Traffic Light System Theory

Introduction

The Traffic Light Trading System identifies entry points based on the comparison of the current closing price with the previous closing price. This system is suitable for both daily and weekly charts, providing traders with reliable entry and exit points.

How It Works

Setup

Compare the current closing price with the previous closing price. If the dot color changes from red (falling) to green (rising), then enter LONG. If the dot color changes from green (rising) to red (falling), then enter SHORT.

Entry

Buy at the day's high (LONG) / Sell at the day's low (SHORT)

Stops

• Initial stop for LONG position is the current candle's low.
• Initial stop for SHORT position is the current candle's high.
• Trailing stop: Adjusted after each profit candle by the amount of the book profit.

Traffic Light Stop

Exits the position when the dot color turns against my trend direction.

Permanent Filters

• 50 % + X must tend in one direction
• Intermarket spread DJIA: Weekly basis
• 20-day average weekly basis
• Triple bar trend-following filter weekly basis
• Slope angle weekly basis

Volatility Filter

0.5 % - 2.5 % daily basis

Position Size

1 % of the account volume: Point distance of the initial stop = number of shares

System Highlights

• Advanced AI algorithms designed to spot market trends.
• Real-time analysis to make quick and informed decisions.
• Customizable options for individual trading preferences.

Optimizing Your Strategies

Discover techniques to maximize your trading success with our detailed guide on using the Traffic Light System effectively.

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Join Our Community

Engage with other traders and share insights on our dedicated online platform.

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Conclusion

The Traffic Light Trading System is more than a set of rules; it is a comprehensive trading framework that integrates technical analysis, psychology, and rigorous risk management. It equips traders with the knowledge and tools necessary to navigate the complexities of the market, maximizing opportunities while controlling risk. By applying this system, traders of all experience levels can enhance their market presence, making informed and profitable trading decisions.