Scalping system #6 (EMA Bands)

Neal,
That would be soooooo great!
Jim

Hello Everyone,

I have been trading the system for about 3-4 weeks now.
What I have to say.
I am a kind of guy who trades system but still doe snot do it blindly. I there is signal from the system to buy/ sell, I not always follow it because there are other conditions. I use SARs to as one more indicator for trend confirmation and I also used it to trade when market is choppy and EMAs are not working well in choppy market if you trade 5 minutes chart. Generally speaking 5 minutes chart is good if you are looking for more pips. Like 5 and 20. I would even say 10-20 and more. I managed one trade of 50 pips taken.Added 10% to the balance. But, I am not going to repeat it:) The pressure is just too high for me.
Ok, if you are looking for 1-5 pips the best is to trade lower time frame. I use 1 minute. With 5 minutes you can be already late if you are looking for real small scalps. you might use bigger lots of course. I have 21 lots to trade and often use all of them to take 1-3 pips. 1 minute works fine. Plus it is very important for me to read candlesticks.When you scalp, it is very important and add one more filter to the system. I also do not follow signals when I see the trend is approaching pivotal points, resistance/ support level.

How about heikin-ashi candlesticks as additional filter and confirmation for this strategy?

Hello Edward,

Do you use any additional indicators with this system? If yes, what are the guidelines.

Regards,
Cornell

Thank you everyone for wonderful comments and ideas!

Hi Cornell,
Nothing more to add so far.
...But wait, on the second thought, as I'm editing my own answer now, I think I can add one more entry rule to it.
The rules is about additional entry opportunities.
It goes as follows:

When a trend is steady:
For uptrend it is true when yellow EMAs are above green EMAs, and green EMAs are above 55 red EMA.
Reverse for downtrend.

So, when a trend is steady and running, notice when price starts to retrace. So, if we are in an uptrend, notice when price finds a top and starts to slide down.
Attempt entries withing next 3 retracement bars:
Buy into the breakout above the high of the first retracement bar.
If no such opportunity arise and price moves lower, reset entry to buy the breakout above the second bar. Same for the third, but no further.
Once in a trade, set stop to the low of the most recent bar.
Take profit when price levels up with the top.
Important note: consider entering on a breakout only if there is enough pips to cover the spread plus earn profits on the way up to the top. If there isn't enough pips, skip that candle, wait for a lower one.
The higher the time frame traded with this system, the lesser are probabilities to encounter insufficiency of pips.

Below I took a fragment of the same screenshot from the original post.

Case 1 had a buy order triggered upon breaking above the second retracement bar.
Case 2 had the first candle being ignored, because the were not enough pips to profit from - the top was too close. (Again should that be a daily chart, there would be enough pips to collect, but here it is not the case). The highs of the next three candles haven't been breached, so there will be no further breakout trading for this particular retracement.

That's the method to try and test.

Regards,
Edward

I have never used heikin-ashi, but I guess there is no difference. I have used regular candlesticks and understand their behavior you can probably do the same with heikin ashi. I think candlesticks generally, when you really can read them is the best of additional filters and of course pay attention to support/resistance levels. Do do not long/short according to this strategy if you are around them and trend is going to hit support/ resistance.
Moreover, if the trend was up/down, you made your pips, it retreated then as Edward says when candlestick closes above EMA 3, I still would not go long/short. I am waiting for the trend to show it is still strong and to go beyond previous peak and candlesticks must be showing strong movement, no hesitations here. Generally, practice will help and thinking along the way too. The strategy is really good, but like all tools it require someone to use it properly.
Trade only break outs and trends. No trading in consolidating market.

By the way, what is the difference between regular candlesticks and heikin-ashi candlesticks?

That is simple.
Compare two charts with the same price data:

and

Heiking-ashi candles help to see trends better and thus are able to keep traders longer in the trends.

It is also easy to use trailing stops with heikin-ashi candlesticks. One simply need to set a stop below previous heikin-ashi candle (for uptrend), above (for downtrend).

Regards,
Edward