Maoxian Trading For Dummies

From the Chairman Maoxian website, more particularly one of his archive pages.

On that archive page, he lists quite a number of trades under the "Trading for Dummies, Q&A Series" banner. While he does not specify his trading rules explicitly, I'm pretty sure that the intention of providing all those examples was for you to look at the charts and work out his system.

Here's what I came up with:

• On 30-Minute chart.
• Unusually active (more volume than normal).
• Very volatile. Perhaps a gap.
• Wait for "pullback", which means lower high in uptrend, higher low in downtrend.
• "Uptrend" means prices above EMA. "Downtrend" means prices below EMA.
• Trade must be before lunch-time. The noon bar is the last bar to make calculations off. Otherwise finish for the day.
• Set entry at high of pullback bar (for long trades).
• Set initial stop-loss at low of pullback bar (for long trades).
• If next bar pulls back further, reset entry and initial stop-loss.
• Exit at the end of the day (or could keep half if you want).
• One trade per stock per day only (i.e. don't get back in if stopped out).

Please keep in mind that this system is meant for trading shares. Some adaptation is required to make it usable for trading currency. For example, currency does not have volume. Further, currency trading is 24/7, 5.5 days per week. The rule to stop trading at noon or at the end-of-day needs to be dropped or adapted.

There are also a couple of things which need to be changed into "purely objective trading systems" language. For example "unusually active", and "very volatile".
 

Unusually active

This applies to the volume. If the system is to trade in forex then just remove this rule. Here are a couple of possibilities for turning "unusually active" into something that a computer can use:

• Current bar's volume is more than a multiple of the average volume.
• Current bar's volume is the highest of the last 20 bars.
• Rising volume for 2 or 3 bars in a row.
• All of the above combined.

I think I'll go with the second option.
 

Very volatile

There's a special post about this. I'm going to use the "Two Bollinger Bands" method.

Here's what I came up with:
 

 
I kept the rules in order of the English description at the start of this post. In this case there is a one-to-one mapping. Except for the last specification - only 1 trade per day. There's no rule in ATM that handles this. But there are the "No Trading" settings. And amongst those there is the "Allow up to and including X long trade(s) in a row" option (also for short). Set these to 1. So one long trade will be allowed, one short trade will be allowed, and then this system will stop trading.