Complex trading system #10 (Egudu simple 4 tools trading)

Speaking about long term trends, you're absolutely right.
Long term picture is a key to understanding market directions.
You can also try 34 SMA or 34 EMA, whichever you like most.
On a longer time frame you not only check for how long the price has been trading above/below the SMA indicator line, but also if the price trades near or just begins to approach SMA line.
The areas around this moving average is a high action area, where traders look to get into new trades at the best price. The further we go from the moving average, the more expensive=riskier it becomes to chase a trend. So, 30 or 34 SMA can serve as a good reference point.

Your approach to moving down to the lower time frame to check for the triggers is also correct. I would first, however, go to 4 hour time frame to evaluate whether the market is developing a move with the trend, or is preparing to make a correction.
Then it would be good to proceed to hourly charts and look for entry signals with the basic strategy rules.

Happy trading!

Edward

I have tried your system and it's really working only a little bit choppy on exiting... i used parabolic sars to have more confirmation. Keep up the good work guys, it really helping people, like me:)

eddy

The problem I have with EMA cross strategies is the exit. Exits that rely on EMA's crossing back always result in lost profits, usually a lot.

You've got the point here: by relying on exits with moving averages you're giving back some good portion of your profits, sometimes more, sometimes less... But, there is the other side of it: the reason you're able to hold to a trade for an extended period of time is because you used moving averages to follow the trend in the first place.

With MAs one should find the balance between profits and risks, and simply work on protecting the largest portion of gains while risking the rest for the privilege to stay in a trade for a longer period of time.

Regards,
Edward

I'm new to this site and wanted to asked the following re this strategy. Re the ADX being above the 20/25 mark, does it matter whether it is strenthening or weaking or flat?

thanks
David

Hi David,

it matters, however, depending on what preceded to different ADX stages.

-> Weakening of ADX below 20 or flat ADX below 20 - stay aside.

-> Weakening of ADX (or flat ADX) above 20 but below 40 after ADX had risen from below 20 - disregard and keep trading, treat is as a temporary market retracement until further notice: it stalls in a sideways channel or breaks previous Support/Resistance level, signaling of a reversal.

-> Weakening of ADX after it descends from above 40 - the trend has already started to change.

-> ADX strengthens while below 20 - identify breakout lines/channels and wait for an opportunity to trade - a trend begins to form.

-> ADX strengthens above 20 - a trend is there to take advantage of.

-> ADX strengthens past 40 - a trend is peaking, keep on trading till ADX continues to rise.

-> ADX gains strength shortly after descending from 40, follow a signal from -DI +DI lines, but make sure to take trades only after S/R level is breached, in other words, make sure the market intends to trend again.

Best regards,
Edward

If you put the Stochastics on (6,3,3)...when it cross...it the best for exit signal :)

Congratz for your system

Hola cual de las tres lineas del ADX se toman para ver si esta por encima de 20 o 25??

Gracias