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

Hi Claude,

I haven't found that comment yet even by looking on purpose. The website is already so huge, I'll keep on trying and get back to you once I find that comment.

Regards,
Edward

Beautiful stuff,

thank you for sharing. It is most simple but very effective technique. I think that when you're approaching the profit target, it is better to set the stop loss to 10-25 pips profit, instead of breakeven, especially when we are talking about hourly time frame and higher.
Should the market decides to pullback significantly, your risk of being stopped out increase rapidly, be it a stop at breakeven or a stop at 10-20 pips lower/higher.
As for me, it is better to leave a small reward for your self instead of hoping for a mercy and risk to get nothing at all.

To Jacinto: thank you for supplying us with nice screenshots. They are really helpful. Keep it up!

Best regards,
Edward

I've used an approach very similar to this one on 4 hour charts. I use a 240 HMA to gauge trend, and a 5.3.3 stochastic with lines at 70 and 30. When I have a 4 hour signal, I enter using the break of a trendline on 1 hour charts. I draw the trendlines on Demark principles. I only enter if the trendline is at an reasonably acute angle. I have a stop at the last swing high or low, and a target double my risk. If the target looks too far away, I don't enter. As and when I get near my target, I move my stop to breakeven.

I do the same using daily charts, getting my signals from them and entering on the break of four hour trendlines.

I monitor several pairs, but only have one trade open at a time.

The hardest part is having the patience to wait for the signals, the guts to enter, and the discipline to stay in the trade.

Hi Edward i hope you are doing well.

I have attached a nice trade setup for the Advanced # 3

Best regards,
Jacinto.

Nope, I don't know if someone has already created an EA for this system. I believe it is an easy thing to do for a skilled programmer. I'm not one of them, unfortunately :)

Best regards,
Edward

Hello,

Just to put my two bits, I have also been demo-trading this method on a daily time-frame. The results are very good so far. I follow the exact rules for entry. I exit whenever the stochs cross again, no matter when that is. The losses are usually quite small compared to the gains. But it is still early stages..

Regards

Edward. Do you know of a EA for this method?

We use 150 SMA here, but I guess yo refer to 200 EMA as a main trend indicator. Then you can ignore trades that contradict with 200 EMA, e.g. go counter-trend.

The stop loss will be high - around 100 pips or so, since we are dealing with daily charts.

When Stoch quickly reaches the other side, re-evaluate your new trading priorities: protect your position, may be take partial profits, decide whether you want the remaining position to chase higher returns and at what risk (stop loss) you want to leave it now. In other words make a new plan, don't let the market decide for you.

Taking 10-50 pips is too little for a daily chart setup, especially this one. I'm not quite sure how it is actually happening that you get just 10 pips out of a major pullback that once finished releases hundreds of pips to traders' advantage. Of course with such approach of 10-50 pips TP and 100 SL you've got a "crappy" risk:reward ratio.

Best regards,
Edward

So after using the system on demo for a few weeks on the 4 Hour chart here are some of my observations.

1. A majority of my trading opportunities are counter trend (on the wrong side of 200 EMA).
2. Stop Loss requirement is almost always near 100pips or more.
3. When trading counter trend I tend to take profit at 10-50pips.
4. When trading with the trend, stochastic reaches the other side of the range a lot quicker then 100pips usually.

So my problem with this system seems to be that my reward:risk ratio is pretty crappy. Although my winning percentage has been very high so far I need about 2-5 wins on average for every loss so I am not making very significant gains.

Hi Claude,

I wouldn't count candles. If price dances on any of the Moving averages crossing it back and forth many times, simply identify and draw channel lines and wait for a breakout.

Should we count it, it would be 9-10 candles to validate a successful break.

Regards,
Edward

Edward,
Would you wait for a certain period of time before considering the price to be over or under the 150SMA?
I think if the price has just crossed the SMA or has crossed it several times in a short period, we cannot assume there is a long term trend.
So, shouldn't we wait for X number of candles after a cross? If so, how many in your opinion?
Thanks,
Claude

Interesting, thank you Edward.

Hi,

I'd use 200 EMA for 4 hour charts.

Regards,
Edward

the 50sma is seen as a key moving average, I believe it works well on all time frames so give that a go

I love this strategy however I have had a lot better luck and personal enjoyment on the 4 Hour chart. I am wondering what SMA value would be suggested for this timeframe to get a good idea on the trend I should be trading?

Hi Salem,

ADX would be quite helpful, although it'll be late with approaching 25 level in some cases when rising from below. Same thing when it starts to descend after peaking at higher (35-40) levels - it'll continue to descend for some time while RSI and Stoch will be sending a new entry signal.

However, if to look at ADX globally, especially when it reads above 25 and continues to rise, it helps to build confidence about a new developing trading setup.

Best regards,
Edward