Black&White System

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B&W example scalper 1copy   The 2nd example below (same 8 Tick range bar chart on the Swiss Franc Future G6S-057) shows how a swing trader would use the system. B&W example swing1 copy The 3rd example (same 8 Tick range bar chart on the Swiss Franc Future G6S-057) shows how a trend trader would use the system. B&W example trend copy

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THE Black & White System and Predictor  run on Genesis Trade Navigator platform Gold or Platinum versions. (The Platinum version is required to access the strategy testing and automated trading functions). To check your computer system requirements to run Genesis Trade Navigator

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If you do not have Genesis Trade Navigator installed on your computer you will need to Download a 30 day free trial of Genesis Trade Navigator.

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To understand how the B&W Trading System performs in its basic mode i.e. without incorporating volume. There are several examples shown below: The first 2 examples below show 2 separate strategy test run on the E mini NASDAQ future NQ-057. They are short term intraday strategies running constantly for a six week period, using an 8 tick range bar setting: The first example is utilising 3 rules only:

  1. B&W buy 1st / B&W sell 1st signals for entry
  2. A hard stop (below previous swing low/above previous swing high) for exit or
  3. A trailing stop to exit the trade

B&W Strategy test 1st signals The second example is utilising the same 2 exit rules but using a B&W uptrend buy/ B&W downtrend sell signal for entry:

  1. B&W uptrend buy/ B&W downtrend sell signal for entry.
  2. A hard stop (below previous swing low/above previous swing high) for exit or
  3. A trailing stop to exit the trade

B&W Strategy test with trend signals There are 2 figures in the summaries above which give an overall picture of the strategy performance and the risk taken:

  •      CPC Index (PF x Win% x PR): gives you the Payout Ratio multiplied by the Winning Percentage multiplied by the Profit Factor. A CPC index > 1.3 indicates the system should be a profitable system to trade.  
  •      Calmar Ratio   fundamentally, the maximum drawdown indicates the greatest loss an investor could suffer if an investment is bought at its highest price, and sold at the lowest.  In employing the maximum drawdown as a proxy for risk, the Calmar Ratio is considered a good indicator of the emotional pain an investor could feel if the market suddenly swings downwards. A Calmar Ratio of 
  • 1 or higher is considered good,
  • 3 or higher is considered extremely good,
  • 5 or higher indicates excellent performance.

The CPC Index for the B&W examples is well in excess of 1.3 indicating a profitable system. The Calmar Ratio for the B&W examples is well in excess of 5 indicating an excellent low risk system. The previous examples were intra-day trading using range bar charts. The B@W systems works just as well on longer term trading timeframes. Below is a strategy run showing the B&W buy1st/sell 1st signals on daily bar chart for the Australian Dollar futures G6A- 057. The strategy is a simple stop and reverse scenario. There are no hard stops or profit targets. Simply buy 1 contract on a buy signal, exit the long on the next sell signal and simultaneously enter a short position, then exit the short on the next buy signal, ad- infinitum. This type of strategy is relatively inefficient, so when you note the CPC Index is > 6 and the Calmar ratio is 1.72 that suggests the B&W strategy is extremely robust. B&W Strategy test 1st signals on Daily   Below is a long term (>13 years) strategy run showing the B&W buy1st/sell 1st signals on daily bar chart for a basket of 8 futures, ranging from currency, soft commodity, hard commodity futures and a forex pair. The strategy on all 8 markets, once again, is simple and about as basic as you can get. 2 rules:

  1. Hard stop above previous SwHi or SwLo (max 200ticks).
  2. 2 bar trailing stop once trade is 500 ticks/pips in profit.

B&W Strategy basket test 1st signals on Daily

 THE RESULTS SPEAK FOR THEMSELVES !!

There are other features of the B&W system with regards to price and momentum to consider before we move on to discuss the Volume part of the system, they are:

  • Price/Momentum divergence.
  • Tradable patterns on the B&WOsc.

