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Quick and Dirty EOD

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  • First Post: Edited Oct 29, 2012 8:08am Jun 27, 2012 6:00am | Edited Oct 29, 2012 8:08am
***** A statement about the move to the commercial section is here: http://www.forexfactory.com/showthre...83#post6047983 *****

***** Simplified and current system starts here: http://www.forexfactory.com/showthre...66#post5970766 *****

This is an "end of day" system that I have been looking into. It is not thoroughly tested yet but a visual backtest looks very promising and it could be a good method for people with a full time job or who live in places where trading the London session means being up at 3am.

It takes into account the monthly trend and then trades the daily only in that direction. It can be used on any pair or other instrument but I have used eurusd for the example. I have shown 2 winners and one that would be currently open. Of course there are losers and I will try and find one to illustrate the fact soon.

The rules are fairly simple. Use a 5 ema close and an 8 ema open. Go to the monthly chart and find the current trend direction. The first chart below is the eurusd monthly chart, the trend is down, we are looking for shorts.

Then go to the daily chart and wait for the trend to be moving in the same direction, ie the 5/8 ema to cross in the same direction as the monthly and start moving down. The second chart below is the daily, the trend is down, the monthly trend is also down, we are looking for shorts.

Now we have identified the trend on the monthly and the daily is moving in the same direction we wait for a candle to close against the trend. In this case the trend is down so we are waiting for a green candle.

Once we have a green candle we place a pending order to sell the spread plus 2 pips below the low of the candle. The stop loss goes 5 pips above the candle or 100 pips away, whichever is closest. The take profit goes 200 pips away.

The 3rd and 4th charts show two trades taken according to the rules and the 5th chart shows one that would still be open.

I have looked through lots and lots of pairs and I find more winners than losers which considering the risk/reward is always 1:2 or better is a good sign. As mentioned above you do find some losers and I will attempt to find one and post it in a little while.

Also as mentioned this is not fully tested and stands as an idea only at the moment but I think it's an idea worth some time spent on it.

Let me know what you think.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: eurusd daily trade 1.gif Size: 25 KB
Click to Enlarge Name: eurusd daily trade 2.gif Size: 22 KB
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Quoting Hugh Briss
This is an "end of day" system that I have been looking into. It is not thoroughly tested yet but a visual backtest looks very promising and it could be a good method for people with a full time job or who live in places where trading the London session means being up at 3am.

It takes into account the monthly trend and then trades the daily only in that direction. It can be used on any pair or other instrument but I have used eurusd for the example. I have shown 2 winners and one that would be currently open. Of course there are losers and I...

Thank you so much. I will definitely trade in this manner. One quick question. How do you handle a situation whereby we have a series of candles all against the trend. An example exist on your chart following the initial win.
Quoting aelimian
Thank you so much. I will definitely trade in this manner. One quick question. How do you handle a situation whereby we have a series of candles all against the trend. An example exist on your chart following the initial win.
Good question. As long as the ma's do not cross against the trend then it is acceptable to hold the pending order open. If they cross the trade setup is invalidated.
this should also work on smaller time frame too.
if you get a clear trend like that,why not using trendline to trade
Quoting mtuppers
this should also work on smaller time frame too.
Yes, maybe.
Quoting yuyafox
if you get a clear trend like that,why not using trendline to trade
You can trade trends many different ways. This way just gets you into a trend when the price is moving in the right direction and support or resistance has just been broken.
Quoting aelimian
Thank you so much. I will definitely trade in this manner. One quick question. How do you handle a situation whereby we have a series of candles all against the trend. An example exist on your chart following the initial win.

HB,

Thanks for taking up this subject for us full-time workers out here. Regarding ths above question, what would you think of continuing to move the entry price up as the series of against-the-trend candles appear? Do you think this would give us a better entry price when the trend resumes or would it just increase our risk in the event of these against-the-tren candles being a trend reversal in the making?

