Forex trading strategy #3 (EUR/USD simple system)
Submitted by Edward Revy on February 28, 2007 - 15:13.
As we move forward we discover a strategy that fits only chosen currency pairs.
Take a look at the next Forex trading system:
Currency pair: EUR/USD.
Time frame: 30 min.
Indicators: MACD (12, 26, 9), Parabolic SAR default settings (0.02, 0.2)
Entry rules: When Parabolic SAR gives buy signal and MACD lines crossed upwards – buy.
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Hello Edward
I had a question about this system. What I noticed while looking at the charts is that sometimes after the MACD cross, it makes a nice profit but by the time it crosses again in the opposite, its turned into a loss. How would you avoid this? Thanks
Michael
Hi Michael,
Try using trailing stops once a trade moves in your favor.
Or try at least bring stop loss to break-even once on the positive territory.
You may also use this strategy just for entries and seek exit recommendations from other trading approaches.
Kind regards,
Edward
Hi Ed,
Good work you are doing. i have some questions about this system though so far a very great one.
The Questions are:
1.What is the Suggested stop loss.
2.Does this system accommodate news reports.
3.What other currency pair can work for this setup and what time frame is more appropriate.
Warm regards
Ugo
Hi Ugo,
Having Parabolic Sar indicator on the chart I like stops suggested by this indicator. Count two most recent Sar dots and place stop just outside them.
Among other pairs you can try USDJPY and USDCAD.
Some other suitable time frames, you'd probably need to find on your own. I think anywhere between 15 min and 4 hour should be ok.
The system will react to news like any other one. However, with Parabolic Sar there might be troubles: if price swings up and down violently then PSAR will change dots from sell to buy chaotically. Also the recovery process afterward would be longer for this indicator. I wouldn't suggest relying on PSAR during news reports.
Kind regards,
Edward
has anyone tried using Stocastic Slow with this strategy as well? I notice you get K% & D% crossing reliably before MACD does. Also, it seems to have worked well for me at 5min on AUD/USD & USD/JPY. Any Thoughts?
Does anyone has an alert for this system on meta trader?
Thanks
Thank you.
Here is how we may try working with Slow Stochastic 5, 3, 3:
(still on 30 min though, 5 min should be tested separately).
Ideally, we enter trades only when MACD signal comes first, and then Parabolic SAR dot changes direction.
(If Parabolic SAR advises new trend before MACD lines cross each other, it is better to avoid entering.)
Well, now if we add Slow Stochastic, we no longer need to avoid entering, but only in cases when Stochastic cross happens inside overbought/oversold zone.
That's my thought.
I'd be also glad if someone could code and share with us the automated version of the system.
Regards,
Edward
Is there a probability of greater success in trading with more advanced strategies as opposed to simple ones? I'm most familiar with ICWR that combines elliot waves with fibonacci which seems most simple to me, and I'm fairly new to forex. Would I have to study more advanced strategies to increase profits to loss ratio. What do the professionals think?
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