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Prolific Automated Trading System(PATS)


The Prolific Automated Trading System(PATS) consist of six(6) Trend Following Sub-Systems developed by Dr.Glen Brown for self-traders.

Trend following is a trading strategy that tries to take advantage of long-term moves that seem to play out in various markets.

Traders who employ trend following strategies do not aim to forecast or predict future; they simply jump on the trend (when they perceived that a trend has established with their own peculiar reasons or rules) and ride it.

These traders normally enter in the market after the trend "properly" establishes itself, betting that the trend will continue for a long time.

A market "trend" is a tendency of a financial market price to move in a particular direction over time.

This concept assumes that markets, at times, tend to trend (that is, they move up or down for a fairly long period of time via impulsive waves). If we can spot when the trend starts and capture much of the move, then this should increase our chance of becoming a successful trader. 
However to be a trend follower requires patience, knowledge, guts plus health and rest. You must be able to buy what is going up and sell what is going down.
As trend followers, we must now ask ourselves the following questions:
How will we spot the major trends? How will we know if a market is trending?
Will we trade the trends on the upside and the downside?
What will we do when the market goes sideways?
What will our entry criteria be?
How will we handle corrections?
How will we know when the trend is over?
The Prolific Automated Trading System(PATS) uses Market Pattern Recognition(MPR) to helps us answer the above questions.

Market Pattern Recognition

Over the course of several years I have research, watch and trade many markets and have note five types of market patterns.
They are:
• Bullish strongly trending
• Bullish weakly trending
• Bearish strongly trending
• Bearish weakly trending
• Range-bound 

A Bullish Market structure occurs when the PATS-MMA Color Bands are in the following order from Bottom Up:
1. Red Band
2. Orange Band
3. Yellow Band
4. Green Band
5. Blue Band
6. Indigo Band
7. Violet Band 

A Bearish Market structure occurs when the Prolific MMA Color Bands are in the following order from Top Down:
1. Red Band
2. Orange Band
3. Yellow Band
4. Green Band
5. Blue Band
6. Indigo Band
7. Violet Band

Prolific Automated Trading System(PATS) uses the concept of Multiple Time Frame Analysis.

There are problems with popular trend-following indicators that must be ironed out before they can be used. The same trend-following indicator may issue conflicting signals when applied to different time frames. For example, the same indicator may point to an uptrend in a daily chart and issue a sell signal and point to a downtrend in a weekly chart. The problem is magnified even further with intraday charts. On these short-term charts, trend-following indicators may fluctuate between buy and sell signals on an hourly or even more frequent basis. 

In order to combat this problem, it is helpful to divide time frames into units of five. In dividing monthly charts into weekly charts, there are 4.5 weeks to a month. Moving from weekly charts to daily charts, there are exactly five trading days per week. Progressing one level further, from daily to hourly charts, there are between five to six hours in a trading day. For day traders, hourly charts can be reduced to 10-minute charts (denominator of six) and, finally, from 10-minute charts to two-minute charts (denominator of five). 
The crux of this factor of five concept is that trading decisions should be analyzed in the context of at least two time frames. If you prefer to analyze your trading decisions using weekly charts, you should also employ monthly charts. If you day-trade using 10--minute charts, you should first analyze hourly charts. 

Once the trader has decided on the time frame to use within the Prolific Automated Trading System(PATS), he or she labels this time frame as the " Trading Time Frame(TTF)". According to our trading methodology, the long-term time frame (which is known as the Primary Trend) is given by the Monthly Time Bars, the Secondary Trend is given by the Weekly Time Bars, Medium Term Trend is given by the Daily Time Bars and the Short Term Trend is given by the Four Hour Time Bars. Any time-frame below the four hour is know as micro-trends 

Prolific Automated Trading System(PATS), requires that the chart for the long-term trend be examined first. This ensures that the trade follows the tide of the long-term trend while allowing for entrance into trades at times when the market moves briefly against the trend. The best buying opportunities based on my experience occurs when a rising market makes a briefer decline; the best shorting opportunities are indicated when a falling market rallies briefly. When the monthly trend is upward, weekly declines represent buying opportunities. Hourly rallies provide opportunities to short when the daily trend is downward.

Markets often trend in more than one direction at the same time: The GBP/USD can be in an upward bull trend (which may endure for several years); while the secondary cycle corrects downwards over several months; and a short-term rally occurs during the current week.

What is important to remember is that long-term trends influence short-term trends. 
In an up-trend, rallies tend to be stronger than corrections. In a down-trend, corrections are mostly stronger than rallies. 

Unusual conditions can be created by the interaction of cycles in different time frames. They may offset each other or they may overlap and act in the same direction, resulting in an extreme peak or trough. When testing a trend-following system, we should expect that a trend of 200 days, compared with a trend of 50 days, will produce greater consistency, greater reliability, and proportionally fewer trades. As you increase the calculation period, this pattern continues; when you reduce the calculation period this pattern reverses. You are prevented from using very short calculation intervals because slippage and commissions become too large; the longest periods are undesirable because of large equity swings. There must be a clear, profitable pattern when plotting returns per trade versus the average holding period.

The Prolific Automated Trading System(PATS) works in three to four time frames.. Each time frame has a logical purpose and is said to be modeled after Gann's concept that the markets are essentially geometric. The shortest time frame is the one in which you will trade; in addition, there are two to three longer time frames to put each one into proper perspective.

The patterns common to time frames are easily compared with fractals; within each time frame is another time frame with very similar patterns, reacting in much the same way.

You cannot have an hourly chart without a 15-minute chart, because the longer time period is composed of shorter periods; and, if the geometry holds, then characteristics that work in one time frame, such as support and resistance, should work in shorter and longer time frames. 

