The Waddah Explosion and Kaufman Lines are still at the core of the system, but I eliminated less reliable indicators and replaced them with better ones. It is very simple to use, and very accurate. I use it for live trading, not paper trading.
The way I see indicators is I want the 4 smartest people in the room with me when I’m making an important decision, who all have unique perspectives. If the room is filled with people who have one point of view or make bad decisions and repaint them later, it is of no help to me. This method is an amalgamation of the best indicators I’ve used, that work seamlessly together as a group.
There’s always room for improvement, but I’ve had excellent results trading with this method. I hope other people will as well.
How this Advanced Forex Waddah Explosion and Kaufman Lines Trading System works…
- When the colored bars in the Waddah Explosion indicator match the colored dots on the Kaufman line this signals a potential entry point for a trade. Blue is Bull trend, and Red is Bear Trend.
- I don’t enter a trade if the Kaufman is running horizontally even if the indicators show a short or long trade. Wait for the Kaufman line to be moving up (or down) in a diagonal trend direction.
- The Waddah will show the strength of the trend. As the bars start to drop in size, the trend is weakening which signals a potential exit.
- If the Kaufman and Waddah are no longer the same color, this is a potential exit point as well.
- When the candles pass through the Kaufman line on the chart, this is a clear sign of trend reversal.
I use the Better Volume Indicator for entry and exit confirmation as well.
- Yellow bars show low volume, which is potentially a signal that a trade is losing momentum (or not a good trade to enter). The big money is rarely moving the market on low volume, so I wait for higher volume and follow the big dogs to make a move.
- Green and magenta bars show strong resistance.
- White bars show strong bear volume, Red are strong bull volume.
- If you zoom your chart out you will see that the volume is often heaviest around trend reversals.
The BV is such a straight forward visual representation of volume activity and a great tool for recognizing market behavior. I included a PDF on how the BV works in the attachments paperclip on the right if you would like to learn more how to use the BV than the basics I outlined here. I use it with an ECN feed which is more accurate than a Market Maker feed, but I have tested it on 2 MT4 Market Maker feeds, and it is fine.
I use the +100/-100 level settings for additional entry/exit confirmation.
When the blue line crosses either 100 line, it is potentially a good time to enter or exit a trade.
(important! I had forgotten to put the -100 level in the CCI indi I bundled here, so please set it in your mods)
Once you use it a bit, it is quite easy to read. Don’t trade off of it solely, but it is amazingly accurate a lot of the time. I like the MA-RSX as well, but found this much more straight forward to use.
MM are very accurate for potential entry and exits at support/resistance areas. Once you test these in your charts you’ll see how good they are. Pivots are good for the stock market, but I found that MM Lines to be more reliable for Forex trading. The trends stop on them or very close a lot of the time. I use the MM on 1M for shorter rallies and 1H for longer rallies.
I find the semafor to be a good potential early warning indi for exits and it’s useful for mapping retracements. I never use it for entry.
Yellow dots are peak of trend
Red and green signal retracements.
The dots will sometimes appear earlier then the end of a trend sometimes and move with the trend to each new candle if the trend is continuing, so I don’t exit when the yellow dot first appears. I wait for additional confirmation. On shorter rallies I may get out on a red or green dot as well, rather than wait for the entire trend to finish. The Semafor is not my main tool for exit, but are useful for signaling a potential near exit.
(I know Semafor repaints but I appreciate it for reasons better understood when you are actually using the system. It is the only indi in this set that repaints.
I left it on my charts for now, until I find something better. I tried the Stopping Volume indi as an alternative, but it is far less reliable)
The Waddah Explosion and Semafor both have alerts. I use the Waddah when I have a TP as part of my order, and the Semafor when I don’t.
If you decide to try this method out, please test it out in demo first. I think you will find it clear and simple once you start using it.
Thanks and happy trading!
I attached an image below of last weeks G/U chart, it’s zoomed out so you can see the layot for the week, so the chart looks a bit more busy then it does during normal trading. I only use the Kaufman lines and Semafor on 1M, 15M, 30M, and 1H. I like to leave the 4H and up clear for charting.
In the bundle is the stochastics bar indi. I dropped it from my setup. Is redundant and I found I wasn’t really using it much. I trust the CCI more for divergence.