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The Koala System

The Koala System for Forex Trading

In this article, We will like to share about how one can make use of The Koala System for forex trading.

What is this forex trading system?

The Koala System is by no means a get rich quick method for forex trading. There are no guarantees that you will profit from this method. This is a trading style that we believe helps prevent traders from entering trades against the trend and thus increasing the chance of success. It may also help cultivate a patient and defensive trading style due to the nature of the system.

Why create this forex trading system?

After suffering three margin calls, the founder needed a way to trade with prudence. Being trigger happy in entering trades and even often going against the trend! After an extensive search for a suitable trading system. The final system was slowly adapted and customised over months of learning and trials. The Koala System for Forex Trading was thus created!

How to set up this forex trading system?

Using MT 4,

we deploy 3 moving averages on the chart. Parameters are

  • Smoothed
  • Applied to Median Price ( High + Low / 2 )
  • Period of 3 ( Red ) , 6 ( Green ) , 9 ( Blue )

This gives us our primary indicators.

Next we deploy 2 moving averages on the chart. Parameters are

First

  • Exponential
  • Applied to Closing Price
  • Period of 200 ( Black )

Second

  • Smoothed
  • Applied to Median Price ( High + Low / 2 )
  • Period of 50 ( Brown )

This two moving averages will serve as our secondary indicators.

The Rules

While you can use any value for your stop loss and take profit, in view of proper risk and reward ratio and money management, recommended sets are

  • 30 SL 30 TP ( Normal )
  • 50 SL 50 TP ( Challenging )
  • 30 SL 50 TP ( Very challenging )

The more challenging the values are, the more precise your entries should be.

A buy or sell opportunity will surface when the

  • primary indicators becomes parallel towards the direction of the trade
  • brown secondary indicator is in the same direction and is not turning in towards the primary indicators. This functions as an immediate support or resistance warning too as the price often react to the moving average
  • black secondary indicator is not near the price action and hence not a potential strong support or resistance

Exceptional conditions

As the system relies heavily on trends, there are certain market conditions that will affect the performance of the system greatly

  • Low trading volume conditions resulting in no trends
  • Excessive flipping of the price action due to volatility
  • Major economic events resulting in unexpected spikes and momentum
  • A major support and resistance / trend line is not in the immediate region of the momentum

Picture examples

In this example, we see a rather clean entry signal to buy.

The three primary indicators are not converging and the secondary brown indicator is in the direction of the trade and not turning in towards the price action. Furthermore, the black indicator is no where to be seen.

If you notice, the price action is not cutting beyond the green indicator much. This is good because if the price action do cut beyond the green indicator excessively, it may indicate a failing momentum and hence the signal should be reevaluated.

In this example, we see a typical low trading volume market condition.

Due to a lack of clear direction, the primary indicators start to jumble up like noddles and hence indicating a no trade zone. The price action is simply too narrow and ranging to be of any use for trading.

In this example, we see another no trading zone.

In this case, the price action is choppy and is indicated by the excessive flipping of the primary indicators. Any attempt to trade in this condition may result in one’s stop loss getting hit due to the spikes. Furthermore, the black indicator is likely acting as support here.

Conclusion

While we usually deploy The Koala System on the EUR/USD M15 time frame, we do have members reporting their success in other pairs.

Do remember that The Koala System is not a fast way to get rich from forex and it does not guarantees you success.

Forex trading is your own responsibility and you still need to understand the fundamentals and concepts of forex trading. Proper money management, patience and discipline is crucial. Having only a few trades in a week is common!

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