Legend24

The genuine trend following system from Creative Breakthrough, Inc. CTA

Trades all E markets as well as FX!

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Trending markets are characterized by a large sustained increase or decrease in price. A trending market can assert itself in any observable time frames: from tick bars to fifteen minute, to 60 minute and daily or weekly. All trending markets are characterized by sustained up or down moves with small, sharp and short-lived corrections – counter trend moves - along the way. Trending Systems are considered longer-term approaches to trading. Keep a sense of proportion here in that “longer term” is a relative term. Longer term for a Scalper may be holding for minutes while for a Day Trader may be holding for the three hours while longer term for swing trader may be 1 to 3 days and so on. However, as the name implies, trending systems are designed for trending markets and to take advantage of all the big trending moves that may occur. There are several approaches to create a trending system.

In my approach to putting together a trend trader I put as my number one priority that the system should never miss a big move. Most, if not all system developers have this in mind, I would think. However, that is where the majority and me part ways. The majority approach to accomplish this is to “always be in the market”, that is, to always be either short or long. If you always have a position, you will always be there when the big move takes place. However, what they don’t consider is that “time in the market” is measure of risk. If the trader is always in the market, he is always at risk. This is something I look to avoid!

Another method is to always have a "stop" order in the market – in today’s trading to have a stop resting on your computer platform- resting either above or below the current price (this is the same as having the stop resting on the floor in a market maker’s book. As a side note stops can be used to enter the market as well as exit. Using a stop to enter the market will protect from missing a trend because if the market moves quickly in either direction, you will be stopped in before the big move gets away. Again, while this may satisfy many who just can’t live with the fact that an opportunity has rushed by, the risk of slippage as the entry order chases prices higher in a fast market can decrease the edge of the system significantly also called slippage.

Legend24 takes advantage of the “trending market “ pattern on its brief counter trend moves for entries plus it exits into the strength of the positions. No trend is a straight line move, even the most dynamic of trends have short and brief corrections – pull backs – periods of profit taking, Legend24 defines when the up or down trend exist and enters on the shorter term counter trend moves. So it is going long or short on limits and works orders for positive slippage as opposed to chasing prices on a stop order. This is something most traders are brain washed about to the point that they have no real idea that positive slippage or working orders for a better price even existed. Furthermore, the exits are into strength as well on limits and in that regard the fills should be as good if not better than what the computer programming is assuming.

Keep in mind that the traditional trending systems tend to lose money in choppy or directionless phases of the market. Legend24 by nature has this “chink in its armor as well.” Furthermore, traditional trending systems have a smaller percentage of winning trades as compared to a scalping program. It is a well-documented fact that most trend systems hit about 35% win rate while scalper’s have a winning percentage of 65%. So for trend traders, they make their money in a smaller percentage of big trades. This means that if you miss a big move – given all the small losses, you may not have enough capital to hold out through the draw down as you wait for the next big move.

However, Legend24 has a unique characteristic in the construction of its moving averages that tell it when the market is in neutral. This characteristic has a tendency to limit losses during the market's sideways mode. Remember, no system will make money in every market condition. Legend24 is designed to make money in a trending market and is designed to avoid the sideways moving market. While it is not perfect in doing this, the win rate Legend24 shows - across the more liquid markets - a higher win rate than the proverbial trend trader. Legend24 at its worse will see a 40% accuracy. In fact for years the system will take hold and bat 45% on the US 30 year bonds, 55% hit rate for the e-Dow mini in the last 2 years plus a 55% winning rate on silver and the yen!

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