Forex trading strategy #6 ("Key Simplicity")

P.S.: I tried to use that CCI Histogram Program thing for MegaTrader4 but I couldn't figure out to transfer it to my brokers MegaTrader Platform once I had it on my computer. (BaronFx) If anyone can give me a tip on that, super. Not very tech savvy.
Mr. Revy, if you have any thoughts on my post above your experience will be appreciated. This has been working nice for me for about 90 days but I want to fine tune. Of course, if "leave well enough alone" is your advice, I'm there. But, in case you see any glaring red flags of future problems, give a heads up. Thanks. Great site by the way, my goodness. Best on the web easy!!

Eric A.

Hi Eric,

Your strategy is well balanced; and although 100 pips stop isn't looking sophisticated, it is justified by the fact that it's larger than average daily range for a chosen pair. Therefore I woudn't try to change it. Every idea I have would result in a more distant stop, so I'd leave 100 pips for this one.
What I would change is a superior time frame reference: instead of monthly charts, I'd seek trend direction on weekly charts. Basically, you can use the same CCI on weekly charts to identify a trend. (Monthly trends are normally used for weekly trading).

In order to add any custom indicator to MT4, please follow the steps on this page:
http://forex-strategies-revealed.com/mt4/how-to-add-and-use-mt4-custom-i...

Regarding different currencies, each one has its own behavior. For AUD based pairs we often have smoother looking trends, which derive from a combination of several factors:
- it is a commodity currency, which suggests a projection of commodity prices onto currency behavior - this relationship creates a smoother reaction to changes.
- it relies on cycles in production and demand on natural resources, with such cycles again we don't have sharp turns in the market.
- AUD participates in carry trading (AUDJPY), as we know, carry trades are driven by unified traders' interest to certain market direction = trend.

Best regards,
Edward

Thanks for insights into commodity currencies and your desciption does match the behavior I've experienced. The link to instructions for loading a MT indicator is helpful. Your right, the weekly is great for confirming daily chart trend direction.
Yes, I checked daily ranges for various pairs, and now have a good idea of range variation between pairs. I'll keep working on pairs with ranges less than 100 so my fixed stop loss makes sense. When I can afford a larger stop loss based on percent equity, I'll look at the pairs with a broader range.

Dear Edward

You state above in one part of same paragraph that for those that wish to trade the H1 time frame: for a sell-signal, price-level should be below 20/30/50 EMA - for it to be a downtrend, and in earlier part of the paragraph you state 20EMA OR 30EMA OR 50EMA. OR can not be correct or can it.

Questions:

(1) May i assume that was a typo and the OR should be AND. This means the price level has to be below 20EMA AND 30EMA AND 50EMA.

(2) For a 5EMA and 12EMA to cross and at the same time the price to be below 20EMA AND 30EMA AND 50EMA one will have to wait in some cases a few hours or possibly a day after the crossing takes place for the price level to be below all 3-EMA's above in order to take the position. Is this okay?

Yours,

Isabel

Hi Isabel,

In answer to both of your questions -

What Edward meant was you can use either a 20EMA or 30EMA or 50EMA - the choice is up to you. The price (as per example) would be below whatever EMA you choose for it to be a downtrend. So you don't have all the 3 EMAs (20,30 & 50) on your chart, but just one of them and use that as the trend giver.

Hope that's ok Edward.
Cheers
Phil

Thank you, Phil, I always very grateful for such help!

Best regards,
Edward

Is there a way to eliminate false ema crossover on the 5 and 12. Because sometimes when the ema's cross and the RSI is reading right it turns the other way. Thanks

We would need more tools, I suppose.
I'm testing CCI 50 to filter trends.

Mark