Scalping system #6 (EMA Bands)

Hello Everyone,

I have been trading the system for about 3-4 weeks now.
What I have to say.
I am a kind of guy who trades system but still doe snot do it blindly. I there is signal from the system to buy/ sell, I not always follow it because there are other conditions. I use SARs to as one more indicator for trend confirmation and I also used it to trade when market is choppy and EMAs are not working well in choppy market if you trade 5 minutes chart. Generally speaking 5 minutes chart is good if you are looking for more pips. Like 5 and 20. I would even say 10-20 and more. I managed one trade of 50 pips taken.Added 10% to the balance. But, I am not going to repeat it:) The pressure is just too high for me.
Ok, if you are looking for 1-5 pips the best is to trade lower time frame. I use 1 minute. With 5 minutes you can be already late if you are looking for real small scalps. you might use bigger lots of course. I have 21 lots to trade and often use all of them to take 1-3 pips. 1 minute works fine. Plus it is very important for me to read candlesticks.When you scalp, it is very important and add one more filter to the system. I also do not follow signals when I see the trend is approaching pivotal points, resistance/ support level.

Neal,
That would be soooooo great!
Jim

Hi guys,

The thread for this trading strategy has become some what long, and a bit confused with the many excellent contributions, suggestions, additions, recommendations, etc. Over the course of this weekend I will take it upon myself to work therough the thread and summerise the contibutions and write up the trading strategy and rules, as I understand them to currently be. When I have done so I will send it through to Edward so he can post it back up on the site, thereby making it available to all, and we as a group we can further test it, refine it and make suggestions about enhancements and improvements.

Cheers

Neal

Hi Andrew,

When you trade with a larger trend, the odds are in your favor.
Depending on initial time frame that you choose, you would try look at a higher time frame, which should actually be not too high and not too low.
Here is a suggestion for checking trends on higher time frames (the first time frame is the one you trade, second and third - where you check trends).

1 min => 5 min => 30 min
5 min => 1 hour => 4 hour
1 hour => 4 hour => daily
4 hour => daily => weekly
(Source: http://forexbeginners.net/trading-multiple-time-frames)

Regarding your first question: yes, you're right. It means we are picking trades that follow the direction of last 30 minutes trend.

Traders give preferences to 5 min vs 1 min charts, because 1 min charts often are too noisy to trade with, they give lots of signals back and forth before profits are able to accumulate.

What appears to be the end of a trend on 1 min chart could just be a small retrace on 5 min chart, and so, traders who trade 5 min would still be in a trade while 1 min scalpers should be forced to exit.
A tip: when you use 5 min chart and you've got accumulated some profits already and would like to keep them as is, go to 1 min chart and wait for an early exit there. Especially this applies to situations when you get a large candlestick - large move in your favor. Then don't give it back and seek an exit on 1 min time frame.

Regards,
Edward

Hi everyone,

I am really interested in this system with the EMA bands though have had some mixed result on a demo account as i am pretty new to the forex & scalping.

1. I was Just wondering would you ONLY trade with the Daily or hourly trend or can you trade the system as long as all the indications are there to go long or short? I noticed one of the posts said to use the 30 minute chart to check the trend, so does that mean you trade the trend of the last 30 minutes?

2. The 1 minute charts seem to give you more advanced notice of whats going on compared to the 5 minute charts. Its like the bad news is already in the i minute but the 5 minutes is still looking relatively ok to get in, however i get the impression that most are using the 5 minutes charts for this system, does anyone have any feedback or preferences re which charts to use?

Any feed back would be greatly appreciated

Great site, love it!!!

Regards
Andrew

Hi,
just a side note. Some have called the original poster Mr. Frank Tenerife. I think it's Frank who lives in Tenerife. Tenerife is not his last name, it's a Spanish island. http://en.wikipedia.org/wiki/Tenerife
Cheers
Peter

This is a great site and a great thread. I have used the Guppy Multiple EMAs trading stocks with some success in the past. It was a great peice of lateral thinking on the part of Frank Tenerife to apply it to scalping FOREX pairs.

Just a thought to avoid the ... when to trade, when not to trade... question and thereby over come the perceived 'weakness' of the method discussed above. How about using the ADX as a filter. In other words, only trade when the ADX (for a particular pair or time frame) is above 20 and rising, or above 30 (in which case it does not necessarily have to be rising). Do not trade when ADX drops back below 25 (or maybe 20). Another option is to shift time frames until you find the timeframe where ADX is 30 or above and then trade the method, similar to the picking tops and bottoms advanced strategy outlined elsewhere on this site.