Also, HB, are you not considering stochastic action for this strategy, like with your other?
Nice strategy. I checked trades in history, and i saw that much more wins than loses. But it needs some time to test it. Its very good that this strategy is on daily chart, i have no time to trade intraday. Thank you.
Quoting Traderbry
HB,

Thanks for taking up this subject for us full-time workers out here. Regarding ths above question, what would you think of continuing to move the entry price up as the series of against-the-trend candles appear? Do you think this would give us a better entry price when the trend resumes or would it just increase our risk in the event of these against-the-tren candles being a trend reversal in the making?

Also, HB, are you not considering stochastic action for this strategy, like with your other?
I have looked into moving the pending order up after successive countertrend days and it does tend to lose more. This is not a scientific view, it's not been tested, just a quick and dirty view of it. By all means test both methods and let us know the results.

No stochastics on this one, just the trend and support and resistance.
Quoting vmelnikov
Nice strategy. I checked trades in history, and i saw that much more wins than loses. But it needs some time to test it. Its very good that this strategy is on daily chart, i have no time to trade intraday. Thank you.
I'm glad you like it and I hope it will be of some use to you. Please, if you do any backtesting of your own post the results here.
Eurjpy looks like setting up today. The monthly trend is down, the daily trend is down. I won't take this trade because of the EU summit tomorrow. Probably going to wait til Monday to take any trades.
Attached Image (click to enlarge)
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Thanks for your input, Hugh - this looks pretty solid. Have you done any comparisons with monthly/daily vs. weekly/daily? Is it always better to skip a time frame when looking for the trend?

Rob
Quoting ChicagoRob
Thanks for your input, Hugh - this looks pretty solid. Have you done any comparisons with monthly/daily vs. weekly/daily? Is it always better to skip a time frame when looking for the trend?

Rob
Hi Rob, no comparison done as yet but I have found it better to use monthly with daily. Weekly is a little too close, only 5 days in a week. Daily and hourly is a good combination, obviously 24 hours in a day so monthly and daily makes more sense with roughly 20 trading days in each month.
Quoting Hugh Briss

Let me know what you think.
Probably a good strategy tho I think I prefer the weekly/daily.
Could be a little less stressful than hammering away at the hourly charts.

The charts/MA's are representative of what you've described. Just in a bit different format

NLMA (non lag ma) as is
and NLMA with MA in color (8,0) on daily
Attached Image(s) (click to enlarge)
Click to Enlarge Name: weekly.gif Size: 15 KB
Click to Enlarge Name: daily.gif Size: 16 KB
When the Joker is in the deck.. fear not and play it well
If anyone is interested here are the ma's


I've far exceeded my "posting quota" (personal joke) so the rest is up to you.

Happy trading.
Attached File(s)
File Type: ex4 MA in Color.ex4   3 KB | 675 downloads
File Type: ex4 NonLagMA_v7.1.ex4   8 KB | 639 downloads
When the Joker is in the deck.. fear not and play it well
Quoting Hugh Briss
You can trade trends many different ways. This way just gets you into a trend when the price is moving in the right direction and support or resistance has just been broken.

How are you factoring in your support and resistance? Looks like the EURO is flirting with a low seen in 2008/2009.
I have a question concerning your stop loss Hugh. Do you ever move up to break even, say like when you've reached 100 pips for example, or is every trade either a 200 pip win or 100 pip loss? Just curious... And thanks for sharing your idea.
Quoting prof8t
How are you factoring in your support and resistance? Looks like the EURO is flirting with a low seen in 2008/2009.
I suppose you could add a pivot indicator (for one). This one says that initial weekly support is at .2456.
But there we go. Adding indi's and making everything complicated.

I lose 2 more points for excessive posting.
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When the Joker is in the deck.. fear not and play it well
Alternatively and probably the best option. You could simply "draw a line in the sand". After having consolidated (seemingly forever) you might take it as a short term double bottom or simply as an indication that the market is waiting for EU summit "words"

One great thing about fx trading is that it allows you to think for yourself.

I've lost yet another point for excessive posting.

I'll have to take some time away to redeem my points.
Attached Image (click to enlarge)
Click to Enlarge Name: space.gif Size: 72 KB
When the Joker is in the deck.. fear not and play it well
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