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Quad Trend-in-Trend Trading System (QTiTTs)

What is QTiTTs?
QTiTTs stands for Quad 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) and by multi lines of coloured dots of Upward (Green) or Downward (White) momentum against a black background chart.

The intent is to Enter into a trade when the momentum and trend are in sync above or below their stacked moving averages. The colour of the candles represents the Trend. Green candle means it is on an UpTrend and Red Candle means it is on a down Trend. So when the Trend and Momentum are in sync, we enter into a trade and when it is out of sync, we exit a trade.

When the candles are Green and the colour of the dots are Green, we Enter into long trade. When the candles are Red and the momentum dots are White, we enter into a 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 changes colour. This change of the Trend is when the Trend and Momentum are totally out of sync.

Chart 1: TiTTs or Trend-In-Trend Trading System

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.

As a rule, Green represent Upward/above and White is Downward/below.

Multi-TimeFrame in Moving Averages and Stacked Moving Averages
The 55 SMA is an important moving average when we trade the /RTY in the 1-minute chart. The 144 SMA in the 1-minute chart is equivalent to the 55 SMA in the 3-minute chart. By utilising the 55 SMA and 144 SMA, we are essentially analysing the state of the market in 2 timeframes. In QTiTTs, the moving averages of 8 EMA, 21 EMA, 34 EMA, 55 SMA, 89 SMA, 144 SMA and 233 SMA are used to analyze the market. The intention of trading is to be in sync with the market which means the Trend and Momentum must be aligned. That is when the big moves happen and as a trader, we are interested in capturing these big moves.

Chart 2: TiTTs or Trend-In-Trend Trading System

When the moving averages are stacked, we know we have a strong Trend. Traders are interested to buy the dip in a strong trend as there will be pullbacks even in a strong Trend.

QTiTTs rules
The basic QTiTTs rules are as follows:

  1. 8 EMA crosses above the 21 EMA for an upTrend
  2. Candle close must be above the 55 SMA. This then forms the upTrend quadrant.
  3. Likewise, the reverse is true for a DownTrend.

If there are other moving averages such as the 144 SMA and the 233 SMA, then it has to push through these potential resistance lines. Likewise if it down-trending. In that case, it is fighting against Support at those moving averages.

In a trade with stacked moving averages, the trending progress is much smoother. The probability of a strong trending trade is much higher and as the adage goes, “the trend is your friend” and we trade the trend until it ends.

Range Trading and Breakout

In chart 3 below, the market was rather volatile and traded up and down. It soon established a range. All these while, the Tick chart was below zero showing a bearish bias. The ATR Trailing StopLoss was above the candles also demonstrating a bearish bias. Eventually, it broke our downward.

Chart 3: TiTTs or Trend-In-Trend Trading System

#1 – 8 EMA crosses below the 21 EMA. For the most part, the candles were trading below the 55 SMA.
#2 – The ATR Trailing StopLoss started to move downward.
$3 – The breakout downward.

It is easy to anticipate a bearish setup without confirmation which results in losses. The Do and Don’t is always to be patient to wait for Confirmation of ANY setup.

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.

Artificial Intelligence and Self-Learning

We continue to develop our Artificial Intelligence (AI) system and foresee a day where it develops into a self-learning and self-training AI.

The TiTTs below are used for explaining how the trading system works. The same rules apply for both Bullish and Bearish trades. The charts are 1-min charts on the Russell 2000 index futures (/RTY). The Rules are set out as below.

This is Trend-In-Trend Trading System (TiTTs) for Entering a trade and also for Exiting a trade. The intent is to look for high probability trades with highest chances of success and minimum probability of losses.

On the 1-minute chart, the 55 SMA is a very important line where it acts as both Support ad Resistance. The idea is that in a rally, we Short Sell at the 55 SMA. If the candles are able to breakout above the 55 SMA, we Buy Long when the index pulls back to the 55 SMA to test its support.