Complex trading system #4 (Trend trading with EMAs)

Yes, and it was performing very well for me. How well? That's simply impossible to statistically measure for me considering the amount of strategies I've been trading and testing over the past years. I pile up the performance data for a number of strategies that I work with, otherwise I would never be able to find enough time to deliver stats for each separate method. I'm very sorry about that.

Kind regards,
Edward

Hello Edward! U are too much, great strategy.
I found some assistance adding 200SMA for major trend direction and ADX21 for strength using same exit & entry rules in your post and it was quite profitable in 6 majors over the last 5 days. Checking thru timeframes from 5mins to monthly every 3 hours while monitoring the 1hourly timeframe also useful, unfortunately i dont know how to apply proper stops, the unpredictiveness of market movement beats me.
This is just the best forex website ever!
Best regards
Osahon

Hi Edward,
i am not sure about exit signal.
You say that when we get the signal to enter we always wait for the current price bar to close and only then enter the trade.
But what about exit signal, must we wait for the price bar to close or we exit immediately?

Best regards,
Gita

Hi Osahon,

Since we always rely on indicators to suggest an exit, we need only simple stops, which would protect us from sudden large turnarounds.

Such stops can be placed manually once you visually detect support/resistance areas, or you can use some help with Fractals. Also, among other indicators, you can try Parabolic SAR based stops, or even trail stops behind Heiken-ashi candlesticks.
Alternatively, have a look at the following indicator:
http://forex-strategies-revealed.com/mt4/stochastic-bbands-stop
and I'm sure there are many other simple solutions. Again: our goal is simple protection of a trade, not a close tight stop order.

To Gita: Once we get a signal to exit, we wait for the current candle to close before closing a trade.

Kind regards,
Edward

Great work and quite informative. Thanks Edward for sharing your knowledge.

Hi Edward,

I'm a 17 year old forex trader. Trading for 8 months now (only EURUSD). First, I would just like to sincerly thank you for creating this site because this is where i learned most of the things I know. Question: I looked through the comments and don't think anyone asked but I would like to know if I should use the default ADX (14) or do you have a recommended setting? I would feel more comfortable knowing the trend's strengh.

Thanks in advance,
Linvor A.

Hi, one more thing. I know it's allowed to open another position upon the crossing of the 3 EMA and 5 EMA when it's in the direction of the 80 EMA, but is it recommended or is it just a suggestion? I ask this because I believe their is a chance of false signals... I'm not sure if this makes any sense.

Thanks in advance,
Linvor A.

Thank you Linvor,

ADX 14 would be very good. Using the default settings is beneficial in many ways:
1) the indicator was build with the suggestion of the standard settings (14).
2) by using the default settings you'll be trading and seeing the same signals that majority of traders see.

I sometimes change ADX to 10 or 20 to see if I can pick up any additional clues from it. But whenever I can I stick to the defaults.

Taking an additional position on the second or third 3&5 EMA cross is a suggestion, which would work best only if you have already made profits from the first open trade, and those profits are sufficient to cover the risks of opening an additional trade. (E.g. if 1st trade is running with 20 pips profit, you're allowed to add an additional order with a stop loss of 20 pips, assuming that the stop loss for trade #1 is by now at the break-even).
Your goal is to not allow more risks. If this goal is not looking achievable when you're about to open a second trade, then just ignore the signal.

Kind regards,
Edward