Forex trading strategy #1 (Simple balanced system)

Hi Carlos,

Thank you for the good idea about MAs.
As to higher time frames, I'd use either 4 hour and daily OR, as you said, 1 hour and 4 hour. And then simply compare the results.

Regards,
Edward

Hi Everybody, greetings from Bogotá DC, Colombia.

I see this system profitable. I have been testing this system, but sometimes I fail because I only see the 15 minutes chart, and trade following the instructions.

I do not say that follow instructions makes you fail, I want to tell you that you must follow strictly the instructions about entry and exit market with the system, but in order to reduce losses, you must look other timeframes before you open a position.

My question is, which timeframes must I watch before open a position, using this system? I open positions in 15 min. timeframe. I think watch 1 hour and 4 hours timeframe could help, but I would like to share opinions.

Finally, I made a modification to this system. I use 2 Moving Averages, 5 EMA close, and 8 EMA open. These EMA gives you a little bit earlier entries. The other indicators remains as is.

Thank you in advance, and happy trading.

CARLOS ALBERTO CASTILLO SANCHEZ.
Bogotá, Colombia.

Hi,

I would be glad to answer with a straight forward solution, such as:
TF 1 day, pair EUR/USD, SL 50 pips, TP 80 pips
TF 4 hour, pair EUR/USD SL... etc etc...

:) but that would require months of analysis of majority of time frames and currency pairs... which is, well, possible, but not for my schedule :)

Thus, here is a general solution/answer I can provide:
Certainly, position of a stop loss order would depend on a time frame and a currency pair you choose. In general, for 5 min trading it would be reasonable to set a fixed stop of around 10-20 pips, for hourly - somewhere around 25-40 pips. The more volatile the pair, and the higher the time frame, the wider should be the stop.

But still the best place for a stop is always found after analysing nearby support/resistance levels such as trend lines, pivots, fibonacci levels etc.
If nothing obvious comes out, then the simplest way to determine a place for the stop is to look at the most recent swing high/swing low (see the illustration about swings in the comments at http://forex-strategies-revealed.com/advanced/trendlines-breakout/cpage-...) and set a stop order couple of pips away from it plus counting in the spread as well.

With this Forex strategy we take profits using exit rules. However, if you decide to have a predetermined profit target, then again you would need to look for obvious price support/resistance levels mentioned earlier; or come up with a fixed amount of pips you believe is reasonable for the time frame and pair you trade.

Money management rules here would generally be about knowing the risks: before each entry we calculate the distance at which to set a stop, then enter only if risks aren't too high.
As to position sizing and number of lots to be traded - these parameters are fundamental and set individually, apart from the main system rules.

Kind regards,
Edward

hello edward,
I don't have to mention again how kindly person you are sharing your trading strategys with us!
In this strategy you mentioned above, I like to know how and where to put the stoploss and where to put the take profit.
and what about money management ?

Hi seun akin,

Absolutely. It should perform well on 15 min EUR/USD.

Regards,
Edward

Hi Edward,
i want to know if i can rely on this system for EUR/USD on 15 timeframe. Will that be reasonable?
seun akin

No, thanks.

Hi Kemi,
Thank you for your input in our discussion.
I like your idea of adding 20 SMA to support the channel. This should allow filtering some losing trades and add confidence in entering valid ones. Exiting with Fibonacci also adds value to the strategy.

Is there anything you may be concerned about regarding the strategy. Let us know and we will do our best to answer your questions.

Regards,
Edward

Hi Edward,
My name is kemi.I am a beginner. I want to put forward my system for testing and know how efficient it is. I use ema crossover of 5(close) and 6(open) and 20SMA on a 1hr chart.
Entry rule
Buy: 5 Ema crossover with 6 ema with the 20SMA/trend channel supporting the direction combined with the above RSI and schostatics parameters in the balanced strategy above.
Sell: This is the vice-versa of the above.
However I exit using the Fib.expansion tool or crossover in the opposite direction from the decision taken.
Thanks.

I'm Jorge Cano again.

Anyone know which is the percentage of efectivity of this strategy?

Hello Jorge,

There is no requirement for EMAs, RSI and Stochastic to signal simultaneously. There could be (and often is) a delay before all indicators provide signals we need.
If we have EMAs' cross, but Stochastic and RSI are not in the levels indicated, then we simply wait till they reach those levels. Once all conditions are met, we can start trading.

Regards,
Edward.

hello Edward.

i'm Jorge Cano and i'am from Colombia, therefore my english are not better language, but i will try to do my question of the better way possible.

Is necessary that in the moment that Emas Cross, Stochastic and RSI are in the levels indicated? or if they aren't, i can wait some candles more until these indicarts are in the correct level to enter in the trade?

Thanks for this web page. Are the best that i found of Forex in Internet.

It should say "oversold" for Sell orders... It's been fixed.
Thank you for pointing that out.

Regards,
Edward.

Hi Edward

Please clarify this. The entry rules for both the buy and sell trades in the above strategy have the following "and Stochastic is not in the overbought position (above the 80.00 level)". Thank You.

This strategy works well, IF you are patient to wait for the RSI to get above or below 50 and the EMA to actually cross. Almost without fail, whenever I've tried to 'get ahead' of these indicators by 'anticpating' that they were going to line up-the trade failed. Best to wait until the indicators are just as suggested.
Happy Trading.