keltner channels Archives

What’s the win rate of the Keltner Channels indicator that actually looks better than the Bollinger Bands indicator? In this video, I’m going to test the Keltner Channels Trading Strategy 100 times that I talked about in the previous video, to find its win rate and compare it with other strategies we have tested so far, and to see if it actually makes money or not. Also, in this video, I have improved the Keltner Channels Strategy a bit more, because while backtesting, I found out that, instead of taking buy signals at the first candle that crosses and closes above the upper Keltner Channels Band, it is better to take a long position when a candle opens and closes completely above the upper Band. And instead of selling when the first candle crosses and closes below the lower Keltner Channels Band, it is better to take a short position when the candle completely opens and closes below the lower Band. By doing this, you will filter some of the false signals that appear in a choppy market.

Keltner Channels was one of the most interesting indicators I have tested on the Trading Rush Channel, you will see why in a moment. At the start, when the price was in an uptrend, it won 10 trades in a row. It not only won multiple trades in a row, but also lost multiple trades in a row pretty much as soon as the win streak ended. In fact, it lost 17 trades in a row. If I remember correctly, 17 losses in a row is the highest losing streak we have seen on the Trading Rush Channel. We have tested many different strategies, but none of them had anything as high as 17 losses in a row even though they all were tested on almost the same market structure. But that’s not all. As I said, this indicator is one of the interesting indicators we have tested yet. One might think, after having these many losses in a row, no way this strategy is going to be profitable, but if you look at the profit graph, after winning and losing, the profit line went in an upward direction in almost a straight line. If it had not lost this one trade, the Keltner Channels Trading Strategy won almost 17 trades in a row.

Keltner Channels gives more signals in a short time period. It made a good profit when the price was in an uptrend at the start, but when the uptrend ended and the price started a downtrend, it had a losing streak because it gave multiple signals in a short period of time near the end of the trend. But here’s the thing, many traders in the live market, add to the position or take more trades when they notice a good trend, or when they are right about the trend direction. When they win multiple trades in a row, the profit graph looks similar to the winning streak the Keltner Channels Strategy had in a good trend, but when you start losing multiple trades in a row, you don’t take more trades in the market. In other words, even though the Keltner Channels had 17 losing trades in a row because it gave multiple signals near the end of the trend, in the live market, you are most likely going to stop after getting few losing trades in a row in the same trend.

Because of this, Keltner Channels Trading Strategy that we discussed in the previous video has a great potential to achieve a higher win rate, as long as you stop taking more trades in a short time if you have already had around 5 losses in a row.

In this experiment, even after losing 17 trades in a row, it still managed to make money after 100 trades, and got a 49 percent approximate win rate with a 1.5 to 1 reward risk ratio. In the Trading Rush App, it made a profit of 2250 with an account size of 10000 and with 1 percent risk per trade of course.

5.8+7+4.5+4+6

And the Keltner Channels Trading Strategy gets a TR Score of 27.3 out of 50. And if you come to the Official Trading Rush Website, you will see it ranks 17th from the top, just above the RSI Supertrend Trading Strategy, and below the Bollinger Bands Strategy. Now it ranks below the Bollinger Bands strategy, because the Bollinger Bands we tested was a slightly different and difficult strategy, and because the Keltner Channels lost few points in the reliability and consistent profits category because it had 17 losing trades in a row. When it comes to the Easy to Use Category, the Keltner Channels easily takes the lead. Overall, the Keltner Channel is a good indicator with great potential.

That’s all.

THIS IS WAY BETTER THAN BOLLINGER BANDS (1/30)

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Tag: keltner channels

You are most likely familiar with the Bollinger Bands indicator. It is one of those popular indicators that is pushed towards the beginner Stock Market and Forex Day Traders. But the Bollinger Bands is not always useful, especially if you are a trend trader. Imagine that Bollinger Bands is this road, and this middle line is the middle line of the Bollinger bands and the edges of the road are the outer Bollinger bands lines. If Bill the second was the price, and if the price didn’t move much up or down, the upper and lower bands of the Bollinger bands will move closer or pretty much stay at the same place.

Let’s say, when the price breaks out of a range or gives signs of a strong trend after a slow-moving market, you wanted to enter as soon as possible.

But if bill the second, or in other words, if the price decides to break out of the range, and starts a new trend, the outer Bollinger bands will expand. But we don’t want that. We want to enter at the start of the trend, and sure we can use other trend indicators, But what if the Bollinger bands, instead of expanding with the price, would have stayed at pretty much the same place when the price starts a new trend?

This is the normal Bollinger bands on an up-trending chart, and sure, one can say when the price is trending, we can take the trade as soon as the price breaks above the upper Bollinger band, it is a sign of increasing buying pressure in an uptrend and we can take a long position. That’s good, but this is better. This indicator looks similar to the Bollinger Bands indicator, but as you can see, the upper and lower lines are staying close to each other, and when there is a good trend going on, the price stays outside of the channel. In many cases and in this case, when the price started a good move in the upper direction, the breakout of the upper bands was earlier than the Bollinger Bands, and the price stayed above the upper bands for the most part of the uptrend. This is the Keltner Channels, and I’m going to test it 100 Times in the next video to find its win rate, just like we have tested many other strategies 100 times on the Trading Rush channel.

The middle line of the Keltner Channels is a simple or exponential moving average. But this time, the upper and lower bands are usually set two times the ATR value. So they do move away and closer to each other when the price starts trending and ranging respectively, but not like the Bollinger Bands Indicator, which makes them perfect for avoiding the ranging and trading the trending markets.

The 200 period exponential moving average will show the long-term trend direction. If the price is staying above the moving average, we will wait for the price to break and close above the upper band of the Keltner Channels, and we will enter a long position at the first candle that breaks above the upper band.

When the price is staying below the 200 period exponential moving average, we will wait for the price to break and close below the lower band of the Keltner Channels, and we will create a short position at the first candle that breaks below the lower band.

Since this is a trend following strategy, in the long setup, set the stoploss below the pullback. And in the short setup, set the stoploss above the pullback of the trend.

We will test this strategy 100 Times to find its win rate in the next video. Subscribe to Trading Rush and ring the notification bell to see that. Thanks.