The BunnyGirl Trading System

One of the best-known free trading systems available was invented by the (charmingly named) BunnyGirl, who posted her strategies in the MoneyTec forums and in so doing started one of the liveliest forex discussions ever.

The core of her trading system is a 5 period x 20 period weighted moving average (WMA) cross on a 30-minute chart. The main currency pairs traded are EUR/USD, GBP/USD, and USD/CHF, and she goes both short and long on all pairs. However, it's the filtering that goes into identifying each trade that really makes the system successful...and according to BunnyGirl it's been extremely successful, to the tune of 90% trading success and a 45 trade winning streak at its peak performance.

So how does the filtering work? Here's what BunnyGirl says to look for:

• WMA crosses around the key trading period of 00:00 GMT (Greenwich Mean Time)
• A breakout of at least 20 pips for the EUR/USD and 25 pips for other pairs, plus spread if going long. This helps minimize those nasty whipsaws that can saw away your funds in a hurry. (Get it...whipsaw, saw away...I just made that up. Oh, the wit. Please, save your applause for the end of the post.)
• Avoid trades when the 100 period WMA is near the cross and the price is heading in that direction.
  
• Don't trade in the last 5 minutes of a 30 minute chart period - wait for a breakout in the next 30 minute period.
• Don't enter trades near points of strong price resistance or if they're going against the prevailing daily trend.
• Multiple lots: BunnyGirl traded a sophisticated mix of 4 lots with trailing stops set at various levels. I won't summarize this system here but you can read all about it in her complete strategy, which you can download below.

There are a lot of other rules and filters you'll want to review before trying this system, and rather than copy them all verbatim here, I'll just cut to the chase and show you where to download it. I've come across two versions of the system which differ in a few details, and one of which has a lot more helpful charts. On the other hand, the other one's half as long. So I'd download them both and compare them to see which works best for you:

• BunnyGirl Bunny Cross Trading Framework (Longer, More Graphical Version from MoneyTec.com)

• BunnyGirl's FAQ (Shorter Version from ForexBasic.com)

Related topic:
Chart-Based Trading Systems

Tired of Moving Averages? Try a Moving Median

One day I got bored with testing out different moving averages, perhaps the most common indicator in use among traders. So I decided play around with a related statistical function, the median. According to Wikipedia, "In probability theory and statistics, a median is a number dividing the higher half of a sample, a population, or a probability distribution from the lower half." Interestingly, in strict statistical terms the median is actually a type of average, since the term "average" describes a variety of different methods for determining the central tendency or "middle" of a set of data (read more about this in the Wikipedia article on averages.)

What most people typically understand to be an average is in fact the "arithmetic mean," which like the median is one of several measures of the middle of a data set. Going back to Wikipedia, the arithmetic mean is "the sum of all the members of the list divided by the number of items in the list." So if you have five prices from five successive hours, add them all up, divide by five, and you've got the arithmetic mean. Pretty simple - and that's certainly part of its appeal.

But enough with definitions - let's look at results. In my historical testing of the arithmetic mean and the median on forex data, I found both measures yielded consistent trading signals. To start with, I looked at what happens when a short-term moving average crosses a longer-term moving average (a signal familiar to just about all traders). Then I tried the same type of signal with moving medians, testing what happened when a short-term median of a few days' EUR/USD prices crossed below a longer multi-week median. Again, out popped some good results, signals you'd be pleased to have in your trading tool kit.

But the most interesting signals, and those that are currently hard at work in my active forex trading, emerged when I hybridized the arithmetic mean and the median into a single signal. By hybridize, I mean (is that a pun?) that a trade was triggered when the median crossed above or below the arithmetic mean for the same period. By looking at activity of these two subtly different measures for the identical set of prices in the identical time period, I think this turned out to be a remarkably sensitive signal. And the historical results certainly supported that theory. After a lot of further tweaking and recombining of medians and arithmetic means, I ended up with a signal I felt confident going live with.

Unfortunately, I have yet to find a moving median featured in any forex charting software I've looked at, so you'll probably have to generate it yourself in Excel or some other spreadsheet and charting application. Admittedly, this could be a hassle, but just think, you'd be looking at a signal used by almost no one else - unlike the moving average (I mean, arithmetic mean), which everyone and their cat is looking at every day. In fact, my cat's gotten pretty good at interpreting moving averages, and I may turn them all over to him soon.

Mind you, I wouldn't do all my trading based just on medians, but they're certainly an interesting addition to a trader's tool kit. Good luck and happy trading if you try them!

Further reading:
Averages
Arithmetic Mean
Median