The chart below shows an 8 tick range bar chart on Crude Oil futures CL3-057. The yellow lines (hand drawn) highlight divergence between price and the B&WOsc. The green and red zones (actual signals produced by the system (adjustable by customer)) highlight the previous divergence. B&W Divergence example copy   Patterns that can be recognised on the B&WOsc and which can be traded are : Head and Shoulders and inverted Head and shoulders patterns (H&S). The yellow lines (hand drawn) on the chart highlight the baseline of the (H&S) patterns. It is preferable to have had the head of the (H&S) pattern exceed the extremes on the B&WOsc (+60/-60) When the B&WOsc value breaks above/below the baseline a trade can be entered. The 3 patterns shown  below also have B&W buy 1st/sell 1st signals showing, so the (H&S) can add an extra layer of probability that a successful trade may ensue. B&W H&S copy Double tops and double bottoms  are also tradable reversal patterns, as per the H&S pattern it is preferable that one of the peaks has gone beyond the extremes on the B&WOsc (+60/-60). B&W DT & DB copy   From what has been said so far it is safe to say the B&W is an extremely competent system just using Price action, Trend, Momentum and momentum patterns. We are now about to add Volume to the mix. By doing so we are taking the B&W system to a new heightened level, rarely seen in any commercially available trading system. The  unique way of examining volume and presenting the results graphically, is totally different to the norm. If you have used Time and Sales (reading the tape) information in the past you will know that one moment your screen is full of red numbers (sellers) the next moment it is full of green numbers (buyers) and it oscillates between the 2, constantly.  Accordingly it is very difficult to know which of the two forces is in control and equally difficult to get a feel for what the buyers and sellers are actually doing at any moment in time. The Volume trend pane shown below aims to address that situation: It’s simple and easy to understand visual presentation of buying and selling pressure in a graphical form allows you, at a glance, to instantly identify what the buyers and sellers are doing. It makes it simple for you to see who is in control and when that balance of control is changing. The simple visual presentation means you can draw dynamic trend-lines on the buy sell volume (thereby allowing  you to determine when overall Volume trend has changed) and horizontal support and resistance on the buy/sell volume which often times will coincide with price support and resistance levels and with volume market profile point of control.  Buy/Sell Volume momentum is shown by the colour of the line, white for up and black for down. The Volume Trend scale can be viewed as dynamic, real time volume data similar to the Commitment of Traders (COT) which, of course, is delayed data released only once a week, therefore only of limited use. The Volume Trend scale, however, is real time and is therefore a far superior market sentiment indicator. B&W  Volume trend 1 copy There are many more volume studies included in the B&W system. The majority, of which, are shown on the chart below in the volume trend panel. B&W  Volume trend 2 copy The meaning, implication and significance of the why and how you can use these studies/indicators would probably constitute the subject matter of one, possibly two books. Suffice to say that once you understand what the volume studies/indicators are telling you, they and the Volume Trend indicator give you a wonderful insight as to how the market-makers are managing the Price/Volume relationship and how markets are really working. These volume studies in conjunction with price action signals create a truly market beating system.  Before going on to the actual volume based signals another 3 volume panes need introduction:

i) The B&W Volume Strength

ii) Smart Money

iii) Volume

 shown in the lowest pane on the Natural Gas 300 tick  chart below is  the The B&W Volume Strength which displays the numbers of buyers versus the number of sellers on each bar, expressed as a percentage and displayed in histogram form. When there are:

More buyers than sellers the bar is white.

More sellers than buyers then the bar is black.

If the percentage of buyers > 60% a green cap is shown above the bar.

If the percentage of sellers > 60% a red cap is shown above the bar. B&W Volume strength gauge copy  

Smart money  is shown below in the lowest pane of the German Bund 30 tick chart. This highlights  when the institutions and the big players are participating in the market. B&W smart money copy

The final pane on the B&W system chart is the standard total volume indicator incorporating a volume swing points line (adjustable by customer). This picks out the highs and lows in total volume. As shown in the lowest pane of the 3 minute German Bund  chart below.   B&W Volume normal copy

We now move on to the Volume signal. They are shown in the chart below, they are:

  

B&W Volume Buy

      B&W Volume Buy 1st  

B&W Volume Sell

     B&W Volume Sell 1st

B&W Volume buy&sell 1st signal copy   Experienced Volume traders contend that Volume is a leading indicator and that buying volume comes into the market before the price rises and vice-versa, selling volume comes into the market before the price falls. As a general rule that contention is close to being true. Observation of the B&W price and Volume trend panes simultaneously, show that on occasions Volume leads Prices, at other times Price leads Volume but most of the time they appear to be synchronised and it is difficult to discern which, if either, is leading. This suggests that the majority of time Price and Volume move more in tandem rather than one actually leading the other. You can see this synchronicity happening time and time again just by observing the B&W price pane and B&W Volume trend pane The example below shows price and volume synchronised the majority of the time. However, just as there can be divergence between price and the B&WOsc, there can also be divergence between price and buy/sell volume. The (hand drawn) blue and yellow lines show the divergences and the green and red zones (adjustable by customer) are generated by the B&W system to advise of the divergences. Letter D (green and red) advise of divergence between price and volume on individual bars.

B&W Volume price conpare 2

To take advantage of Price and Volume being synchronised, the final signals in the B&W System are combination Price and Volume signals.

They are called:

  1. B&W All White Buy (large white triangle beneath price).This combines all the positive aspects of price and volume (i.e. all bars, zones and indicators are white and all signals are green).
  2. B&W All Black Sell (large black inverted triangle above price).This combines all the negative aspects of price and volume (i.e. all bars, zones, and indicators are black and all signals are red).

These two signals can be described by the phrases: ticking all the correct boxes or lining up all the ducks  in a row. Effectively they are stacking all the probabilities in favour of a successful outcome to the trade.

 

B&W all white black copy

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THE Black & White System and Predictor  run on Genesis Trade Navigator platform Gold or Platinum versions. (The Platinum version is required to access the strategy testing and automated trading functions). To check your computer system requirements to run Genesis Trade Navigator

Click Here

If you do not have Genesis Trade Navigator installed on your computer you will need to Download a 30 day free trial of Genesis Trade Navigator.  

CLICK HERE

 

 

 

 

 

 

 

 

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CFTC Commission rule 4.41(b)(1)(i) hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. IMPORTANT: The risk of loss in trading futures, options, cash currencies and other leveraged transaction products can be substantial. Therefore only “risk capital” should be used. Futures, options, cash currencies and other leveraged transaction products are not suitable investments for everyone. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result you may lose more than the amount originally invested and may also have to pay more later. Consider your financial condition before deciding to invest or trade.