not require additional settings, it is used with standard settings.
- Trend indicator “Moving Average” or “Moving Average”. According to this strategy, this instrument is placed on the price chart twice, but with different settings in the values of the period:
- The first moving average is characterized by a period value of “3”; it is represented by a red curve on the chart.
- The second moving average is set with a period value of “7”, the curve is colored blue on the chart.
The next 2 tools are located in their own windows, located in the basement area of the MT4 operating window.
3. The “Relative Strength Index” or “RSI” oscillator indicator is also set twice in the same window. We get two of its curves with different values of the period:
- The first curve “RSI” – the value of the period is “3” – red;
- The second curve “RSI” – the value of the period is “7” – blue color.
4. Oscillatory indicator “Stochastic Oscillator” with the following settings:
- “Period% K” – 7;
- “Period% D” – 3;
- “Slowdown” – 3;
- “Prices” – Low / High;
- “MA method” – Simple.
You can also use the ready-made template of tools located under the video with an overview of this strategy, a link to which I will give you later.
Let’s continue our study of the KAS 37 Trading System trading strategy and consider the signals of its indicators for entering the market with buying and selling.
Let me remind you that according to this trading system we choose TF M5 and trade on the GBP / JPY currency pair.
Buy entry signals
The buy entry algorithm includes the implementation of several conditions that must be met on the chart:
- The price is in the space between the middle and lower lines of the Bollinger Bands trend indicator.
- Curves of the Stochastic oscillator lie below the 20 level, then leave it, crossing and moving up.
- Both curves of the “RSI” oscillator are below the “30” level. At the same time, the fast red curve of this indicator crosses the slow – blue, “RSI” curve in the direction from bottom to top.
- Pay attention to 2 moving averages on the price chart. Here, too, the red “Moving Average” curve, as the faster one, crosses the slower blue “Moving Average” curve. At the point of their intersection, we enter the market with a buy, if all the conditions above are met.
According to the rules of the KAS 37 TS strategy:
- We set Take Profit equal to 30 points.
- Stop Loss is also set at 30 points.
Thus, the ratio of Take Profit to Stop Loss is 1: 1.
In addition, as soon as the price passes 20 points in the direction of the open position, the transaction should be transferred to breakeven. Thus, she will be out of the risk zone.
Signals to enter with sell
The algorithm for entering with a sale is similar to the entry for buying, but inversely proportional to it in terms of trading signals:
- The price lies between the middle and upper Bollinger Bands.
- Curves “Stochastic” are located above the level “80” and leave it, moving in the direction from top to bottom.
- Both “RSI” curves are above the “70” level, the red curve crosses the blue curve in a downward direction and both of them are going out of the “overbought” zone.
- The red “Moving Average” curve crosses the slow blue curve also from top to bottom – this is our sell point.
When the price passes 20 points towards the open position, we transfer the deal to breakeven, reducing the risk of a loss.
With regard to transactions, according to the terms of this strategy: if the price does not close by Take Profit within one hour, we close the transaction manually.
According to this strategy, we are working on TF M5. Considering that each candlestick is formed within 5 minutes, 12 such candles should be formed in an hour. After an hour on the 5-minute TF, at the close of the 12th candlestick, we forcefully close the open deal, if it has not been closed by Take Profit before.
Thus, we trade according to the rules of the “KAS 37 Trading Sуstem” strategy.