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CHTrader uses thousands of algorithms to calculate the price reversal alerts. These mathematical formulae have been developed over a continuous period since 1992. The program developers have been traders who have worked with the exclusive feedback from a large group of traders using and testing the principles and techniques developed over this time.
The algorithms use technical analysis and methodological analysis to study and automatically analyse the 25 minute close price interval of the CHTrader hedge indicator. This indicator is a live derivative of the GBPUSD and the USDJPY currency pairs. These two currency pairs have been chosen because of the diversity between them.
The algorithmic analysis detects trends in the live movement of this indicator and warns when there is a reversal in the up and down trends.
The CHTrader analysis is largely based on the chaotic feedback model of market price cycle behavior and fractal analysis. There are parallels in the study of fluid dynamics and weather pattern prediction.
The neural networks in the CHTrader price analysis study a fractal level length of just over three weeks. This means that on the average the system gives a trading alert about every three and a half weeks or 15 times a year.
There are many advantages in this. One huge advantage is that only trading a little more than once a month in itself tames the market and substantially reduces stress for the CHTrader operator. Less stress means less personal emotion when trading. Trading CHTrader is low key trading conducive to minimal emotion with decision making.
As currency markets operate 24 hours per day 5 days per week, they are virtually impossible to survey seamlessly with manual or ‘screen jockey’ techniques of analysis.
If traders try to do this they inevitably fall victim to fatigue and family or everyday commitment neglect. This is where emotion eventually takes over from orderly continuous price analysis if CHTrader is not used.
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When the CHTrader analysis reports a price trend reversal alarms are sounded.
CHTrader can also ring the operator’s mobile telephone automatically.
Along with the reversal in trend alert which is given for each of the two currency pairs simultaneously, a stop loss level is given for each currency. These stop losses are always different in each trade and are calculated from a risk minimisation perspective to be at a price level which is unlikely to be filled. CHTrader statistics show that in the 18 months up to November 2008 using a stop loss sensitivity of 120, only about 10% of all the single trades had been stopped out. In CHTrader, it is possible to use this stop loss sensitivity to increase all of the stop losses by a standard amount, to deal with such things as increased volatility. On a two currency pair basis up until that date, none of the pair trades had been totally stopped out using a stop loss sensitivity of 120. With the increased volatility of world financial markets in late 2008, the currency markets also became far more volatile, with greatly increased price range movements. For example, CHTrader management allows the trader to back test different levels of stop loss sensitivity setting in order to decide whether higher levels could be used due to such things as increased volatility.
This means that if one currency side of the traded pair is stopped out the other currency in the pair is allowed to maximise its profit and continue in the market to achieve profit. In this period 80% of the stop out fills ended up in the net result of the trade being in profit at the close of the trade because of the result achieved by the pair remaining open in the market. This is further evidence of the hedging effect in operation.
The successful CHTrader operator is a computer systems operator and does not have to be a skilled trader to operate this system correctly. N.B. The CHTrader management can be customised by the user to give varying outcomes in regard to growth and risk control combinations.
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