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Simple Daily System

  • #1
  • First Post: Edited Sep 2, 2007 3:57pm Jul 18, 2007 9:02am | Edited Sep 2, 2007 3:57pm
Hello guys!

I would like to share this simple but effective system with you. I'm not an author of it but use it quite successfully. Hope for some of you it will give a nice profit specially for those who is not a full-time trader and has only limited time to trade. OK here it is:

Buy Rules
1) Daily Charts with 20/50 EMA (close)
2) If price has 3 consecutive days where the Close is higher than the Open and 20 EMA > 50 EMA and the slope of these two emas is positive, on the OPEN of the 4th candle, Initiate a Buy Order.
3) Stop is 2 pips below the previous candle, or 90 pips (whichever is lower)
4) Take Profit is in 2 steps...
a) Take half profit at 30 pips and move stop to break even
b) Take remaining profit at 100 pips


Sell Rules
1) Daily Charts with 20/50 EMA (close)
2) If price has 3 consecutive days where the Close is lower than the Open and 20 EMA < 50 EMA and the slope of these two emas is negative, on the OPEN of the 4th candle, Initiate a Sell Order.
3) Stop is 2 pips above the previous candle, or 90 pips (whichever is lower)
4) Take Profit is in 2 steps...
a) Take half profit at 30 pips and move stop to break even
b) Take remaining profit at 100 pips


This is an easy system because it eliminates many factors that make the novice trader unsuccessful (overtrading, ignorance about how to effectively use indicators, etc.).

I would recomend to move your SL to breakeven as soon as possible, 20-30 pips are quite enough.
TP levels may differ depending on pair being traded. Say for GBP/USD optimal TP is 39 pips and 80 pips. You have to optimize your TP for each pair you trade.

You may paper trate any pair you like and post your results!
Thanks to IndyCash for creating backtest tool for SIMPLE. You can find it here and experiment with optimal TP and SL levels.
You trade only once a day and it takes about 15 minutes to look over the charts and make your decision.
I wish you success and have fun!

Take care!

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  • #2
  • Jul 18, 2007 9:14am Jul 18, 2007 9:14am
Looks good. Definitely good for people who can't watch the charts. Were those results from backtesting or did you actually make the paper trades on those? Do your losing pips reflect the fact that your losing twice as many pips as you are on your winners (ie., you are scaling out half the profit on winners, and you lose 100% on the losers)?
Life is too short to have anything but delusional notions about yourself.
  • #3
  • Jul 18, 2007 9:21am Jul 18, 2007 9:21am
so always have to wait 3 consecutive days of up or down?
  • #4
  • Jul 18, 2007 9:37am Jul 18, 2007 9:37am
Quoting hoss
Looks good. Definitely good for people who can't watch the charts. Were those results from backtesting or did you actually make the paper trades on those?
All pairs are paper traded. Pick up any and compare with your results.
Take care,
Dimy
  • #5
  • Jul 18, 2007 9:37am Jul 18, 2007 9:37am
Quoting amenlo9
so always have to wait 3 consecutive days of up or down?
Yes, Price Action rules:
  • #6
  • Jul 18, 2007 9:51am Jul 18, 2007 9:51am
Quoting TheThing
Yes, Price Action rules:
Is there any specific reason for the 3 bars, Reason i am asking is out of my obverservations i noticed that price on daily charts normaly reverse after 2 - 3 consecutive bars. I counted the bars awhile back and the percentages were less than 50% of continuing after 3 consecutive bars. Unfortunately i deleted the file by mistake.

I will try to test after 2 consec bars and compare the results
  • #7
  • Jul 18, 2007 9:59am Jul 18, 2007 9:59am
Quoting Ebenst
Is there any specific reason for the 3 bars, Reason i am asking is out of my obverservations i noticed that price on daily charts normaly reverse after 2 - 3 consecutive bars. I counted the bars awhile back and the percentages were less than 50% of continuing after 3 consecutive bars. Unfortunately i deleted the file by mistake.

I will try to test after 2 consec bars and compare the results
Well, if you look closely through James16 thread you can find a lot of examples with 3 bars going in one direction and usually price continue to move in that way. Yes, it may reverse and it should but before that you can catch your first TP level of 30 pips and move your SL to break even.
Pick up any pair and paper trade it for a half a year with 2 candles and 3 candles and we can compare the results. This system uses 3 bars as well as price action.
  • #8
  • Edited 10:25am Jul 18, 2007 10:09am | Edited 10:25am
The Thing,

Thanks for sharing the idea and I have a question, Do you consider the sunday candle too?
  • #9
  • Jul 18, 2007 4:01pm Jul 18, 2007 4:01pm
Quoting deepleo
The Thing,

Thanks for sharing the idea and I have a question, Do you consider the sunday candle too?
Nope, all 3 pairs were tested without sunday candle and i currently trade without taking it into consideration but still results with sunday candle may be good or even better.
This method is nicely designed for people who are not able to watch the market all the day long. It takes only 5 minutes to look for setup and place appropriate trades at 00:00 GMT (for me when the new daily candle opens).
  • #10
  • Jul 18, 2007 4:24pm Jul 18, 2007 4:24pm
Entered the market:
1) long gbp/usd at 2.0531; 1st target 2.0561
2) long aud/usd at 0.8777; 1st target 0.8807

