FREE FOREX STRATEGIES

Complex trading system #2 (“2-Cross”)


Currency: GBP/USD (preferred) or any other.
Time frame: 3 hours (preferred) or 4 hours.
Indicators:
SMA 200, SMA 100 – these are two influential SMAs; you will find price “obeying” their boundaries.
SMA 15
EMA 5
MACD (12, 26, 9)


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Hi Edward,

Thanks so much for sharing these wonderful and definitely useful trading methods! Since my encounter with your website just a few days ago, I must say that it's really my blessing to have chance upon this website (I was desparate for a method to use after having lost alot in the past).

I just saw this 2-cross mtd this early morning and have been back testing on a few pairs immediately. I have a qn which I hope you can help me with - you mentioned that some other indicators may have to be looked at for exit signals for 1H charts. Is/are there some you can share?

Thanks in advance
brightdays

what a fantastic site. stalin

Dear Valérie,

yes, you can certainly use Parabolic SAR for stops.
I haven't particularly tried to apply it for Oil trading, but I'm sure you can use it there too.

Kind regards,
Edward

Hello Edward,
I'm testing this strategy and it seems to work fine for me. Thanks a lot for this site!!! Please, could you tell me if i can use Parabolic SAR for my SL?
Does somebody knows if this strategy also works for oil trading?

Greetings from Switzerland
Valérie

Hi Pete,

While searching for that ONE best strategy, it is understandable (and it's a very familiar feeling) that you'll be overwhelmed with the rules, indicators and ideas at first. But, on the other hand, it's always good to have that many options to choose from, isn't it?

When it starts getting complicated, I use a reverse method: I have my own small trading notebook, where I keep collecting favorite ideas & methods which worked for me during testing and, most importantly, which made a perfect sense to me in a way I understand the market and its behaviour.

With this small trading book I can always open a new trading strategy and immediately try out my new favorite ideas on it in order to see if I can improve it. In such simple way I stay organised and focused, and never forget the best methods I ever traded with.

Answering your questions:

1) so far the mix is fine, but since it's not a finished/polished strategy yet, it's difficult to evaluate it any further.
2) 20 pips stop is a bit tight for 15 min. I would say an initial stop of 30-40 pips would be ok. As a rule, the initial stop should be wide enough to give some room for a trade to develop, especially so when you rely on entries using Moving averages. Later, as you plan on using swings high/low or fractals, you'll be looking to tighten your stop whenever possible. (That's the stop suggestion for GBPUSD pair).
3) 100 & 200 EMAs work good as trend filters across all time frames, be it daily or 15 min or any other.
4) It's difficult for me to make such comparison so far, I'm very sorry.
5) There are many great strategies that rely on Moving averages, and many traders who would use nothing but moving averages for trading.
Basically, if you look at this indicator, it smooths out the price data for you, so that you can focus on Major trends and changes in the market while filtering the rest of the noise (depending on the period on the MA you'll have, you'll filter more/less noise).
Trading with Moving averages offers great simplicity, transparency of chart and trend analysis, and many profit opportunities, same as with advanced #3 or 5.

As you look for Your best/favorite strategy, you'll need time to find out your best times frame, which would depend on how active you want to be during the trading day. It takes time to thoroughly test every time frame, but you always get the result.
When your goal is to use multiple time frame market analysis, try using no more than 3 time frames at one time. Also keep in mind that oftentimes 2 time frames is more than enough to learn everything you need to know about the market, while keeping things simple.

Kind regards,
Edward

thanks for the lesson

Dear Edward,

Thanks again for your help and information. I am learning so much from this site and from you. Thank you! I thought I would send you and e-mail, however you never know -my simple ( newbie) questions may help someone - so in advance, I'm sorry for these basic questions on this thread! The thing is I really would like your advise please. I have already studied and set upon my trading strategy.( or so I thought)....but the more I read the more strategies I want to try....and now I think I am confusing myself and getting mixed signals!! I know I should KEEP IT SIMPLE and that is what I prefer, which is why I have chosen strategies with moving averages etc....However I really like the look of Advanced #3 and Advanced #5. Do you think in your professional experience that it is good or not too mix so many strategies??

I also wanted to try a scalping strategy ( as I feel my daily moving average strategy may be safe, but won't give me the amount of entries / opportunities I would like) In the end I decided to try the scalping strategy by Hezzel ( The one using Bollinger Bands )....But the problem is I feel I am mixing too many strategies!! What do you think please Edward?

My conclusion has been to kind of mix it all up into one strategy - So I have set on sticking with the moving averages on a daily time frame, but also added a second time frame based on Strategy #1 ( Simple Balanced System).....So I also now use 15 min charts with EMA 5 & 10 . I will use the EMA 10 as the trigger according to your suggested EMA 9 theory. I have added RSI / Stoch / MACD as my signals. I will use either the swing lows/highs or fractals as my stop loss setting ( but with min 20 pips ). I have also added EMA 100 and 200 as my guide to the greter trend direction.

