This is a moving average, but it is not your average moving average. This moving average
tries to disappear in the range market, so you won't lose money when the price is moving
in the sideways direction. I have tested a lot of Trading Strategies 100 Times at this
point. From MACD to MACD combined with Ichimoku. Most of the strategies had a profitable win
rate, some of them even had a win rate of around 60 percent, but many of them lost money
in the range market. When we taught my computer to take trades on its own, I created the Beep
Boop indicator for fun, but after testing it 100 times, it actually was one of the
better indicators we have seen on the Trading Rush Channel. So what if we create our very
own indicator or a moving average, that will filter or disappear in the range market? Will
the win rate of the trading strategy go up? In this video, I took 200 trades with 2 different
strategies in an attempt to create the best moving average, and here's what happened.
But why though? Why do we want a moving average that will disappear when the market is in a range?
Well, look at this example. Here, price is in an uptrend, and we all know that one of
the best places to buy in the Forex and Stock Market, is when the price is in an uptrend.
Most of the long trades you are going to take in this uptrend have a higher probability
of winning, well because the price has a higher probability of moving in the direction of
the trend. This is the range, and if you are a subscriber of the Trading Rush Channel,
you have probably seen multiple strategies get bad win rates because they gave too many
entry signals in the range market. You can make money when the market is moving in the
sideways direction, but beginner traders are not recommended to, because trading here
is much easier and better than trading in a range market where the price can get choppy.
So how do we actually filter the range market? Even your dog knows that in a range market,
the price stays between two areas, and, if you plot a long-term moving average, the price
will cross the moving average multiple times. So wait a minute, in a range market, if the
price crosses the moving average multiple times in a short time period, and the price
stays on one side of the moving average in a trending market, can't we just tell the
moving average to disappear when the price crosses the moving average multiple times
in a short period of time? Well, that's exactly what I did. I created a 200-period moving
average, that tries to disappear if it detects the range market.
Look at this example, when the price was in a good uptrend, the moving average color was
green. When the price started to move in a sideways direction, the Trading Rush moving
average disappeared. And when the price started to trend again, the moving average turned
green again. When there is a good downtrend going on, the
moving average will turn red. And if the Trading Rush moving average detects a range market,
it will disappear so you won't take trades and lose money in the sideways market.
This example is even better. Here, the Trading Rush Moving Average was green in an uptrend,
then turned red in a downtrend, and when the price was moving in the sideways direction,
the Trading Rush Moving Average Disappeared. And then reappeared when it detected an uptrend.
Does this mean we have successfully created the best moving average that filters the
range market on its own? What will happen if we test a trading strategy 100 times, with
a normal 200 period moving average, and test the same strategy again, but this time with
a moving average that disappears? Well, why don't we find out?
First of all, to test the Trading Rush Moving Average 100 times, we will need a Trading
Strategy. I have tested many different trading strategies 100 times on the Trading Rush Channel,
but if I use them, the videos will look similar, and youtube will send a love letter asking
me to delete the videos, again. So, I created a new Trading Strategy just for this video.
If you are a subscriber of the Trading Rush Channel, you have probably heard about the
Beep Boop indicator that we created in the AI trades video. Beep Boop Trading Strategy was
a profitable trading strategy. So I combined the Beep Boop Indicator with the Bollinger
Bands Indicator, and created a new trading strategy for this video, that goes something
like this.
If the price is above the 200 period moving average, buy when the beep boop indicator
gives a buy entry signal, only if the closing price of the entry candle is above the Bollinger
bands. Set the stoploss below the pullback.
Similarly, if the price is below the 200 period moving average, sell when beep boop indicator
gives a sell entry signal, only if the closing price of the entry candle is below the Bollinger
bands. Set the stoploss above the pullback.
If you don't know anything about the Beep Boop Trading Strategy, check out the "I taught
my computer to trade" video, or the video after that to learn more.
Now we have a trading strategy, but we don't know its normal win rate yet. To see if the
Trading Rush Moving Average can improve the Winrate of a trading strategy, we will have
to test the trading strategy with a normal moving average first. Once we find the normal
win rate, we will test the strategy again with the Trading Rush Moving Average, to see
if the win rate improves or not.
So I took 100 trades with the normal moving average, and here's what happened.
The profit in the Trading Rush App went up, then came down, and then went up. When we
tested the Beep Boop and Bollinger Bands Trading Strategies on the Trading Rush Channel, we
saw both of them made money at the end. And after combining both strategies, the profit
graph still went in the upward direction. And the win rate I got with the normal moving
average was approximately 45 percent, which is still a profitable win rate because of
the 1.5 to 1 reward risk ratio. In the Trading Rush App, the strategy with a normal moving
average made a profit of 1250.
Now let's see if the Trading Rush Moving Average can increase the win rate of the Trading Strategy.
So I took another 100 trades with the disappearing moving average, and this happened.
At the start, the profit in the Trading Rush App went up, then came down, and then went
up. But this time, the profit was more consistent, and more trades were won than lost. When the
Trading Rush Moving Average disappeared, many false trades were filtered, and that's exactly
what we designed it to do. If you remember, near the start of this video, I showed you
an example of the Trading Rush Moving Average. The trades in that example were taken with
the Beep Boop and Bollinger Bands strategy. As you can see, when the Trading Rush Moving
Average was green, more long trades were won than lost. And when the moving average was
red in color, more short trades were won than lost. That makes sense because the price has
a higher probability of moving in the direction of the trend. But when the price started to
move in a really bad range, no trades were lost or won, because the moving average disappeared.
We all know that most strategies give false signals in a range market, but because the
Trading Rush Moving Average filtered the range market, the win rate at the end was actually
higher.
If we compare the results side by side, you will see that the win rate with the Trading
Rush Moving Average was 5 percent higher. Now 5 percent doesn't sound that high, but
remember that both of them were tested in the same market structure, and if you look
at the profit graph and profit numbers, you will notice that profit with the Trading Rush
Moving Average was 100 percent more than the profit got with the normal moving average.
Furthermore, the profit graph with the Trading Rush Moving Average is more consistently going
up than the profit graph of the normal moving average.
So how can you try the Trading Rush Moving Average for free? and what's the conclusion?
Well, this was an attempt to create a moving average that can increase the win rate of
our trading strategies by filtering the bad market. I think we all succeeded at that part.
The best part I like about the moving average is that it filters a lot of false signals
in the range-market. While creating and testing this indicator, I noticed that it does a fantastic
job at disappearing when the market is in a really bad range, or in other words, when
the markets are not worth trading. So if you want to try the disappearing Trading Rush
Moving Average for absolutely free, I will publicly share the source code on the Trading
Rush Patreon Page, just like I did with the beep boop indicator. The link to the indicator
will be in the description. If you are watching this video on the Official Trading Rush Website,
the link to the indicator should be just below the video. In the next video, we will try
to improve the trading strategy even more, by improving the disappearing moving average
a bit more.
So Subscribe and ring that notification bell to see that, and to see win rates of other
trading strategies that we have tested 100 times. After all, you don't want to risk your
money on a strategy that doesn't even work. Like the video if you liked it. Support Trading
Rush on Patreon to see in-depth trade analysis, and for trade opportunity signals. Thanks
a lot for watching.