Complex trading system #4 (Trend trading with EMAs)

Hi Edward,

One more thing, is it useful to use full stochastic 21,3,3 (simple) as an additional indicator to this strategy (I use 30-minute chart GBP/USD) just to find out whether it is already overbought/oversold?

Thanks a lot for your help.

Regards,
Kris.

Hi Kris,
It is very good that you are doing thorough research on a favorite currency pair.
I agree with you about news releases time and that it is better in this case to stay out.

Regarding risk management, you've got to have at least 1:1 ratio. Thus you would need to either increase your profit target or set tighter stops. How many pips wide it should be, I'm afraid I won't be able to suggest a number, testing and trading will tell.

If you favor Stochastic indicator, definitely add it to your charts.
You can also watch a quick video about Stochastic and a simple strategy of using Stochastic:
http://forex-strategies-revealed.com/trading-strategy-doublestochastic/c...

With that strategy you can determine trend on weekly charts and then take only Buy or Sell orders on 30 min or hourly charts to increase your odds of getting into a profitable trade.
Try Stochastic settings: (5, 3, 3) and (14, 3, 3) as well.

Best regards,
Edward

Hi Edward,

Thank you so much for your input! I just missed the chance to enter a short position at 2:30 a.m EST..bummer! I would've gotten 30 pips profit (less than 30 minutes) or even 145 pips profit (3:30 a.m candle) if I had entered a transaction...so I guess now I have to wait for another signal according to your "complex trading system #4."

Regarding the risk management, after doing the back-trades I think in using your strategy (complex trading system #4) I need to set a stop loss for -47 pips in order to trade in the 30-minute chart (GBP/USD). Your strategy works that way, but it's pretty hard to get 47 pips profit, and I guess I will need to ignore the stochastic indicator in applying this particular strategy of yours.

Anyway, do you recommend to enter a short/buy position if the RSI 21 reaches 30% or 70%, or should I wait for the RSI to go back crossing 50% just to make it safer?

I'm glad that I found this web site, since I had been trying to find the best technical strategy to trade the GBP/USD for one year! Keep up the good works, man!

Regards,
Kris

Hi Edward,

Does this strategy not work on sideways trend? It hit my stop loss during sideways trend (bollinger band), although the price was below 80 EMA, the 3 crossed down the 5 EMA, and both crossed the channel 13 and 21 EMA. Thanks for your help.

Regards,
Kris.

Hi Edward,

One more thing, should I use bollinger band just to show me whether the trend is sideways or not? Thank you.

Regards,
Kris

Hi Kris,

To make it safer we wait for RSI to cross 50.

I wouldn't recommend trading 5 min charts with this method, it'll be unprofitable.

Any moving average based strategy will be vulnerable during ranging markets.
Regarding Bollinger bands, you use them after you identify that the market is ranging.

The indicator for identifying ranging market would be ADX.

Also you can try developing next theory/idea (I haven't worked on it enough yet, so just sharing the thoughts.)
- Plot 50 Simple moving average (any time frame).
- compare the change in parameters of the moving average based on the last two days: yesterday and the day before yesterday.
- if the change is more than 10 points, a strong trend is in place. (For, example, the day before yesterday 50 SMA readings were 193.55 and yesterday - 193.66. We have more that 10 points progress.)
- if the change is 7-8 points - a weak trend is in place.
- if the change is less than, say, 5 points - there is no trend, the market is ranging.
If you like the idea, you may work out your own measurement of the trend in points.
All-in-all this would be unbiased determination of a trending or ranging market.

Kind regards,
Edward

Dear Edwards;

I just want to tell you: This system has been stolen & sold in ebook(pdf) format by the guys called Jeff Brown with his ebook : Forex Hitman.

Thank you for the note.
Things like this happen in every business: ideas are stolen and sold for profit.
Well, this should be a concern for those people who pay for the information which is available for free.

Regards,
Edward