A great site Edward. Thankyou. I keep coming back to see what is new.

Also, I would be interested in hearing from the contributor using the two SARs as to what he is applying the SARs: is it the same approach to using SARs in Scalping system #4??

Thanks again for a great site and great and generous contributions from all concerned.

Edward, Thank you!

I actually starting seeing my trades results improved considerably day by day. My goal is to risk no more than 1% of my account per day.I have managed to achieve this in my last 3 days. But still need improvement. Not even per trade. Per trade I am thinking no more than 0.4% of my account maximum. Thus, my stop loss depends upon the size of my position. I am trading $1000 balance now. If position is $0.10 I am risking 10-15 pips. If it is $0.50, I am going down to probably 8 pips. I am trading pretty fast and waiting to trade come back after going against me 20 pips looks to drwn out for me. There is trends within trends and market movements., I actually manage to make money within this micro trend more than I am in minus with original position and I simply close this position even at loss but when I traded on more from other positions. i have maximum 3 positions opened at the same time.
When market goes sideways, I am using SAR's. I am trading 5 minutes template, as I used to trade 1 minute and I become too spooky and it doe snot let me see bigger picture and bigger moves.

"The strategy is vulnerable during quiet trading periods and at times when market moves sideways.
New York and London sessions remain the most favorable for trading with EMAs."

Every strategy has it bad moments. This strategy really shows great promise and it actually works! If you follow the rules of course.
EUR/US New York and London sessions is obviously a pair of choice, especially with Oanda since spread is as low as 0.9 pip. I would not trade GBP/US since spread is too big. It is also good for US/JPY which I traded successfully with this strategy. When market moves sideways, I use 2 SAR's. I actually incorporated SAR's into same template as EMA's, it works good and when both agree the moves are extremely strong.

The strategy is vulnerable during quiet trading periods and at times when market moves sideways.
New York and London sessions remain the most favourable for trading with EMAs.

Also, not all currency pairs present profit opportunities with this method. Test few pairs, you'll quickly get a feel which one "talks" best to you.

Try first of all: EURUSD, USDJPY, EURGBP. Then also USDCHF and GBPUSD.

Regards,
Edward

Hi Edward,
Thanks for this very informative website.
Does anyone know what weakness this strategy has, since no system is 100% profitable, any idea when and how not to use this strategy or when it could give false signals?

Experiencing changes in strategy performance when changing brokers — such problem exists. Not only do brokers have different time zones for trading platforms, their actual price data feed vary. As a result, trading indicators may behave differently.

Too tight stops won't allow your trade to develop. I'd leave old stops.

Happy trading!

Edward

Hello everybody and especially Edward:) I have never posted here just was reading.
Previously I traded with EFX/MB Trading and I had pretty good strategy to trade with them.
I am going to move to Oanda and I noticed that my strategy that worked well with MB Trading ain't working with Oanda. So, I checked all scalping strategies here and I need to say multiple
EMA's are working very well, but only when this strategy is followed. I actually mixed EMA's with 2 SARs and it works very well for me. I have not finished practicing this new systems and still trade in demo. I have been for a week. I can say it sure works.
Thank you Edwards for this strategy:) Some problems happen like today when I am suddenly hit with downspike which is not upspike then... it is pretty much 3 positions and total 60 pips lost. I managed to trade all back and more with this system, but... I wonder, is not 20-25 pips stop loss too much? I was even thinking may be set stop loss at 5-8 pips like take profit. But will it let the trade run. Really stop loss is the biggest problem here.

Hi Jay,

Try setting N to a certain value, like 3 (to get 3 EMA), and leave nbr+ and nbr- equal zero.

If that doesn't work, tell us what trading platform do you use? To understand the problem, we may need to try the platform out and see what it says.
Also you may inquire support from your broker. They should tell you what their abbreviation means as well as the required input if they are to keep you trading with them.

Regards,
Edward

Hi Guys,

Mr Tenerifes formula seems promising, i am trying to set up the EMA and three lines appear instead of one on each setup on my platform. It requires following input on each EMA:
N =
nbr periods+ =
nbr periods- =

Can someone advise?
My email address is khanjay[at]hotmail.com

Thanks

Jay
UK.