Simplest Daily EMA Cross System

Disregard the poll, people are voting without having done the backtesting that was a requirement in order to vote.

Greetings friends,

I have tried many things in the Forex world and so far have discovered hundreds of ways that won't work for me. I can't seem to guess market direction well, I hate scalping personally, and carry trades have gotten me margin called.

But I do believe I have found a method that works for me. When I share this method you are going to think it is too simple, and will want to start adding indicators, changing time frames, decreasing stop losses, adding take profits and multiples lots. That is all fine to do, but I would just ask that you begin a new thread to do so, as the purpose of this thread is simply for anyone willing to do significant backtesting on different pairs.

This method netted (including spread) 8294 pips since the beginning of 2007 until now (see backtesting results below) or 331 pips per month. And this is only with 7 pairs. We can increase this with additional pairs, hence my request to help backtest.

Here is the method:

Time Frame: Daily
Entry: 5 and 8 EMA cross (attached indicator is all you need)
Exit: End of next day

So here is how it works. At 00 (midnight) GMT check the charts and see if the EMAs have crossed. If so, enter a market order in the direction of the cross. No stop losses, no take profits.

The next day at 00 (midnight) GMT close the order.

I told you it was extremely simple. Here are back test results from January 2007 until the present (2-11-09).

GBP/JPY 2301 Pips (Gross)
-470 pips for spread (10 pips spread)
1831 Pips net

GBP/USD 839 Pips (Gross)
-48 pips for spread (5 pips spread)
791 Pips net

AUD/JPY 1606 Pips (Gross)
-520 pips for spread (10 pips spread)
1086 Pips net

GBP/CHF 1487 Pips (Gross)
-530 pips for spread (10 pips spread)
957 Pips net

USD/CHF 813 Pips (Gross)
-216 pips for spread (4 pips spread)
597 Pips net

EUR/GBP 1199 Pips (Gross)
-159 pips for spread (3 pips spread)
1040 Pips net

EUR/USD 2098 Pips (Gross) I used 3/8 EMA crossover instead of 5/8
-106 pips for spread (2 pips spread)
1992 Pips net

I have not had time to test other pairs. I believe that changing from 5/8 EMA cross to 3/8 would benefit USD/CHF and possibly GBP/USD as well but have not had time to test.

So again, the purpose of this thread is for anyone to help backtest this method on other pairs, using only the EMA cross indicator for entry, and closing at the end of the 24 hour period.

Looking forward to hearing from you as able.

I just completed backtesting for USD/CHF same time period as above (January 2007 to present) but changed the EMA cross over from 5/8 to 3/8. The change brought an additional 300 pips.

USD/CHF 1353 Pips (Gross)
-240 pips for spread (4 pips spread)
1113 Pips net

hi dreamliner
there must huge drawdown , right? so maybe for 10 k account we should only use a micro lot ?
did u use vhands or somethin similar to backtest this method ?
thanks

Plus nearly 300 changing from 5/8 to 3/8 on Cable for a total of 1089 net pips for the period.

I wouldn't use ANY lots right now until you have backtested.

I just used the chart and backtested visually.

See if this will help You out dreamliner. Hope i do the upload right....

You're saying take a new trade every day instead of going signal to signal? So in this pic, at the first up arrow you'd start your daily trades. And each day take a new trade since you're still in the correct direction. And for those 3 red candles at the top you'd have a losing trade each day -- and also a loser on the red candle just before the down arrow?

I made an ea to test this method (I like simple), results for majors / 20 years (1990 - today) below (alpari data 00:00)

Dreamliner

Your EMA cross indicator looks to the future = repaints

Do not waste your time for backtesting. Or put 2 MA on chart and test

Cool system. Do you have any stats on what the chances were that all 7 would be open at any time? Also, do you know what your largest daily drawdown would have been?

The way he explained it, it sounds like you'd pretty much always have a trade open on every pair.

I interpreted the first post to mean that a cross to the upside would mean taking a long trade at the market price and close the trade at the end of that first day, vice versa for shorts

Andy

Oh, so just one trade per cross? Maybe so -- Dreamliner, clarify please.

No! What I said is, when you have the signal, enter with a market order in the direction of the cross. Then close out the trade 24 hours later. No more trades until you get the next signal.

What are these indicators for?

Hi ya Dreamliner,

Just wondering if you would take the trade at the green arrows I have placed on the bars on the chart which go past the MA cross bar just to confirm it is a good trade and also where would you be placing your stop loss?

thanx,
Adrian

Note how this little ray of fact does not stop the fantasy train from plunging on.

I guess people think they have found the grail -sad.

Craig,
Dreamliner's backtests have positive results, while your set of backtests are negative. Why should we accept your backtests as being accurate and Dreamliner's backtests are not?

Many attempts at backtesting simply fail. There is no substitute for forward testing. That's how I will be judging the merits of this system.

Dreamliner,
Many thanks for sharing your system and your optimisim. I am looking forward to testing your strategy.

Bob

I think the guy just got excited and pulled the trigger too fast.

I like the "lots of pips" title LOL.

Hey loophole, here's another system for you. Try and see if is better than the last one! LOL