Forex trading strategy #6 ("Key Simplicity")

hi edy,
am specially grateful for the candid advice you gave me the other time i called.
pls., i haqve something really bothering me again and i hope i can get a code from your forum to resolve it.
my expert trades reversal correctly well making profitable entries at the point of reversals, but it goes on to enter another trade each time it hits the 100 pip target, which eventually and sometimes leads to loss.
pls i need a code that can help me stop it from entering trade on the same currency pair once it hits its first target. i will prefer that it delays trade till the new hour.
thanks and god bless.

Hi Pete,

thank you for the feedback!

Answering your questions:

1) yes, that's a strategy with the same parameters and the same idea
as the one recently added by Azim.
(http://forex-strategies-revealed.com/simple/azim-x-system)

You can try any of the rules on 1 hour time frame, they should work there as well.
I initially recommended daily charts since there we get less false signals from indicators.

2) Stops should be placed at the closest retracement/swing high or low be it 1 hour or 4 hour or a daily time frame.
You can actually use Fractals to help you see those swings high and low.

3) If EMAs cros first, then we wait for RSI to go above 50 or blow 50 (depending on a trend). At which point we can already enter. However, the more conservative method would be, probably, as you suggested, to wait till RSI proves its direction bias and crosses above 55 or below 45.

4) We have many interesting ideas on the website, and I encourage traders to mix up strategies to get the best out of every trading method. i think you can definitely add fractals and, also, if you find ADX helpful, then why not use it?

5) the higher is your time frame, the wider stops will be required - it's inevitable. But with the higher time frames comes a better accuracy for many Forex indicators, which for traders mean fewer false signals and fewer unprofitable trades.
I would try hourly charts for the Basic Fractal strategy.

6) I like using 9EMA method as an entry trigger for many strategies. Here, since you already have 5 and 12 EMAs, you can effectively use 12 EMA as an entry trigger (instead of 9 EMA).

Kind regards,
Edward

Hi Edward.
Sorry I have one more question for you please...

Would the 9 EMA work as a good entry trigger with this strategy ( as according to your trading method 1) or would you suggest just using either the original 5EMA or 12 EMA as the entry trigger?? ( i.e when the candle passes the EMA line)(( using daily charts))

Thanks mate for any help you can give. This site is so helpful. Cheers.

Pete

Hi. Thanks for this very interesting strategy and thanks for your excellent site. I have a couple of questions regarding this strategy.

1)I see that there is another stategy posted recently by Aziz which is very similar but uses candlesticks also. Do you think that might be better on a shorter time frame ( i.e 1hour ) where as this exact strategy is better suited to daily?

2) What would you recommend for stop loss levels on 4 hour or 1 hour times frames?

3) In my testing of this strategy, I noticed that usually the EMA's would cross over before the RSI. Would you enter the trade as soon as the RSI has crossed to +51? Or do you think it would be better to wait till say 55 or 45 for short?

4) I am also very interested in you posted stategy using ADX and FRACTALS. Do you think these indicators can be used together, or do you think this would mean either too many mixed signals or too complicated.

5) Finally regarding the Fractal strategy posted in BASIC STRATEGIES, what do you think is the best time period for this strategy? I would prefer longer time scales but am worried that this maight mean largish stop losses etc?

Thank you very much for any advice / help.

Best regards

Pete

great strategy, thank you. thank you Edward.

Hi John,

good question, but I don't have the answer for you, since when I used to trade with this strategy several years ago, I didn't know I'll be posting it one day on my website, so I haven't collected any stats, just kept the rules.

Also, it's easier when you have an EA and can create instant reports. For me it would mean manual record keeping, which I'm not ready to take on considering the amount of work I have to do to support the strategies on this website.

Best regards,
Edward

what's the overall expected win/loss ratio for the original daily strategy and the average risk/reward?
Thanks!
John

We would need more tools, I suppose.
I'm testing CCI 50 to filter trends.

Mark

Is there a way to eliminate false ema crossover on the 5 and 12. Because sometimes when the ema's cross and the RSI is reading right it turns the other way. Thanks

Thank you, Phil, I always very grateful for such help!

Best regards,
Edward

Hi Isabel,

In answer to both of your questions -

What Edward meant was you can use either a 20EMA or 30EMA or 50EMA - the choice is up to you. The price (as per example) would be below whatever EMA you choose for it to be a downtrend. So you don't have all the 3 EMAs (20,30 & 50) on your chart, but just one of them and use that as the trend giver.

Hope that's ok Edward.
Cheers
Phil

Dear Edward

You state above in one part of same paragraph that for those that wish to trade the H1 time frame: for a sell-signal, price-level should be below 20/30/50 EMA - for it to be a downtrend, and in earlier part of the paragraph you state 20EMA OR 30EMA OR 50EMA. OR can not be correct or can it.

Questions:

(1) May i assume that was a typo and the OR should be AND. This means the price level has to be below 20EMA AND 30EMA AND 50EMA.

(2) For a 5EMA and 12EMA to cross and at the same time the price to be below 20EMA AND 30EMA AND 50EMA one will have to wait in some cases a few hours or possibly a day after the crossing takes place for the price level to be below all 3-EMA's above in order to take the position. Is this okay?

Yours,

Isabel

Thanks for insights into commodity currencies and your desciption does match the behavior I've experienced. The link to instructions for loading a MT indicator is helpful. Your right, the weekly is great for confirming daily chart trend direction.
Yes, I checked daily ranges for various pairs, and now have a good idea of range variation between pairs. I'll keep working on pairs with ranges less than 100 so my fixed stop loss makes sense. When I can afford a larger stop loss based on percent equity, I'll look at the pairs with a broader range.

Hi Eric,

Your strategy is well balanced; and although 100 pips stop isn't looking sophisticated, it is justified by the fact that it's larger than average daily range for a chosen pair. Therefore I woudn't try to change it. Every idea I have would result in a more distant stop, so I'd leave 100 pips for this one.
What I would change is a superior time frame reference: instead of monthly charts, I'd seek trend direction on weekly charts. Basically, you can use the same CCI on weekly charts to identify a trend. (Monthly trends are normally used for weekly trading).

In order to add any custom indicator to MT4, please follow the steps on this page:
http://forex-strategies-revealed.com/mt4/how-to-add-and-use-mt4-custom-i...

Regarding different currencies, each one has its own behavior. For AUD based pairs we often have smoother looking trends, which derive from a combination of several factors:
- it is a commodity currency, which suggests a projection of commodity prices onto currency behavior - this relationship creates a smoother reaction to changes.
- it relies on cycles in production and demand on natural resources, with such cycles again we don't have sharp turns in the market.
- AUD participates in carry trading (AUDJPY), as we know, carry trades are driven by unified traders' interest to certain market direction = trend.

Best regards,
Edward

P.S.: I tried to use that CCI Histogram Program thing for MegaTrader4 but I couldn't figure out to transfer it to my brokers MegaTrader Platform once I had it on my computer. (BaronFx) If anyone can give me a tip on that, super. Not very tech savvy.
Mr. Revy, if you have any thoughts on my post above your experience will be appreciated. This has been working nice for me for about 90 days but I want to fine tune. Of course, if "leave well enough alone" is your advice, I'm there. But, in case you see any glaring red flags of future problems, give a heads up. Thanks. Great site by the way, my goodness. Best on the web easy!!

Eric A.