Vola-Break-out by Rene Wolfram

Description

The Vola-Break-out strategy is one of Rene Wolfram’s favourite trading strategies. Rene Wolfram is the only German trader who ever managed to reach the winners’ podium in the Robbins Worldcup Trading Championship, a 12-month trading world championship using real money. "All traders, including trading legend Larry Williams, have used volatility break-out strategies as the basis of their success in the trading world championship. It was the same in my case and even today volatility break-out strategies remain for me the main source of trading profits." says Rene Wolfram.

The Vola-Break-out strategy was programmed by René for the WHS FutureStation Nano trading platform. The strategy uses two of René Wolfram’s own indicators: the WolVol indicator and the nBars indicator. Rene Wolfram trades futures but it is also possible to use the strategy for CFDs.

Click here to buy Rene Wolfram’s Vola-Break-out in the store

The strategy in detail

Traditionally trend break-out strategies are characterized by a high proportion of losing trades and a small proportion of big winning trades. For many traders waiting for the one big winning trade whilst incurring many small losses is mentally too difficult. This was also the case for Rene Wolfram. He set out to solve the problem and in 2007 the WolVol indicator was born.

The WolVol indicator is designed to identify with precision the beginning or the early stages of a trend. The precision of the WolVol indicator contributes to the fact that Rene Wolfram avoids many of the small losing trades associated with break-out strategies.

 

This example shows the WolVol indicator. When the indicator crosses its lower line upwards it indicates the beginning of a trend. A green zone appears in the price chart. Four occurrences are visible in this example. When the indicator moves outside the horizontal lines a purple zone appears in the price chart.

 

Vola-Break-out can be used in all time frames and for all instruments. Rene Wolfram provides the optimal settings for four timeframes (1’, 5’, 15’ and 60’) and six instruments he trades (Dax, S&P 500, Nasdaq, gold, EUR/USD and crude oil). The optimal settings can be found in a table further in this article.

When to open a position?

The WolVol indicator’s job is to alert Rene Wolfram of a new trend. He does not use the indicator to open a position. To determine the time and the direction of a new position, Rene Wolfram uses his nBars indicator.

 

This example shows the WolVol indicator and the nBars indicator. The WolVol crosses its lower line upwards, indicating the start of a trend. The entry moment and direction will be given when the nBars indicator is pierced.

When to close a position?

Reality shows that the WolVol indicator can also identify the end of a trend. Hence Rene Wolfram uses his WolVol indicator to close positions. The package does not include a stop as Rene Wolfram tends to vary stop types and distances. Traders can choose from 13 different stops available in the WHS FutureStation platform.

 

This example shows the WolVol indicator closing a position. The indicator crosses its upper line upwards, indicating the trend has come to an end.

Click here to buy Rene Wolfram’s Vola-Break-out in the store

Practical implementation

If you are not yet familiar with the NanoTrader Full please visit the quick start page.

Getting started

Step 1: Right-click in your account on the instrument you wish to trade and select the corresponding study.

Step 2: the settings in the platform correspond to the settings Rene Wolfram prefers. These settings have a blue background (e.g. Rene Wolfram's prefers a 5' timeframe for the Dax). If you wish to trade in another timeframe, you need to enter the settings as per this table:

  1 min  5 min
DAX 20;50;100;200;50;0;10;2;250 20;50;100;200;110;0;40;2;100
S&P emini 100;200;500;1000;12;0;1;2;250 13;20;50;100;5;0;1;2;10
Nasdaq emini 13;20;50;100;15;8.2;2;2;150 20;50;100;200;24;0;4.5;2;500
Gold 100;200;500;1000;4.8;0;1.5;2;1000 100;200;500;1000;14;0;2.5;2;250
EuroFX Not possible 100;200;500;1000;0.01;0;0.001;2;1000
Crude Oil 100;200;500;1000;0.8;0;0.2;2;1000 50;100;200;500;1.3;0;0.2;0;10

  15 min 60 min
DAX 20;50;100;200;235;0;50;2;50 13;20;50;100;235;0;68;2;50
S&P emini 10;20;50;100;10;0;3;2;500 5;13;20;50;10.5;0;3.8;2;250
Nasdaq emini 13;20;50;100;24;0;4.5;2;150 13;20;50;100;53;0;6;2;50
Gold 100;200;500;1000;20;0;4.5;2;100 13;20;50;100;14;0;2.5;2;50
EuroFX 50;100;200;500;0.007;0;0.0015;2;250 20;50;100;200;0.01;0;0.002;2;100
Crude Oil 20;50;100;200;1.3;0;0.6;2;1000 50;100;200;500;9.5;0;2.5;2;50

You can change the settings in the DesignerBar:

You can also change the settings in the chart (click the relevant value and use the mouse wheel or the keyboard):

Click here to buy René Wolfram’s Vola-Break-out in the store.