Please can I ask you for your advise?
1) Does this all make sense to you or am I trying to mix too much?
2) Is my min S/L of 20 pips ok on the 15 min time frames.(will adjust to SW-High/low)
3) Is my EMA 100 and EMA 200 idea right for this time frame as a trend filter? ( I.E i will only trade LONG above these EMA's and only SHORT below)
4) Am I correct in thinking that this strategy (on daily ) will produce approx the same signals ( or same amount of entries) as the ADVANCED STATEGY # 3 ( neat Entry) but only slower??
5) Finally, I know you never reveal you personal strategy, however in your opinion do you think moving avergage strategies are more or as reliable as something like your Advanced strategy # 3 ( Neat entry) or # 5 the daily morning breakout??

I'm sorry if my questions sound confusing. I guess we are all searching for the ONE perfect strategy - but any advise is greatly appreciated. In conclusion , i guess I am looking to try to keep things as simple as possible but also flexible for longer and shorter time frames....Is this possible do you think?

Thank you in advance for your feedback.

Best Regards

Pete

Hi Pete,

when trading with Moving averages crossover on daily charts, 100 pips stop will be too tight for EURUSD and USDJPY pairs. We have to also remember that we'll be entering a trade not at the very best/safest price level (the best and safest are those near key market Support/Resistance areas, but that requires a totally different study and knowledge). The point is that there we can afford a tighter stop, but with the smoothing averaging action of the SMAs we can't afford too tight stops. Is a fixed stop value really the best choice? Could be, but also could be not.

I would also like to see the relative price/market reaction picture, which you can observe with the help of, for example, 100 SMA - a midterm floating support/resistance line or SMA 200 - a long term support/resistance line. They both advise on the safest distance for protective stops; but, talking about daily charts, it'll mean lots of pips away from the entry point.
If 100 and 200 SMA based stops seem to be too far away, try Fractals (a study that is based on swings high/low). Place your stop behind the closest fractal.
In all those cases your stop will have a meaning &purpose, while placing a fixed value stop has only monetary meaning more related to risk:reward, but, again, with SMA trading it is difficult to foresee the size of rewards upfront, and therefore it is almost impossible to figure out the risk:reward ratio for a new trade.

Once MACD and EMA cross, the sooner you enter the better. But if the market retraces back after a short time inviting you for a second equal or even a better opportunity (say, within 3-5 candles), you can still enter a trade.

It a good idea to use those pin bars. Making sure that your next trade has the highest winning potential according to filters and setups is a very very good thing to do. Don't be afraid to filter out some winning trades with it as well. As long as your filter makes your win ratio better, even if it means fewer trades, you'll be a more happier trader by the end of the day.

Kind regards,
Edward

All right edward, Thanks a lot,i really appreciate your help;)

Will try it soon,

Cheers

Hi Edward,

Thank you so much for reply and advise. Regarding the stop losses for DAILY set ups - Do you think that a fixed stop of for example 100 points on the majors like EUR/USD or USD/JPY or even a cross like CAD/CHF is enough or do you think 100 points is a bit too tight? ( I have chosen 100 points as a fixed monetary stop ) - Also I have tried using trailing stops, but I find that I am stopped out more and my win/loss ration is lower.....again is this because my stops are too tight, or would you reccommend not using trailing stops so much. My second question is about entering a trade sometime after the EMA's and MACD have crossed. How long after the cross would you still consider getting in on a trade ( assuming all the signals still seem right???) ....and finally I am using pin-bars as a trigger to enter a trade (similar to Azim's strategy)....Do you think this is necassary (good idea) or will this severly limit the amount of trades I can get into as I will be waiting for too many correct signals?? Wow-so many questions.....but thank goodness for a site like this....Thank you Edward / fellow traders for any advise you can give. Best Regards. Pete P.S I will follow up with feedback regarding this strategy using Daily set ups / charts....

Hi,
Great strategy! Using it on a 1hr GU chart provides a more accurate result.
Tyson

Hi,

there is always ways to combine strategies to get a better return. I think you should definitely try both.
For daily charts you'd need to work more on stops, first of all, since they'll obviously need to be much wider. Consider looking at daily average range numbers or indicator.
This one can be of some help:
Daily_Range_Calculator.mq4

Kind regards,
Edward

Hi Azim,

for 1h GBPUSD you'd be looking at 30-35 pips stop minimum.
With 100 USD on balance, you can afford to trade only micro lots (0.01 of a standard lot)

kind regards,
Edward

Hi Edward,

Thank you for your 2 cross system using MACD and EMA. I would like to try to use it on a longer time frame - i.e Daily charts. Do you have any advise for me please? In the meantime I will try a combination of this strategy and the SIMPLE strategy 6 ( EMA 5 & EMA 12 & RSI 21) and let you know how it goes. I think a combination of the two may work well - what do you think please??

Cheers

oh by the way Edward,at what stoploss do u recommend for TF 1 hour,pair GBP/USD with 100usd capital to start,any suggestion?

Thanks,
Azim


 

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