What is QTiTTs?
QTiTTs stands for Quadrant Trend-In-Trend Trading System. It is designed to be a visual trading system represented by the colours of the candles for UpTrend (Green) or DownTrend (Red). It is also represented by multi lines of coloured dots of Upward (Green) or Downward (White) momentum against a black background chart. But above all, it is a multi-timeframe trading system.
Risk Management and Probability
No trading system can be successful without taking into consideration risk management and probabilities. With that in mind, QTiTTs filters out short-term noise signals and focus on longer-term signals in any timeframes. From analysis, positive longer-term signal has a higher probability of success whether it is an UpTrend or a DownTrend signal.
What market can it be used?
QTiTTs are used for trading both stocks and Futures market. For trading stocks, we need to see that the candles are above all the moving averages such as the 8 EMA, 21 EMA, 34 EMA, 55 SMA, 89 SMA, 155 SMA. It is also preferable that the candle is above the 255 SMA.
When a candle Close is above all the moving averages mentioned above, it is likely to be in a longer term upTrend and likewise if it below all the moving averages, it is in a longer term DownTrend. We would also like to see the moving averages stacked accordingly.
TimeFrames for Stocks
For trading stocks, we use only the Daily and 3Day charts. For a positive trend, the candles must be above the 55 SMA for daily, 3-Day, weekly and fortnightly charts. The corresponding Simple Moving Averages are 55 SMA, 155 SMA, 255 SMA and 530 SMA respectively. For the monthly chart, it is the 1070 SMA on the daily chart. So in order to analyze a multi-timeframe chart, we need to put the 55 SMA, 155 SMA, 255 SMA and 530 SMA on the same chart daily chart. For short term trading using the 1-minute chart, we will do the same The 55 SMA on the 1-minute chart, 3-min, 5 min and 10 minute corresponds to 55 SMA, 155 SMA, 255 SMA and 530 SMA on the 1-minute chart.
Momentum must be positive. Also the 8 EMA must have crossed ABOVE the 55 SMA for the Daily charts. We like to see a stacking of the moving averages as the trade progresses and then we know that we have a LONG term trend setting up. For shorter trading in an upTrend, we need to seel the TTM_Squeeze above zero and the 8 EMA above the 55 SMA (Long Tide).
TimeFrames for Futures – Intraday
For intraday trading of the /RTY futures, we use both the 1-minute and 3-minute charts and also market internals for precise timing of for ENTRY and EXIT as shown in the chart below.
Hock Money Flow and Multi TimeFrame
The Hock Money Flow understudies are plotted for 21, 55 and 155 candles. Each candle can be 1 minute or a day. For trading futures like the RTY (Russell 2000 futures), we use the 1 minute chart. By using the longer periods of 55 and 155 candles, we are ensuring that either all the shorter timeframes and longer timeframes are in phase when the HMF21, HMF55 and HMF 155 are greater than zero for UpTrend. By doing that, we have a higher probability of trading in the right direction.
Average True Range Trailing StopLoss and Multi TimeFrame
The ATR Trailing StopLoss are shown on the chart in its currect timeframe and also 3 timeframes higher. When we are trading the long direction, we want both the currect ATR Trailing StopLoss and its higher ATR Trailing StopLoss to be below the candles. Likewise if we are trading the short direction, we want both to be above the candles.
Entry and Exit
Our intent is not to trade frequently as that would incur increase in trading commissions but to trade with high probability of getting our directions right. The intent is to Enter into a trade only when all the signals favour a strong directional move either upward or downward.
When the candles are Green and the colour of the dots are Green, we Enter into Buy Long trade. When the candles are Red and the momentum dots are White, we enter into a Sell Short trade. We look to Exit a trade when the candles changes colour or it loses its trend. That means that if it was Red candle and it turns to Yellow candle, it is time to exit the trade. Likewise, if it is was Green candle and it turns to Yellow candle, it means the trend is lost.
Momentum dots will give advance warnings of the change long before the Trend candles changed colour. This trend change is when the Trend and Momentum are totally out of sync.
In the chart 1 above, there are 9 rows of coloured dots. The 3 bottom rows of Red, Orange and Black dots indicates the status of the Squeezes in 3 different timeframes.
The middle 3 rows of Green and White dots represent the status of the Close above the 55 SMA in 2 different timeframes and the uppermost dots represent the status of the close in relation to the 55 SMA and the ATR Trailing StopLoss understudies.
High Probability Trading Rules
The basic rules are as follows:
- 8 EMA crosses above the 21 EMA for an upTrend
- Candle close must be above the 55 SMA. For stronger UpTrend, candle must also close above the 155 SMA.
- Candle close is above the ATR Trailing StopLoss in the higher timeframe. If the candle close is above the current timeframe, then the candle close is above both ATR Trailing StopLoss in both fimeframes and that is a strong signal.
- There are three Hock Money Flow understudies and they use a 21 period, 55 period and 155 period. At a minimum, we need both the HMF21 and HMF55 to be above zero for UpTrend and below zero for DownTrend. If all HMF21, HMF 55 and HMF155 are above zero, that is a very strong signal.
- Preferably, we need to start with at least both the HMF21 and HMF55 or HMF21 and HMF155 to be above zero for the start of an UpTrend move. Likewise both have to be below zero for start of a downward move.
Importance of Time of Day in Trading
The 9:30 am to 12 noon ET is the most important time to trade especially when trading the /RTY. That is when there are volume in the trading which means good liquidity. The initial few minutes after market open tends to be rather volatile with the potential for the market to reversed itself. Sometimes there are 2-3 reversals within the first 10 minutes after market Open.
The other important time is 8:30 am ET when news are announced. For example there could be an announcement on inflation numbers or CPI and so on. This can cause some rather violent reaction in the market.
The Importance of Not Trading in a Range Bound market
For traders that are trading stocks or futures, the trending market whether it is up or down is when profits are made. Making money from non-trending market is for Option traders. Most traders that trade when the market is not trending are very likely to lose money. Considering that about 70% of the time, the market is range-bound, it is even more important to know when Not to trade.
