More than a decade ago, a famous hedge fund manager named Vegas publicly shared his complete trading method on the internet, called the Vegas tunnel trading method.
The Vegas tunnel trading method proposes a definition of the tunnel and its breakout, achieving the ultimate application of the Fibonacci sequence.
So why hasn't this theory gained everyone's attention?
1. People often think that the potential patterns of the market and a good trading method must be complex and obscure.
2. Because of human greed, arrogance, and fear. Even if you are given the best trading method, you may not execute it according to the method.
3. When Vegas announced it, he hid a considerable amount of information. The rules published by Vegas do not specify clear entry rules.
The Vegas tunnel (144, 169) is a watershed for medium and short-term trends in the market. It can guide direction and serve as support and resistance.
When Vegas defined the tunnel trading method, he introduced the concept of breakout. What is the concept of breakout?
We need to look for entry and exit signals, always operating after the price breaks through the tunnel.
Introduce the concept of filter line - an EMA moving average with a period of 12.
If the price breaks through the tunnel, but the filter line does not break through, it is considered a false breakout, and the breakout is invalid. Only when the filter line breaks through the tunnel is it considered a true breakout.
Add a set of auxiliary moving averages, which are 4 times the 144 and 169 moving averages (periods of 576 and 676) tunnel.
In fact, the 144 and 169 moving averages on the 4-hour chart are the 576 and 676 on the 1-hour level.
Vegas believes: always trade in the direction of the 576 and 676 moving averages. Give up trading opportunities that are inconsistent with the direction of 576 and 676, and only take trend-following opportunities.
