I was wondering about stop placement. What you say in your description of the indicator makes a lot of sense, Chris; however, a far simpler technique would be to exit a position when the dots start turning blue. Does that make sense?
Is that a simple answer or method...Yes. We have to be careful and always adapt to the markets we trade. The dots turn blue based on the order of the moving averages. Moving averages Lag. In more volatile markets this can be significant. Since this is a trending system if your in a long profitable move this = trading with the Trend...the Purpose of the indicator. however...."Snap Back Rallies? can be quick and harsh. Example. In Oil and 30 year bonds there are many examples of Price moving through channel and closing right at the opposite side of the channel. But by the time the first dot turned blue you would have given up 2K per contract...vs. the first close through the channel.
But for many securities that would be a great rules based exit.