Advanced system #3 (Neat entry: RSI + Full Stochastic)

Hello Edward,
What could we use to determine the trend in a H4 setting (instead of the 150 SMA)?

I want to say that I tested out this method, with only slight variations to suit my needs and have to say that it is wonderfully successful. In fact, it is the only system that I trade now.

I first used it on Oanda's 3 hour tf and I traded it for 50 trades. Most were 4 lots with SL's around 100 and TP targets of 25, 50, 75 and let the 4th lot run. I had a solid winning percentage of 66%. I took 6006 pips, and gave back 3654 pips. Average winner was 154 pips, average loser is 182. There was a net total of +2352 pips. This was about a month's worth of trading.

I've since tweaked it a bit to fit my liking. First of all, I use limit orders instead of market orders. I don't necessarily wait for a candle to close, if it is meeting the criteria for an entry I enter a limit B or S order around 20 pips off the current price. That seems like a lot, but I only trade dailies, so 20 pips is nothing. Then I use the 3 TP targets. I only use Stop losses after I have locked in some profits, as a sort of trailing stops. I don't use them when I first enter a position. There is too much stop hunting going on. After I reach my third profit target, I usually enter a stop at break even. Then I just trail it. I don't close profitable positions just because of a stoch. cross in the other direction, I just let the price and my trailing stop take me out.

Also I have abandoned the 150 SMA. It does work, and keeps you out of trouble, but I've found that trading the dailies, even in an up market, there is enough movement on most pairs (100 pips or so) in the short direction that I can usually hit my small profit targets.

I pay very close attention to support and resistance. I won't enter a trade if it doesn't have 100 pips or so room to move before it hits a S or R area. Time and again these S and R areas are stopping points.

Thanks for a winning system. If anybody wants any clarification, they can email me at joeandjulian[at]yahoo.com.

Sure,
That is a FXTrade trading platform from Oanda.

Regards,
Edward

Dear Edward,
Thanks for the great work on this website and the usefull materials. What is the charting or broker platform you used when trading this strategy. You know different charts have different atart for the trading day in Forex and I would like to know which one you used to trade this system and to show the charts displayed.

Regards,

Hi Nick,

I appreciate your idea and asking for my opinion.
Let me just say, that I showed you a methodology of trading. Knowing it you may now create, modify, change - for example, the way to identify a trend.

I looked at daily charts with 18 and 28 EMA settings you've mentioned, and.. I still like 150 SMA better.
Anyway, that's only the opinion based on looking back at past price performance.

I'm glad you are doing your own research. Keep it up!

Regards,
Edward

Hi Edward,
Thank you for the information and ideas you give us.
Please share your opinion if I use insted of SMA 150 for identifying the trend-
18 EMA - 28 EMA crossing.
Best Regards,
Nick

Hi Paul,

It will, but the number of false signals is going to be higher, which at certain point (the lower you go on the time frame) may shift the balance of winning and losing trades into negative territory.
I haven't tested time frame limits for this system. While developing it I targeted only daily charts.

Regards,
Edward

Edward, do you know if this strategy will work on lower timeframes?

Thank you.
Paul

Thanks Ed. Will try that out

Hi Narayan,

Since you are trading on MT4 platform, see if you like this idea of entries with GANN HiLo Activator indicator:
http://forex-strategies-revealed.com/mt4/gann-hilo-activator

The rules would be as follows: upon receiving a signal from the original (RSI+Stochastic) strategy, wait till the price bar appears on the opposite side of GANN HiLo indicator, then go, e.g. price above indicator line - buy, price below indicator line - sell.

Regards,
Edward

Hi Ed,
This is a very good strategy. Can you please let me know what I could have done during the last few days to avoid entering the market. Had I entered the market based on the stochastic crossover, my stop would have been hit. On my chart with IBFX, it shows that there was a crossover on 4/30. however the market goes down the next day. Is there anything else that I could have looked to before entering?
thanks
narayan

Hi,

According to strategy rules, to pick up signals we use this setup for daily charts only.

If upon receiving a signal you wish to switch to 4 hour charts to identify a better entry (which is good), you should seek for other methods of finding your confirmation signals, and do not use indicator setups from daily charts and especially 150 SMA indicator there.

Regards,
Edward

Hi
I have a question regarding this strategy. In my D1(daily) chart its showing the price below 150 SMA, RSI 83 and Stoch 85 which is a signal of short according to the rules but when i switched to H4 chart with same stuff its showing RSI 90, Stoch 87 BUT the price is well below the 150 SMA where i shouldnt go for short cz one condition is not meeting the rules. What should i do? Should i continue with short cz of daily chart indicator or i shouldnt cz of H4's? Thank you so much for such a helpful and nice information on this site. I will wait for the kind reply and guidance

Originally the system requires a stop to be placed above the highest point of the last swing high for a Sell order, and below the lowest point of the last swing low for a Buy order.

In case your stop was hit, you should wait for a current day to close before placing another trade. Make sure the rules for entry are still valid the next day.

Regards,
Edward

I used this system on couple of different pairs and went in loss of almost 40 pips in 2 hrz approx (3 times). Though SMA was well below 150, RSI was above 80 and Stoch was above 70 (all conditions met for Sell). Any guidance for me plz as i was thinking this system really useful but i don't know why its not giving me the desired results. And should i close my trade once it went to 40 pips loss on a D1 chart based strategy like this or i must wait for the day atleast?