Our artificial intelligence trading method
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Londinia uses the power of Central Analyzer, our Big Data tool, to analyse markets. But as the saying goes, "Power is nothing without control". To control and take full advantage of this huge data source, our artificial intelligence uses the "one-way trading" method to generate its automatic technical analyses.
The "one-way trading" method is a simple method that enables each trader to set a framework and rules of conduct for their trading. This method makes it possible to avoid many so-called "classic" mistakes, such as the urge to always be in position, the urge to take all market movements or the urge to open a trade that does not correspond in any way to the trading strategy normally applied by the trader.
To summarize this trading method, you must first define whether you are a trend or counter-trend trader, more a scalper or a swing trader (regardless of the time unit), and you must strictly comply with all trading or psychological rules that have initially been set by your strategy or by yourself.
In its original version, the one-way trading method integrates the analysis of two time units: a long time unit that defines the "one way to trade" and a short time unit that defines the trading opportunities to be entered according to your trading strategy. In summary, we obtain two charts, a "trend chart" and a "signal chart".
On the "trend chart”, one or more levels are determined that will define the "LONG ONLY", "NEUTRAL" and "SHORT ONLY" zones. Then on the "signal chart”, all that remains is to wait for the trading opportunities to present themselves in the direction defined by the "trend chart”.
In this summary of the one-way trading method, I use simple price levels. But it is quite conceivable that "one-way trading" could be determined according to a chart pattern or technical indicator. Example: the price plots a bullish channel. As long as the price remains in this bullish channel, it is "LONG ONLY". The share price is below its 50 day moving average. As long as the price remains below this moving average, it is "SHORT ONLY”.
Three examples to make everything clearer:
A trader identifies the trend on the daily chart and his trading signals on the 1hour chart.
On the daily chart, the tools used by the trader make the price appear bullish above €100, bearish below €90, and there is total uncertainty between these two levels. The trader therefore plans to be "LONG ONLY" above €100, "SHORT ONLY" below €90 and "NEUTRAL" between €90 and €100.
Example 1: the price is €110 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer YES.
Example 2: the price is €80 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer NO.
As the price is in the "SHORT ONLY" zone of the trend chart, the trader must only allow himself to process SHORT positions, and refrain from taking any LONG positions (even if he obtains an excellent buy signal on his signal chart).
Example 3: the price is €95 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer NO.
As the price is in the "NEUTRAL" zone of the trend chart, the trader must not allow himself to do any trading using the signals sent by his trading strategy on the 1 hour chart.
On each analysis, Londinia provides an opinion, an invalidation threshold and price objectives. This invalidation threshold, combined with the opinion, can be defined as the "one-way trading" recommended by Londinia.
- If Londinia is bullish above €100, it is preferable to favour the long trading opportunities indicated by your trading strategy.
- If Londinia is bearish below €90, it is preferable to focus on the short trading opportunities indicated by your trading strategy.
- If Londinia is neutral between €90 and €100, it is better not to take into account the trading opportunities indicated by your trading strategy.
With these explanations and examples, you should now understand that our artificial intelligence perfectly provides "one-way trading" on the analysed time unit. Now you can use your signal charts to determine the trading opportunities to be entered according to your trading strategy!
What is the "One-way trading" method?
The "one-way trading" method is a simple method that enables each trader to set a framework and rules of conduct for their trading. This method makes it possible to avoid many so-called "classic" mistakes, such as the urge to always be in position, the urge to take all market movements or the urge to open a trade that does not correspond in any way to the trading strategy normally applied by the trader.
To summarize this trading method, you must first define whether you are a trend or counter-trend trader, more a scalper or a swing trader (regardless of the time unit), and you must strictly comply with all trading or psychological rules that have initially been set by your strategy or by yourself.
In its original version, the one-way trading method integrates the analysis of two time units: a long time unit that defines the "one way to trade" and a short time unit that defines the trading opportunities to be entered according to your trading strategy. In summary, we obtain two charts, a "trend chart" and a "signal chart".
On the "trend chart”, one or more levels are determined that will define the "LONG ONLY", "NEUTRAL" and "SHORT ONLY" zones. Then on the "signal chart”, all that remains is to wait for the trading opportunities to present themselves in the direction defined by the "trend chart”.
In this summary of the one-way trading method, I use simple price levels. But it is quite conceivable that "one-way trading" could be determined according to a chart pattern or technical indicator. Example: the price plots a bullish channel. As long as the price remains in this bullish channel, it is "LONG ONLY". The share price is below its 50 day moving average. As long as the price remains below this moving average, it is "SHORT ONLY”.
Three examples to make everything clearer:
A trader identifies the trend on the daily chart and his trading signals on the 1hour chart.
On the daily chart, the tools used by the trader make the price appear bullish above €100, bearish below €90, and there is total uncertainty between these two levels. The trader therefore plans to be "LONG ONLY" above €100, "SHORT ONLY" below €90 and "NEUTRAL" between €90 and €100.
Example 1: the price is €110 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer YES.
Example 2: the price is €80 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer NO.
As the price is in the "SHORT ONLY" zone of the trend chart, the trader must only allow himself to process SHORT positions, and refrain from taking any LONG positions (even if he obtains an excellent buy signal on his signal chart).
Example 3: the price is €95 and the trader receives a PURCHASE signal with his trading strategy on the 1 hour chart.
Should he open a LONG position? Answer NO.
As the price is in the "NEUTRAL" zone of the trend chart, the trader must not allow himself to do any trading using the signals sent by his trading strategy on the 1 hour chart.
Our artificial intelligence integrates the "one-way trading" method
On each analysis, Londinia provides an opinion, an invalidation threshold and price objectives. This invalidation threshold, combined with the opinion, can be defined as the "one-way trading" recommended by Londinia.
- If Londinia is bullish above €100, it is preferable to favour the long trading opportunities indicated by your trading strategy.
- If Londinia is bearish below €90, it is preferable to focus on the short trading opportunities indicated by your trading strategy.
- If Londinia is neutral between €90 and €100, it is better not to take into account the trading opportunities indicated by your trading strategy.
With these explanations and examples, you should now understand that our artificial intelligence perfectly provides "one-way trading" on the analysed time unit. Now you can use your signal charts to determine the trading opportunities to be entered according to your trading strategy!
