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Simple 7 Strategy

  • Post# 1
  • Quote
  • First Post: Feb 20, 2010 7:19pm | Edited Jun 2, 2012 12:47pm – mspelt ment
Tom's Simple 7 Strategy
Preparation of charts:
Install a 7 close price EMA.
Install a 50 close price EMA
Basic instructions:
If the 7 EMA is lower than the 50 EMA trade only the short opportunities for maximum risk/reward.
If the 7EMA is higher than the 50 EMA trade only the long opportunities for maximum risk/reward.
Specific instructions:
If the closed candles are above the 7 EMA trade long.
If the closed candles are below the 7EMA trade short.
Warning:
These instructions expect that you have basic trading experience and is not meant to teach you or train you in trading derivatives or forex. www.forexfactory.com and www.babypips.com are excellent websites with basic trading education resources.
With that said, you can use this method on any timframe, but since we are differentiating the positions above and below the 7 EMA that means you will have to monitor your trade constantly after you enter it.
Note:
This method was left simple to allow people to use it as I basically set it forth, but also to allow you to adjust it to meet your needs and allow room for your new ideas based on it.
　
(Intellectual property of Tom, akatom2u) At least give me credits.
This system will delight the scalpers, but I reccomend you determine how long you will be sitting at your screen and make your decision on wich timeframe to use based on that.
Quoting akatom2u
Tom's Simple 7 Strategy
Preparation of charts:
Install a 7 close price EMA.
Install a 50 close price EMA
Basic instructions:
If the 7 EMA is lower than the 50 EMA trade only the short opportunities for maximum risk/reward.
If the 7EMA is higher than the 50 EMA trade only the long opportunities for maximum risk/reward.
Specific instructions:
If the closed candles are above the 7 EMA trade long.
[size=5]If the closed...

Hello Tom,

What is take profit and stop loss?

Thanks
  • Post# 4
  • Quote
  • Feb 20, 2010 8:32pm | Edited Feb 21, 2010 1:06am
maxwell-eqtn, that would depend on you and the timeframe you use, amoungst other things. This is basically a reversal-type strategy, once you see the candles going against the current 7 EMA direction, or convergence, I would exit. Examine the charts with this setup on a 15m chart... EU looks great for it.
Tom,

Thanks for sharing the good work here.

There are a few things that require further clarifications:

1. The system's optimal trading session
2. You might have specified the stoploss depends on personal's discretion, but there could be a minimum stoploss that you have to put in placed like based on your back/forwward testing?
3. Since there's no specific TP in place as well, based on your experience with this, how long do you averagely keep a trade open?
4. Please post some charts as examples, thanks.
5. Whats yoru precautionary measures during ranging whipsawy market which could be rather common with EU?
6. Have you tried in on other pairs as well?
7. What's your success rate thus far with this on live?


I think this is a pretty solid system in trending markets which means in order to maximise profits you should probably be keeping the trades open for days.

Thanks again.

Fei
baronfei, I would trade this in the first four hours of the U.S or London open, and perhaps the last hour of those trading sessions on smaller time-frames. As far as SL and TP goes that is totally dependant on the chart time-frame you are using, you can look up my other published method T.E.A.R.D.O.W.N for ideas on stop loss placement. And again, your selection of time frame will affect your possible length of time in the trade, when the reversal happens, indicated by the candle crossing the 7 EMA or a closed candle that has crossed the 7 EMA, you exit and consider trading the opposite direction of your last trade. (If you are using the 1m chart you could be out of your trade in an hour or less, if you are on the 4h charts, it could be a week or more.) That is why I put the warning there, I preffer not to try and predict in advance what the market might do, once you see the price reversing exit.
About your question about unsure, even whip-sawing markets, that is why I built this system. Although you can use this system on longer time-frames, I will be using it on 1-15m charts. This is my way of scalping and of hedgeing my long term trades (that sometimes move against me before they mature into profit.) Thanks for your reading my post and the thoughtful questions, I will make an account that uses only this strategy and post some more information in the future based on that account.
Quoting akatom2u
baronfei, I would trade this in the first four hours of the U.S or London open, and perhaps the last hour of those trading sessions on smaller time-frames. As far as SL and TP goes that is totally dependant on the chart time-frame you are using, you can look up my other published method T.E.A.R.D.O.W.N for ideas on stop loss placement. And again, your selection of time frame will affect your possible length of time in the trade, when the reversal happens, indicated by the candle crossing the 7 EMA or a closed candle that has crossed the 7 EMA, you...
Very nice and simple system Akatom2u.