Within each time frame there are unique levels of support and resistance; when they converge, increasing stability. 

One primary advantage of using multiple time frames is that you can see a pattern develop sooner.

A trend that appears on a weekly chart could have been seen first on the daily chart. The same logic follows for other chart formations.

Similarly, the application of patterns, such as support and resistance, is the same within each time frame. 

When a support line appears at about the same level in hourly, daily, and weekly charts, it gains importance.

The Prolific Automated Trading System(PATS) obeys the laws of Multiple Time Frames:

LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.
2. The higher time frames overrule the lower time frames.
3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.
4. The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.
5. The trend created by the next time period enables us to define the tradable trend.
6. What appears to be chaos in one time period can be order in another time period.

Money Management & Trading Tactics

As a general rule you should risk a maximum of 2% per sub-system.
What that means is when you calculate your stop losses your stop loss amount has to be within 2% of your account balance.

If the trade goes against you, the maximum you will lose is 2% of your account equity times the number of sub-systems you are trading in your account. If we activate the six (6) sub-systems at once, this means that our maximum risk per portfolio would be 12%.

I have designed ten (10) different risk models to guide you when using the Prolific Automated Trading System(PATS). Feel free to design additional Risk Models to suit your trading style.
The rules within the risk model will depends on your account balance. You might have to start with a higher risk. However your goal is to reduce the risk as your account grows.

It is very important to use small contract size; this will also prevents you from getting panic attacks when the trade moves against you. If your desired stop losses do not come within 2% of your account used position sizing or don’t take that trade. If we increase the risk to say 3%, you should reduce the number of sub-systems you activate.

We will discuss various money management strategies within our online video series.
.
You must always calculate your risk every time before you enter your trades. Our trading software will automatically calculate this for you after you configure the settings to suite your trading style.

The Sub-Systems
The Prolific Automated Trading System(PATS) consists of Six (6) sub-systems namely.

(1).System #1- This sub-system runs on the five(5) minutes time frame and trade in the direction of the 30 Minutes or One Hour Time Bar.

(2).System #2- This sub-system runs on the fifteen(15) minutes time frame and trade in the direction of the One Hour or Four (4) Hour Time Bar

(3).System #3- This sub-system runs on the thirty(30) Minutes time frame and trade in the direction of the Four (4) Hour or Daily Time Bar.

(4).System #4- This sub-system runs on the one(1) hour time frame and trade in the direction of the Daily or Weekly Time Bar

(5).System #5- This sub-system runs on the four(4) hour time frame and trade in the direction of the Weekly or Monthly Time Bar.

(6).System #6- This sub-system runs on the daily time frame and trade in the direction of the Monthly Time Bar.

The first objective is to identify the major trend. We are not interested in range-bound market patterns.

We will define the trend as follows:

• Primary Trend (PT) 
• Secondary Trend (ST) 
• Medium Term Trend (MTT)
• Short Term Trend (STT)
• Micro Trends

The Primary Trend (PT) is given by the Monthly TIME BAR (MTB),
The Secondary Trend (ST) is given by the Weekly TIME BAR (WTB)
The Medium Term Trend (MTT) is given by the Daily TIME BAR (DTB)
The Short Term Trend (STT) is given by the Four Hour TIME BAR (FHTB)
The Micro Trends are given by any TIME BARS below the Four Hour TIME BAR (FHTB)
We can make a strategic decision to trade in the direction of the Primary, Secondary, Medium ,Short Term Trend or Micro Trends. We can also use a combination.
For example:

1. If the Monthly TIME BAR(MTB), Weekly TIME BAR (WTB) and the Daily TIME BAR(DTB) are BLUE then we are in an Strong Bullish Uptrend(SBU) and we will only take Buy Signal(BS) 

2. If the Weekly TIME BAR (WTB) is BLUE and the Daily TIME BAR (DTB) is RED then we are in a Weak Bullish Uptrend (WBU) or a Weak Bearish Downtrend (WBD) and we can take Counter Trend Buy Signal (CTBS) in the direction of the Primary Trend or a Counter Trend Sell Signal (CTSS) in the direction of the Secondary Trend. In this case we will use the Short term trend given by the H4 TIME BAR to calculate the probability of the possible direction. 

3. If the Monthly TIME BAR(MTB), Weekly TIME BAR (WTB) and the Daily TIME BAR(DTB) are RED then we are in an Strong Bearish Downtrend(SBD) and we will only take Sell Signal(SS) 

4. If the Weekly TIME BAR (WTB) is BLUE and the Daily TIME BAR (DTB) is RED then we are in a Weak Bullish Uptrend (WBU) or a Weak Bearish Downtrend (WBD) and we can take Counter Trend Sell Signal (CTSS) in the direction of the Medium Trend or a Counter Trend Buy Signal (CTBS) in the direction of the Secondary Trend. In this case we will use the Short term trend given by the H4 TIME BAR to calculate the probability of the possible direction

Summary of Trading Strategies.

We can execute different trading strategies within the Prolific Automated Trading System(PATS) namely:

1.PROLIFIC TRADING STRATEGY #1 

2.PROLIFIC TRADING STRATEGY #2

3.PROLIFIC TRADING STRATEGY #3

4.PROLIFIC TRADING STRATEGY #4

5.PROLIFIC TRADING STRATEGY #5

6.PROLIFIC TRADING STRATEGY #6


You can purchase the Prolific Automated Trading System(PATS) which includes lifetime VPS hosting for US$30,000.00 and received lifetime upgrades for free.This price also include Training and support.