Forex trading strategy #8 (EMA breakthrough)

hi all

I'm fond of moving averages !

i'd like to use 50 EMA with macd and 1-2-3 formations

very good system.......... try it guys !!

alaa

Hi Lynn,

We use High and Low values.

Regards,
Edward

Hi Edward:

This is an add-on question about entries: Is the 5 pips calculated from the previous candles high (long), low (short) or close? Thanks again, Lynn

Hi Edward:

"Entry: watch for 50 EMA to pierce the candle bar and finally close above (to enter Long) or below (to go Short). Enter with the second candle after it makes 5 pips higher than the previous one." What do you do if a candle pierces the EMA above/below, the second candle DOES NOT make 5 pips higher/lower than the previous one, but the price level remains above/below the EMA? How do you determine and entry point? Thanks, Lynn

With regards to Hanz's post, getting stopped out is unavoidable. Consecutive stop-outs are very common occurrences in trading, which ever system you choose to follow. Just make sure you keep your losses low and let your profitable trades run. Your big wins should more than cover the small losses.

Hi Grant,

You may use 1 hour or 4 hour charts without a doubt. Regarding EMA adjustments, there are no strict rules. You may try 62 EMA, or 55 EMA - the field for testing is limitless.
If you also add 20 EMA it will provide an earlier signal.

Regards,
Edward.

Hello Edward.

My question is that I have 1 hr, 2 hr and 4 hr charts, not the 90 or 3hr. What kind of changes should (different EMA?) I make to ensure the validity of the signal?

Grant

Hi Izmat,
I would simply recommend adding a trend line and nothing more.

But you may also try MACD with standard settings (12, 26, 9). To confirm a Buy signal both MACD lines should be heading upwards. Sell - downwards.

Regards,
Edward.

Hi Edward
Do recommend other indicator to accompany the your setup?

Izmat

Hanz,
After your note I also found that some other brokers' charts show longer shadows while others don't.
I would appreciate your report on 62 EMA testing.
Have a great weekend!

Edward.

|Dear edward,
i don't know what i can i say but i am using the charts from this link http://www.dailyfx.com/charts/ChartStation.html
as i provide more tools than the charts in my company software.
any way i found your chart right in my company software but if you look to this link you will see a shadow for 15-11-2007 candle and the shadow for 16-11-2007 candle is higher than it i verfiyed the conditions for strategy.
any way i will try the 62 EMA and inform you with the results.
thanks for your time.

Regards,
Hanz

Dear Hanz,

I saw those Forex charts. Well, let's take screen shots.
There was one condition, which hasn't been met (at least according to my charts): once a candle is closed on the other side of EMA 50, we wait till next candle makes 5 pips higher (Long) / lower (Short) than the breakout candle to consider entering.

I'd like to add that those 5 pips should be made not above/below the close but rather above the High / below the Low of a breakout candle.

With those conditions you shouldn't be entering a trade yet. At least that's what I see on my charts. I hope you aren't disappointed too much. The most important thing is learning and not losing the same way again.

Also regarding filters. Since you are trading daily charts, I would recommend trying 62 EMA. I've recently found it to be even more accurate than 50 EMA. It should also work well on smaller time frames.
In addition, you may consider adding spread to those initial 5 pips to ensure that your limit order isn't hit prematurely.

Best regards,
Edward.

Dear Edward,
i hope you are fine. i have a question regarding the strategy i work (16-11-2007)on daily frame for USD/CAD and AUD/USD you can find yesterday a candle breaks EMA 50 as buy for USD/CAD and sell for AUD/USD. i put the limit higher than the highest end of the candle same for AUD/USD lower than the lowest end.
the deal is activated after that the stop loss is hitted.
my questions is:
1- did i made any mistake during applying the strategy?
2- is there is a way to filter the false signals??

by the way i am still trying the fibo "get profit"
waiting for your reply

Hanz

Hi,
The simplest way is to define supports and resistances. If the market is moving sideways along with relatively flat 50 EMA, where EMA is drifting through candles, no signals should be taken from 50 EMA until a sideways channel is broken and at least one full candle is closed outside it; OR one could wait for a pullback and retest of support/resistance which has been broken and only then place an order.
If the market is trending well, no precautions are needed.

Regards,
Edward.

Hi

Seems like a pretty simple system :-) How do u guys eradicate fake outs?

Regards