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Complex trading system #4 (Trend trading with EMAs)

Trading strategy setup:

Time frame: 1 day, 1 hour or 30 min.
Currency pair: any.
Indicators:
80 EMA
21 EMA
13 EMA
5 EMA
3 EMA
RSI (21)

Trading rules:

80 EMA suggests major trend direction.
When market trades above 80 EMA – uptrend, opposite for downtrend.

21 EMA and 13 EMA give a current trend direction.
While 13 EMA stays above 21 EMA – uptrend, opposite for downtrend.

RSI (21) above 50 mark suggests an uptrend, below – downtrend.

Entries are made on a cross of 3 and 5 EMA in the direction of a trend:

Buy when 3 EMA crosses 5 EMA upward in an uptrend market AND both 3 and 5 EMA cross a channel of 13 and 21 EMA AND RSI is above 50, and price is above 80 EMA.

Entry with Sell order when 3 EMA crosses 5 EMA downward in a downtrend market AND both 3 and 5 EMA cross the 13 and 21 EMA AND RSI is below 50, and price is below 80 EMA.

Note that additional entries are possible when 3 and 5 EMA cross back and then shortly after make a signaling cross again.

Note, that when we get the signal to enter we always wait for the current price bar to close and only then (if conditions nave not changed) - open a position.

FOREX TRADING STRATEGY


Exit rules: when 13 EMA crosses 21 EMA back.
Keep an eye on 80 EMA, also watch RSI 21 to cross 50 point mark again - both will suggest immediate exits.

P.S. For more conservative trading take positions that do not contradict with 80 EMA's trend suggestion.

Happy Forex trading!


http://forex-strategies-revealed.com/


Hello,
thank u for sharing your trading system, Do you do it on real world, too? what number of your trade be profiteble (in percent)?
Thank you,

I traded this system for real some time ago. Now I trade a combination of different systems and surely use EMAs to guide me through.
What kind of number do you mean?
Regards,
Edward.

Hi, I trade this system before, too. I dont use stop lost just take profit at 10 to 15 pip. when I start it with new month and new demo account it is profitable but in one trade I lose all of my profits. when I use stop lost about 20 to 30 very wonderfull all of my trade touch stop lost. what is wrong with me? Can you help me? I use one minut and daily chart and focus on AUDUSD, I wait for crossing but ema have lag and sometime false signal even in confirm of RSI, I confuse to knowing when is best time to enter. Just I know the main power of price movement is FUNDAMENTAL, but who knows that what happened in shortterm analys? What must I do with forex?
Best regards,

Hi,
You should always use stop loss orders in Forex. As you have said, one day it will eat up all your profits if you don't use a stop.

How wide a stop should be depends on a time frame, volatility of the market price, the point where you entered the market, a lot size you trade with etc. That's theory.

On practice traders use 2 kinds of stops:
1 - critical stop - the widest point you can still afford comfortably and till which your trading position can remain open. This is sure not a pleasant thing to accept a critical stop, but it allows traders to pick wider stops (in your case it could be, for example, 100 pips), thus giving the market a room to unfold the price actions and choose a direction in which to trade without triggering the stop prematurely.

2 - smaller size stops. These stops MUST be picked wisely. Taking a rule of set number of pips, like 20 or 30 or 50 etc for your stop is not the best choice, however the simplest. Instead, focus on/learn about support and resistance in the market and make sure to place your stop according to those important levels. (The subjects to cover include price swings, trend lines, Fibonacci levels, Pivot Points).

EMAs indeed are lagging indicators, plus there cannot always be only winning trades; but the number and the size of winners must exceed the number and size of losers. Just make sure you protect yourself with a stop and everything should be alright.

Hope this helps,
Edward.

Hi, Thank you for your help. I use one minut chart for entery and exit and H4 for direction and sence of market, I test my strategy on "forex tester Professional" and demo accout too and gain good profit but I fear on real account even with small investment. my seting is 2ema High, 2ema Low, 10&20&40 ema Close, 4 close RSI, enter buy when crosing and RSI up 70, sell when crossing and RSI down 30, I draw line for last day high and low and open price of current day. on H4 in researching the past I see it profitable system but How? I need some filtering on it. Can you help me?
Regards,
Farid,

Thank you, Farid.
On the first look your system appears to be fine, especially if you trade it on 1 minute charts, which is quite challenging itself. I'll set it up on my charts and in a couple of days post my comments on it.
Regards,
Edward.

Hi Farid,
I'm going to comment it, but we all should agree that it is my feeling and vision of this system, you can accept or disagree with it.

First of all I found no use for myself in looking back at 4 hour charts. If you want to have a feeling of the market trading 1 minute charts, you may look back at 5 minute, at most 10-15 minute chart...
Why? because 1 minute trading undergoes such quick and almost spontaneous changes that it almost violates all rules of trending. With 1 minute chart I would trade what I see here and now, not what I saw couple of days ago (that's when you use 4 hour charts).

Then, I see that you may easily drop EMA 40; EMA 10 and 20 can perfectly and much quicker tell trend direction on a 1 minute chart.

Now, I'd like to add one more indicator - ADX. Why? Because with 1 minute trading you do want to avoid ranging/sleeping market at all cost!
Try using ADX 10, draw a line at 20. Now, if ADX is below 20 - avoid trading, there is no trend or it is very weak. Once ADX gets above 20 - it is time for action.

Everything else looks good and should give positive results.
Test it, tune it and best of luck in your trading!

Regards,
Edward.

Hi Edward,
thanks a lot for your time to test, I suggest your filtering but I want to trade without any indicator, I change it a little faster 5,10,16 LMA Close and Fibonacci line (Complex trading system #5 (Fibonacci trading)), I make 2side fibo in one with this levels: 0.25(SL or entery point), 0.382, 0.500, 0.618, 0.75(SL or entery point), 1.618 & -0.618, 1.382 & -0.382, 2.382 & -1.382 as exit point you can add @%$ in description side for showing price on line in uptrend I use 0.25% line and in downtrend I use 0.75% to enter after pull back from 0.615 or 0.382 line, the best thing in this strategy is I must look in and consantrate on price movement, by this way we become friend with trend and we trade on what market is not trade what we think.
Test it and give me your comments,
Regards,
Farid,

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