Complex trading system #4 (Trend trading with EMAs)
Submitted by Edward Revy on May 18, 2007 - 09:06.
Trading strategy setup:
Time frame: 1 day, 1 hour or 30 min.
Currency pair: any.
Indicators:
80 EMA
21 EMA
13 EMA
5 EMA
3 EMA
RSI (21)
Trading rules:
80 EMA suggests major trend direction.
When market trades above 80 EMA – uptrend, opposite for downtrend.
21 EMA and 13 EMA give a current trend direction.
While 13 EMA stays above 21 EMA – uptrend, opposite for downtrend.
RSI (21) above 50 mark suggests an uptrend, below – downtrend.
Entries are made on a cross of 3 and 5 EMA in the direction of a trend:
Buy when 3 EMA crosses 5 EMA upward in an uptrend market AND both 3 and 5 EMA cross a channel of 13 and 21 EMA AND RSI is above 50, and price is above 80 EMA.
Entry with Sell order when 3 EMA crosses 5 EMA downward in a downtrend market AND both 3 and 5 EMA cross the 13 and 21 EMA AND RSI is below 50, and price is below 80 EMA.
Note that additional entries are possible when 3 and 5 EMA cross back and then shortly after make a signaling cross again.
Note, that when we get the signal to enter we always wait for the current price bar to close and only then (if conditions nave not changed) - open a position.
Exit rules: when 13 EMA crosses 21 EMA back.
Keep an eye on 80 EMA, also watch RSI 21 to cross 50 point mark again - both will suggest immediate exits.
P.S. For more conservative trading take positions that do not contradict with 80 EMA's trend suggestion.
Happy Forex trading!
Edward Revy,
http://forex-strategies-revealed.com/
Copyright © Forex Strategies Revealed
Hi Edward,
First of all congrats for this strat. I've been quite successful with it in the past. However, I use to struggle with my stop loss. For example, in the 1hour charts what is your average stop loss and profit target(if any since we're waiting for the RSI signal)?
Thomas
Hi Ed,
First of all many thanks for this wonderful website, this is an immense help to all traders around the world. Second I want to post my strategy on this section, please guide me as how to go about it.
I would also like it to be tested and any suggestions, discussions would be more then appreciated.
Thanks,
Ravi
email - [email protected]
Hi Ravi,
thank you, your feedback is highly appreciated.
If your strategy has screenshots, it's better to send them to me at [email protected] and I'll publish everything here.
Best regards,
Edward
"Hi Asri,
I'd gladly say "Yes", but I can't. Simply and openly because the strategy rules are "owned" by my wife as she trades Forex with me. She is very protective about it... I'm sorry, although I like you all, family interests win here :)
Regards,
Edward"
What a load of bullshit! If this so called wife of his is so protective why does she let him flaunt this crappy trading idea. Ummmm Lets see....because it doesn't work! And why would he be happy to share this idea and not some other idea...Ummmmm because it doen't work. And why does he sugest you trade this when he himself trades something else...BECAUSE IT DOESNT WORK!!!
One thing you will are guaranteed to find in forex is liars.
Its hard making money in forex and the worst possible way to try and make money is to use something someone else could not be successful at.
There must be an order those things happen? Or we can enter every time those conditions do met??
Thank you Linvor,
ADX 14 would be very good. Using the default settings is beneficial in many ways:
1) the indicator was build with the suggestion of the standard settings (14).
2) by using the default settings you'll be trading and seeing the same signals that majority of traders see.
I sometimes change ADX to 10 or 20 to see if I can pick up any additional clues from it. But whenever I can I stick to the defaults.
Taking an additional position on the second or third 3&5 EMA cross is a suggestion, which would work best only if you have already made profits from the first open trade, and those profits are sufficient to cover the risks of opening an additional trade. (E.g. if 1st trade is running with 20 pips profit, you're allowed to add an additional order with a stop loss of 20 pips, assuming that the stop loss for trade #1 is by now at the break-even).
Your goal is to not allow more risks. If this goal is not looking achievable when you're about to open a second trade, then just ignore the signal.
Kind regards,
Edward
Hi, one more thing. I know it's allowed to open another position upon the crossing of the 3 EMA and 5 EMA when it's in the direction of the 80 EMA, but is it recommended or is it just a suggestion? I ask this because I believe their is a chance of false signals... I'm not sure if this makes any sense.
Thanks in advance,
Linvor A.
Hi Edward,
I'm a 17 year old forex trader. Trading for 8 months now (only EURUSD). First, I would just like to sincerly thank you for creating this site because this is where i learned most of the things I know. Question: I looked through the comments and don't think anyone asked but I would like to know if I should use the default ADX (14) or do you have a recommended setting? I would feel more comfortable knowing the trend's strengh.
Thanks in advance,
Linvor A.
Great work and quite informative. Thanks Edward for sharing your knowledge.
Hi Osahon,
Since we always rely on indicators to suggest an exit, we need only simple stops, which would protect us from sudden large turnarounds.
Such stops can be placed manually once you visually detect support/resistance areas, or you can use some help with Fractals. Also, among other indicators, you can try Parabolic SAR based stops, or even trail stops behind Heiken-ashi candlesticks.
Alternatively, have a look at the following indicator:
http://forex-strategies-revealed.com/mt4/stochastic-bbands-stop
and I'm sure there are many other simple solutions. Again: our goal is simple protection of a trade, not a close tight stop order.
To Gita: Once we get a signal to exit, we wait for the current candle to close before closing a trade.
Kind regards,
Edward
Hi Edward,
i am not sure about exit signal.
You say that when we get the signal to enter we always wait for the current price bar to close and only then enter the trade.
But what about exit signal, must we wait for the price bar to close or we exit immediately?
Best regards,
Gita
Hello Edward! U are too much, great strategy.
I found some assistance adding 200SMA for major trend direction and ADX21 for strength using same exit & entry rules in your post and it was quite profitable in 6 majors over the last 5 days. Checking thru timeframes from 5mins to monthly every 3 hours while monitoring the 1hourly timeframe also useful, unfortunately i dont know how to apply proper stops, the unpredictiveness of market movement beats me.
This is just the best forex website ever!
Best regards
Osahon
Yes, and it was performing very well for me. How well? That's simply impossible to statistically measure for me considering the amount of strategies I've been trading and testing over the past years. I pile up the performance data for a number of strategies that I work with, otherwise I would never be able to find enough time to deliver stats for each separate method. I'm very sorry about that.
Kind regards,
Edward
Good morning Edward,
You have said you traded this system live for a while.. and since Ive been trading a system all most the same I was just wondering how where your results I.e. whats was your winning % how long did you trade it for live when you where doing it!
For any one else this system is the only system I find that you need to make a very nice living from!
Hi Edward,
wow thats cool, i did looked at the past chart,it seems to be doing well in ranging market too. well although it has some losses(of course), but it minimize it.i was asking just for confirmation,hee~
sorry for my bad english
regards,
Azim
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