Simple 4H System

I've been using this system for awhile now, as it is the base of my trading. It's really nothing new, there are many others like it on this forum. I plan on posting charts with entries and thoughts. My intent is to keep it as SIMPLE as possible. I figure it's time to share and discuss. So, here it is:


Currency Pair: EU

Time Frame: 4H

Indicators: 7, 14 & 30 EMA's

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Entry and Stop Loss

1. Wait for crossover of 7/14 EMA's. Price must be above 30 EMA for long positions and below for short.

2. Enter at pullback to EMA's, may use PA on 5 or 15M, if not,
set limit order somewhere between 7 & 14 EMA, taking SR into account.

3. Place SL just below the last swing low below the 30 EMA.

4. Continue to add positions as price enters the 7/14 EMA zone.

5. Continue to move SL as price touches and reverses off of 30 EMA.

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Profit Target

Option 1. Set target profit for all positions to 300 pips beyond your first entry.

Option 2. Wait to get stopped out as SL is moved.


See sample below:

Looks interesting, I'll come on board, do you use the Bollinger Bands as visual guidance only ?

Hi Cosmo,

The Bollinger Bands are something I used to use as a guide for "insurance trades", reversal trades that usually ending up in minor gains and losses. I found that these made this method more complicated than it needs to be and ultimately took profits away. I still keep them in my charts for reference, and will likely remove in the future to avoid confusion in this thread.

Best,

JCPFX

Hi JCPFX

Your system looks simple and very promosing! What is your success rate so far? And how long have you been using it?

Thanks in advance, and God bless!!

Costa

Hi Costa,

I have found great success with this system, but not until I was patient enough to actually adhere to my own rules. Learning to deal with draw downs and losses is always hard, but with a system like this, dealing with profits each time a position is added starts playing tricks on the mind. I use this system to build a number of positions, which compounds my return once they are all liquidated, but this is much easier said then done. I tend to want to take my profits quickly, as I see my equity start to rapidly fluctuate on a larger scale. I can't honestly say that I have mastered the mental strength it takes to pull this off every time, but I am working at it.

This system has proven itself to me, first over historical charts, then in a period of trial and testing, and now with live trading. The BELIEF in the proven system is most important, without this, you will always second guess entries and exits, questioning every trade, which will ultimately lead to another search.

This all being said, I believe finding a system that works is just the start, and to answer your question regarding success rate, I believe that the success of any proven system is relative. There are so many variables, such as money management, lot size, account size, experience... this list goes on.

I hope I answered your question.

JCPFX

Hi JCPFX,

This is similar to a system I use although my entries are different. I like your entry approach, have you tried it on 1 hour at all

Thx

Splurge

You have, and I thank you!!! I,too, struggle with the patience part,but I will conquer it with the strength from above!

Many blessings

Tony Costa

Hi Splurge,

Yes, I did some testing on the 1H and found it to be a bit too erratic for this combination of EMA's. It really seems to lend itself to the 4H time frame. Now I have tried with other pairs other than EU, and this could have some promise, but haven't vested enough time to really see which pairs would hold up.

Best,

JCPFX

Thanks for sharing..keep on posting

Here's a couple of charts based on the current movement and status of EU. As you can see there is some discretion involved in regards to entry and the amount of entries as well as initial SLs. I prefer not to build up too many entries too quick, and keep my entries (lot size) very small in relation to my account size.

Also, in regards to my initial post and sample, I plan on posting other historical samples of this where the set-ups are not so ideal, basically how to handle this during consolidation.

How did you decide on a take profit of 300 pips?

Hi Jcorp,

I made 300 pips my profit target because this seemed to be the conservative average cycle in a strong trend on the 4H before taking a "breather" and either proceeding onward or reversing. This being said, there have been occasions where staying through the entire trend until getting stopped out would have been insanely profitable, but most of the time there are re-entry signals that allow me to enter back into the current trend.There are also times where I get stopped out with a smaller profit as price reverses without reaching this target.

There are many ways to approach this from an exit standpoint, such as taking partial profits along the way at SR Levels and Trend Lines. I guess it really just depends on your trading plan and style. I've chosen to keep it as simple as possible, and this seems to help me accomplish that.

Hopefully this helps clarify.

Best,

JCPFX

Below is a chart of the current status. As stated above, I waited for the first bullish bar to form before placing my stop, the SL is now set.

Price is also close to approaching a short signal, depending on the location of the 7 EMA. I will wait and see what happens.

Thanks for the detailed analysis here. I must admit I will wait until the 7 crosses above the 14 as the pullback looks a bit too severe for me. Of course thats easy to say now 8 hours after your post but thats what I would do anyway.

I still use the 34EMA insdtead of the 30 as well as thats my favourite MA to use. In addition I use an indicator thats called HILoBandsBug which is the closest indicator I have found to track a historical HI or lo. I think its called Bug as it appears slightly unfinished but I use it extensively. If you are interested I will post it (sorry dont want to hijack your thread)

Great work please keep posting

Hi Splurge,

No worries, feel free to post. Any thoughts and ideas are welcome.

Below is an updated chart with the current status. The long position was stopped out last night and back to waiting again, as price movement upward is too strong for a short entry right now.

Another update as price made a strong upward move. Looking for a downward retrace to the EMAs for a long entry.

Thanks for sharing..keep on posting

just gave the thread a vote of excellent......again thanks for sharing your system just change one of my charts to follow along with you.
regards G.

Hi Gordon,

Thanks for the vote. Looking forward to your thoughts and input.

Long entry set-up at touch of 7/14 EMAs.

jcpfx

I am checking this out. Entered long at 7/14 cross. Let's see how this develops