Vola-break-out by René Wolfram
Description
The Vola-Break-out strategy is one of René Wolfram’s favourite trading strategies. René 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 René Wolfram.
The Vola-Break-out strategy was programmed by René for the NanoTrader Full trading platform. The strategy uses two of René Wolfram’s own indicators: the WolVol indicator and the nBars indicator. René Wolfram trades futures but it is also possible to use the strategy for CFDs.
Click here to buy René 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 René 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 René 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. René 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 René 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, René 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 René Wolfram uses his WolVol indicator to close positions. The package does not include a stop as René Wolfram tends to vary stop types and distances. Traders can choose from 13 different stops available in the NanoTrader Full trading 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 René 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 René Wolfram prefers. These settings have a blue background (e.g. René 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.