​Improving transaction success rate: Detailed explanation of the triple filter trading system

Experienced traders often have a personalized trading system. The system helps them manage risks more effectively through clear trading rules and strategies, and improve trading efficiency and success rate with the help of quantitative trading behavior and controlling mentality. Among many trading systems, there is a triple filtering method to identify trading opportunities with a higher success rate, which is the triple filter trading system.

Triple filter trading system

The triple filter trading system cleverly integrates trend indicators and oscillation indicators, aiming to minimize interference from false signals, but it should be noted that these indicators need to be applied to different time period charts to avoid contradictory signals under the same time frame.

Core concept of the system: The basic principle that the system follows is to enter the market when the price is corrected and ensure that the trading direction is consistent with the long-term potential trend of the market, so as to achieve the profit goal of “buy low and sell high”.

Trends can be observed across multiple time frames, and traders usually subdivided into long-term main trends (such as tides), medium-term trends (such as waves), and short-term trends (such as ripples). The triple filter trading system is a “tide” that conforms to the long-term trend, using medium-term “waves” and short-term “ripples” to accurately adjust the entry point, showing its strong adaptability and flexibility.

First filter: Market tide

This filter focuses on capturing the main trends in the market and ensures that all transactions follow this trend. If the first filter determines that the trend is rising, only buying opportunities are considered; otherwise, looking for selling opportunities. MACD indicators (based on 12th-day EMA and 26th-day EMA calculations) have become the key tool for this filter. By observing the rise and fall of the MACD column, you can quickly judge the trend direction.

Second filter: Market wave

On the 1-hour chart, the second filter recognizes the opportunity for price correction through oscillation indicators (such as RSI). When the main trend diverges from short-term price fluctuations, trading opportunities arise. For example, if the first filter shows a decline in the MACD column, indicating a downward trend, you need to consider selling when the RSI is overbought (value above 70), while the RSI oversold (value below 30) may mean that the market is still in the main trend and should not operate against the trend.

Third filter: intraday breakthrough

The third filter focuses on fine adjustments to the entry point. If the first filter confirms a downward trend (the MACD column decreases), and the second filter shows that the RSI has been overbought (sell signal), you need to find a short-term support level in the third filter and set a sell stop order below it to capture the precise entry point in the trend. Similarly, for the upward trend, the operation is the opposite.

Through the above-mentioned layer-by-layer filter screening, the triple filter trading system has built an efficient and accurate trading framework for traders, effectively identifying and screening trading opportunities with high success rates, ensuring that traders can follow the main market trends and follow the trend. However, to fully utilize the potential of this system, traders need to study the characteristics and applications of various key indicators in depth, so as to capture greater profit opportunities in complex and changeable markets.