We'll see..
  • #11
  • Jul 19, 2007 1:01am Jul 19, 2007 1:01am
Hello The Thing,
nice of you to share your system. Thanks. Are GBP/USD GBP/JPY CAD/JPY the only pairs you are trading? If so, what is the reason? One more question: when you say in the stop loss part "whichever is lower" - do you mean lower amount of pips?
Thanks again.
Pluto2
  • #12
  • Jul 19, 2007 1:55am Jul 19, 2007 1:55am
Quoting Pluto2
Hello The Thing,
nice of you to share your system. Thanks. Are GBP/USD GBP/JPY CAD/JPY the only pairs you are trading? If so, what is the reason? One more question: when you say in the stop loss part "whichever is lower" - do you mean lower amount of pips?
Thanks again.
Pluto2
Hello Pluto!

These pairs mentioned above are the pairs that been tested manually by paper trading. I'm still experimenting with others to find good ones for this strategy. However GBP/USD GBP/JPY and CAD/JPY seem to be most profitable for now.
As for your second question..it happens that the range of the 3rd candle which is used for setting SL is not enough for daily trading. 20-40 pips as SL are not suitable for this system and 80-90 seems to be optimal for me.
But every trader can make any changes he likes to fit his personality and style of trading.

Take care!
  • #13
  • Jul 19, 2007 2:07am Jul 19, 2007 2:07am
Hi Thing

Good looking simple system.

Could you just clarify something?

If, for example, there was 4 bars with the same open – close relationship, would the last 3 bars be considered a valid setup to enter on the 5th day. Or is the setup just the first 3 bars of each run .

I’ll do some back testing, I was just wandering what you did.

Ta, again for sharing the system.

Yellow
  • #14
  • Jul 19, 2007 2:31am Jul 19, 2007 2:31am
Quoting Yellow2
Hi Thing

Good looking simple system.

Could you just clarify something?

If, for example, there was 4 bars with the same open – close relationship, would the last 3 bars be considered a valid setup to enter on the 5th day. Or is the setup just the first 3 bars of each run .

I’ll do some back testing, I was just wandering what you did.

Ta, again for sharing the system.

Yellow
Hello Yellow,

Well, relatively small trading range (doji candles) represents market indecision. On a daily chart, the doji often marks the beginning of a minor or intermediate trend reversal. That is why it's better for me to see a clear picture of a strong trend but not indicision. In real time i'm very careful of such trades and don't taking into account candles with very small trading range.
Hope this helps in some way.
  • #15
  • Jul 19, 2007 3:49am Jul 19, 2007 3:49am
Hi Thing,

Sorry for the confusion, what I meant by " 4 bars with the same Open - close relationship" was they were all in the one direction ie Close higher the open.

There would be an entry on the 4th day (as previous 3 bars all up).

If bar 4 also had a higher close then it's open (therefore: bars 2,3 and 4 were 3 consecutive bars where the Close was higher then open), would you re-enter on open of bar 5.

Really, what I'm asking is, even if there has been more then 3 consecutive up bars, do you only consider the last 3 bars for a set-up.

thanks for patience

Yellow
  • #16
  • Jul 19, 2007 4:01am Jul 19, 2007 4:01am
Quoting Yellow2
Hi Thing,

Sorry for the confusion, what I meant by " 4 bars with the same Open - close relationship" was they were all in the one direction ie Close higher the open.

There would be an entry on the 4th day (as previous 3 bars all up).

If bar 4 also had a higher close then it's open (therefore: bars 2,3 and 4 were 3 consecutive bars where the Close was higher then open), would you re-enter on open of bar 5.

Really, what I'm asking is, even if there has been more then 3 consecutive up bars, do you only consider the last 3 bars for a set-up.

thanks for patience

Yellow

Ahh, sorry for misunderstanding Yello!
There are no re-enter rules! There is only 1 entry rule! So after i have closed my position with profit or loss from previous trade, next day begins and this is my 1st candle i start counting with.
If it's what you've been asking - this is the way i'm doing it
  • #17
  • Jul 19, 2007 4:16am Jul 19, 2007 4:16am
yep, thanks very much.

yellow
  • #18
  • Jul 19, 2007 3:31pm Jul 19, 2007 3:31pm
thing, are you live with this now?
  • #19
  • Jul 19, 2007 3:58pm Jul 19, 2007 3:58pm
Quoting coolshades
thing, are you live with this now?
Not yet, not yet..Still need more time to demo and get more confident with it.
  • #20
  • Jul 19, 2007 4:36pm Jul 19, 2007 4:36pm
Quoting Yellow2
Hi Thing,

Sorry for the confusion, what I meant by " 4 bars with the same Open - close relationship" was they were all in the one direction ie Close higher the open.

There would be an entry on the 4th day (as previous 3 bars all up).

If bar 4 also had a higher close then it's open (therefore: bars 2,3 and 4 were 3 consecutive bars where the Close was higher then open), would you re-enter on open of bar 5.

Really, what I'm asking is, even if there has been more then 3 consecutive up bars, do you only consider the last 3 bars for a set-up.

thanks for patience



Yellow

Just my quick 2 cents.
just quickly eye balling the charts, the only time I see a forth or fifth consecutive candle, is when its with the trend.
this system has promise trading with the trend.
Chris
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