What Is Jimberg AFL? This is a volatility-based trading system developed by Jim Berg. Jim is a skilled trader and he caught the eyes of many individuals when he used it to win the Non-public Investor Journal trading competition in 2002. That was a tough year in the Australian market. All the way through that 12 months the market declined by about 20%. However, Jim managed to provide a return of some 30%, an enormous out-performance of the market. Jimberg AFL is Jim’s work that he coded in Amibroker formula language. At the end of the post, I will share Jimberg AFL for AmiBroker free for you that you can use for your trading.
The Jimberg AFL Concept
In his system, he makes use of the volatility indicator 2*ATR(10) for the entry signal in addition to the trailing stop. He also made use of it to provide a profit taker line on the chart to point when the price has moved up all of sudden. This is a signal to take profit earlier than you can imagine, the retracement to mean value actions. The system is ready for lengthy trades more effectively, so primarily appropriate for swing trading.
Like most excellent trading systems it isn’t difficult and does now not depend on too many symptoms. There’s a sequence of standards which we can use to signal a trade. The primary criteria is that the stock needs to be in an uptrend. The uptrend is proved when it’s trading above a rising 34 week moving average. We use a hundred and fifty day MA which provides so much the identical outcomes on the grounds that it’s similar to a 30 week MA. Take a look at the picture below for extra important points.
Featured in Stocks and Commodities Magazine
“Stocks and Commodities” Journal described this system in February 2005. They published it in a piece of writing referred to as “The Actuality About Volatility” via Jim Berg. In this article, the coding for Metastock is given. Tomasz Janeczko, the originator of AmiBroker, recoded this for AmiBroker. You can also search for the code on the AmiBroker website. However, to get it there, you need to have a licensed version of AmiBroker.
How to Trade with Jimberg AFL?
Below the main chart is another indicator, the 7 days RSI. This is the Relative Strength Indicator. You will notice that there are dotted lines at 30 and 70 showing “Oversold” and “Overbought” conditions. What we are looking for are occasions where the line of the oscillator dips below 30. This happens in the middle of the chart and we have marked it by the blue ellipse.
The next step is to look for the candles to change color to Blue. On the next day, we look to enter the trade. It is best not to chase prices up but to see if it is possible to get in at a price not too far from the price range of the day when the colour change took place. We can set the initial stop below the last low which is low that gave the Oversold signal of the RSI.
The Entry Signal
You should note that the entry signal for this system is not necessarily when the candles move above the blue 2ATR(10) line (as it does when we use the Chandelier line) but when the candles change to the blue colour. This is because of the slightly different way the system is coded compared to the Chandelier indicator.
The 2ATR(10) stop line follows the price up but continues to track horizontally for 15 days when prices fall to provide a stop line for a long trade. If this was not done the line would fall with falling prices and never give an exit signal.
How to Fix Stop Loss and Target?
Getting back to the trade that is signaled on the chart, we can see that it is possible to enter at about Rs. 1342 and that the initial stop is at 975 (first red arrow on the chart). In fact, the previous candle has a lower tail but we are ignoring it as it was simply due to a technical problem that shut down the Sydney Futures Exchange for a while. The initial risk for this trade was therefore about Rs. 350. If you trade in daily charts, it is not advisable to take the trade if the initial risk is more than 10% of the price. In this case, as we are trading on the monthly charts we can keep a bigger stop loss.
Another line on the chart is the lime green one which is usually above the prices. This is the “Take Profit” line. When prices close above this line we can use it as a signal to lock in profit. Notice that on the chart there are few occasions where this signal might be used to make a profit. In each case, this resulted in a better exit than waiting for the stop line to take us out of the trade. Sometimes it will take you out of a trade which then goes on much higher.
More on the Profit Taker
We need to use the profit taker signal needs with discretion. In a stock which is undergoing a rapid repricing because of good news, it’s use may be less likely to lead to good results than in a stock which is in a steady uptrend. This profit taker is also suitable for short-term trades where it is important to get a good profit quickly. But remember that it is important to think of the profit in terms of the risk/reward ratio. If the profit is not at least twice the initial risk of the trade it may be better to let the trade continue until the reward (profit) is large enough to justify taking the initial risk.
The Jimberg AFL system has the 2ATR(10) trailing stop line to protect profit and this signals an exit if the price closes two consecutive times below the line.
Another interesting point is the divergence between the peaks of the RSI and the price. This can be a signal that the trend is running out of momentum and in view of this warning, it might have made good sense to get out of the trade after the first close below the trailing stop line. This would have made the trade a little more profitable. While this might help to manage the trade it is not part of the Jim Berg system.
The Colored Ribbon
At the bottom of the Jimberg AFL price chart, you will notice a colored ribbon. This ribbon changes color as buy and sell signals are given. It is not part of the coding of MetaStock but Tomasz has added it as an extra feature in AmiBroker. This can be useful when quickly moving from chart to chart in a watchlist of shares which are in an uptrend and suitable candidates for trading with this system. In AmiBroker charts open so quickly that it is possible to scan through the charts rapidly looking for a change of color at the end of the ribbon. It is then possible to pause at those charts which have a small patch of blue at the end of the ribbon and see if it is ready to trade.
Jimberg AFL for AmiBroker – Download Free
You can download and use the Jimberg AFL formula for Amibroker by clicking the button below. You need an account on Facebook or Twitter to download this file.
And after you attach the Jimberg afl you will instantly see Jim Berg trading concepts appear in the charts. The above images show how the Jimberg AFL for AmiBroker looks like. All sources are FREE from the internet.