Complex trading system #10 (Egudu simple 4 tools trading)

Speaking about long term trends, you're absolutely right.
Long term picture is a key to understanding market directions.
You can also try 34 SMA or 34 EMA, whichever you like most.
On a longer time frame you not only check for how long the price has been trading above/below the SMA indicator line, but also if the price trades near or just begins to approach SMA line.
The areas around this moving average is a high action area, where traders look to get into new trades at the best price. The further we go from the moving average, the more expensive=riskier it becomes to chase a trend. So, 30 or 34 SMA can serve as a good reference point.

Your approach to moving down to the lower time frame to check for the triggers is also correct. I would first, however, go to 4 hour time frame to evaluate whether the market is developing a move with the trend, or is preparing to make a correction.
Then it would be good to proceed to hourly charts and look for entry signals with the basic strategy rules.

Happy trading!

Edward

Hi Claude,

When we refer to MACD being below or above zero line, it is easier to focus on MACD histogram. MACD histogram readings above zero = buy, below zero = sell.
When 2 MACD lines cross, MACD histogram flips over zero.
Thus, for example, when MACD lines cross and start heading upwards, they could be still below zero, but MACD histogram will be already showing above zero, advising to buy.

Hope this helps,

Edward

Hi,

Another question/comment.
To implement your strategy with an even greater % of success, would it be better to trade pairs that are trending on a longer term? And only trade on the side that is trending on the longer term? This way, you get bigger profits on average if the long term trend continues for a little while.
I was thinking to look at 30 SMA. If the price is above (or below for a sell) the SMA for a whole month, then you go on the 60 minutes time frame you suggest and check if a trigger is on.

This would of course limit the number of trades a great deal...
Is there another way to do this you could suggest?

Thanks

Hello,

I am new to Forex. My limited experience has been more "gambling" than anything else. (Losing, of course!)

I have looked at your "4 tools trading" strategy and on just about any pair I have looked at, there would have been tremendous gains at times. Of course the big gains always attract our eye first. There are always several false triggers with limited losses.

The question I have is this one: does MACD have to be trending upwards ABOVE the 0 line to go long? If MACD is trending trending upwards BELOW the middle, can we still buy?
Hope it makes sense.
Thanks

Claude
Canada

it is applied to Close.

Regards,
Edward

pls can you tell us what settings you use for MACD because i know for one that it could be set on open,close etc.

HI Edward,

Many thanks..

Laurent

Hi Laurent,

Right, except for ADX.
ADX indicator doesn't show direction of the trend, but rather suggests about its strength. Therefore, if ADX line is above 20 or 25 mark, we say it is a clear and strong trend (either up or down). When ADX is below 20 mark there is no clear trend in place.

So, for short entries we need 7 EMA to cross 21 EMA downwards, MACD to be sloping down and ADX to be above 20 or 25 mark. (Typically we use 20 mark).
Long entry - you got it right.

Regards,
Edward

Hi,

My advance apologies as i'm still new to forex. I would like make things a bit more clear.

long :- 7EMA crosses 21EMA up , ADX passed 20 /25 mark upwards , MACD is trending upwards.
short :- 7EMA crosses 21EMA down, ADX passed 20/25 mark downwards , MACD is trending down.

Is this correct? cause i'm a bit confused about the ADX part.

Thanks
Laurent