Well done and thank you for sharing.
FX Compass,
Thank you for your feedback, I hope my system helps...
Quoting akatom2u

If the 7 EMA is lower than the 50 EMA trade only the short opportunities.

If the closed candles are above the 7 EMA trade long.
Please explain how these 2 statements can co-exist............
As far as I can intrpret if the candles are below 50 and 7 EMA the strength for short has high probability.

If the candles started to close above 7 EMA but still below 50 EMA
the possibility of trend change is building up to go long

this is what I can think of by looking at the chart
Basic instructions:
If the 7 EMA is lower than the 50 EMAtrade only the short opportunities for maximum risk/reward.
If the 7EMA is higher than the 50 EMA trade only the long opportunities for maximum risk/reward.
Specific instructions:
If the closed candles are above the 7 EMA trade long.
If the closed candles are below the 7EMA trade short.


pretty clear to me.
tommyd ,
Thank you for setting that strait, part of my thought process on any system I am working on is to be simple and clear about the parts that are defined. If you omit words from my system you might not get the benifit of understanding my methods. Tommy I hope you find this system very profitable and simple to use. (Less stress...lol)
Quoting harigp
As far as I can intrpret if the candles are below 50 and 7 EMA the strength for short has high probability.

If the candles started to close above 7 EMA but still below 50 EMA
the possibility of trend change is building up to go long

this is what I can think of by looking at the chart
You are correct Sir.
My reasoning behind following the 50 as far as risk/reward is that trading against the overall trend causes more loss or risk of loss than trading with he overall trend.
Quoting akatom2u
You are correct Sir.
My reasoning behind following the 50 as far as risk/reward is that trading against the overall trend causes more loss or risk of loss than trading with he overall trend.
I want to follow this simplicity. Thanks Tom.

Ron
hi may i know how do u avoid whipsaws with this. i jus took a visual glance on the 1 n 5min TF. and i see multiple occasions where 7EMA jus goes up n down with a small range along the 50EMA. works great when the market trends for a long time tho. i think this setup is good for exits after u are in the markets in the correct direction.
  • Post# 16
  • Quote
  • Feb 21, 2010 10:35pm | Edited Feb 22, 2010 11:37am
yunielescaz,
You can try to avoid whipsaws by not trading when the 50 or 7 EMA's are pointing sideways(convergence). I also use at least one indicator to confirm the trade, for example, RSI 7.
There will always be those small movements in the market that do not allow us much chance to get a few pips or that cause a loss, the trick is that there are many more that give us many pips and as you have seen many that give us alot of pips (If we have the patience to trade them). I myself much prefer trading several hours of the U.S open or London open to avoid this situation also.
Hi Tom,


It certainly looks like a simple strategy. Im keen to try and hopefully make back the money i have lost all this while..

hope this doesnt sound dumb but do you trade during news/ announcements? if not, any any time buffer to avoid before and after news?

can you elaborate more on the RSI(7)? do you wait till it hits and 30% or 70%? I was running through the charts and it didnt give a proper buy / sell signal when either EMAs cross..

Thanks for reply..cheers!
truthfully, i was in the mode "i quit"

but as i find myself awake in the middle of the nite, i enjoy the company of forex and traders...smile

ironically, my chart was set up with the 7ema and 50ema before i read this strategy??? strange...

could that be the signal to try one last time...smile

i would add to the plan ... if u have 3 losing trades...quit for the day, as the trend is whipping u
the algorithm itself is pretty good (and at the same time simple), but I`m not so much friendly about the whole scalping strategies thing
Quoting akatom2u
yunielescaz,
You can try to avoid whipsaws by not trading when the 50 or 7 EMA's are pointing sideways(convergence). I also use at least one indicator to confirm the trade, for example, RSI 7.
There will always be those small movements in the market that do not allow us much chance to get a few pips or that cause a loss, the trick is that there are many more that give us many pips and as you have seen many that give us alot of pips (If we have the patience to trade them). I myself much prefer trading several hours of the U.S open or London open...
How do you use RSI(7) to filter the trade.
Make money Not pips
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