EMA 25-50 Trading System (Detailed)

http://img193.imageshack.us/img193/4...dingupdate.jpg

Very plain and simple, I cant wait to use this in the upcomming week. Thank you for sharing effilang!

Henyloc

Thank you for your words Henyloc,

I am currently testing the system on lower frames and trying to determine optimal SL for such charts. So i've only recommended it be traded on H4 for the time being.

I am confident however that experienced traders will be able to make wonders on lower time frames just as good.

As it is said: "Unless a man undertakes more than he possibly can do, he will never do all that he can."

Regards,
E. Lang

Im assuming you are using Daily S/R levels.

In many situations you are able to predict an exit or turnaround before the price stops you out, if you draw H4 and D1 R/S lines prior to beginning the trading session.

Profit taking can be different for everyone it can be 30 Pips, or 50 or 100, whatever you feel more comfortable with before moving your S/L to B/E or cutting it by half to minimize any losses that my occur.

Scenarios will occur when you will have 2 or 3 consecutive losses at B/E or closed out on spread, just keep on entering the signals and when one of them picks up you will compensate for all the small losses. This tends to happen in periods of volatile and spiky consolidation.

So, i definitely recommend the application of S/R and even Pivot Point, to better gauge exit levels in conjunction with the Ex/Op technique.

Regards,
E. Lang

I notice you call for 1*ATR or 2* ATR as the SL.

There may be 60 pips difference in the two.

How do you determine which one to use?

Anything between 1 ATR and 1.5 to 2 ATRs will generally be fine for a SL.
You will notice however that in almost all cases before your SL is hit a new entry signal in the opposite direction is presented.

When we have heavy consolidation we can get quite a few false signals, i don't deny this, but you will always be on top at the end of the day.

Another way you can avoid hitting your SL is by entering a trade before the H4 candle actually closes. As long as you've determined based on your TA or your sentiment that the candle will remain below 50 at the close, you may as well trigger the trade prematurely so to say.

This will normaly give you a better chance of hitting safe zones like 50 Pips or 100 pips so you can move to B/E or move your SL up 50%.

When i test or create systems i don't cherry pick trends off the charts.
I scroll through all the major price action and test the system in areas of intense consolidation. When a system works there it gets my mark of approval.

Another way to trade this system is using two time frames side to side.

One H4 chart and a 5 Minute chart.
You execute using the same rules on the 5 minute chart (2 x ATR)

BUT

Only execute a trade on M5, when you have a cross/touch of the Stochastic Indicator on H4 off the extremities of 20 and 80.

I think you will need to test it for a while to get the feel of things.
I have no doubt that many modifications will be made to this as more people begin to trade it.

Regards,
E. Lang

but i don't understand how do you calculate your stop loss..1*ATR is 1*1.6687 (the value of ATR in this moment on gpb/jpy) ?so,what should i do with this number? I'm a beginner in Forex,that explains all!
Thank you!
Stefan Marinica

Hello Stefan,

1.6687 would equal an ATR of 1.66|87 or = 166 PIPS.

It is a little dodgy.

Regards,
E. Lang

I look forward to trying this system out.

Cheers

fxgrm

This is a potential trade based on the dual frame method.


http://img258.imageshack.us/img258/5383/tradecu1.jpg


E. Lang

Ex. Op. Tip*

Use a Stochastic touch/cross in parallel with RSI to amplify the signal.

The Stochastic Indicator may cross several times in the duration of a trend or otherwise price movement. It can become confusing determining when to take advantage of the feedback.

To minimize this problem, when both Stochastic cross/touch and RSI hits either of its extremities (30/70) we accept the exit signal as one much more reliable.

The closer RSI is to one of its extremities when you have an Ex. Op. signal the stronger the signal.

Regards,
E. Lang

Hi Effilang,
how do you cater for news announcements.... any special precautions or tactics?
Thanks
Dave

I prefer one of the following methods:

A: Tell news to kiss my butt.
B: Don't trade until after the announcement
C: Spend an hour reading about market sentiment prior to the news. Then use S/R on H4 and place my buy/sell orders under/above those points based on expectation.

If i had to pick though, it would be B every time. I'm not a fundamental trader, so trading news releases is a big risk for me every time. I know however that after the release a new trade will appear, and another after that, and another after that, so it doesn't bother me.

HOWEVER! - when you trade on D1 and H4 news isn't always that much of a problem.

Regards,
E. Lang

News in most cases won't have nothing on you, since you would have halved your SL or moved to B/E prior to its release.

Losses are accepted in a situation like that.

If your question was whether we voluntarily terminate a trade due to an upcoming news announcement, the answer is normally "no", considering of course that you've booked partial profits already meeting your initial target.

If you however just entered a trade 5 minutes before the news came out; you can either quit or assume that price is moving in the direction of market expectation prior to the release, defining your current entry as appropriate.

Regards,
E. Lang

Hi ELang,

You said that this system works well on H4. How does it performs on the dailies?

You also mentioned that you have a different daily system. Do you care to give any insights about it?

On the daily chart.

I dare say no other system i have ever come across compares to it.

The only problem is you may be holding a trade for up to half a year and longer in trending periods. In other situations though its great to pick off 100-1000 Pips in a couple of days.

Regards,
E. Lang

As for the Daily System.

I teach it live at a price. Feel free to contact me if you are interested using the details in Page 9 of the 25|50 system.

Regards,
E. Lang

look forward to testing this system.

One quick question. If I understand correctly, for entry both the open and close on the 4 hour chart has to be above or below th 50 EMA?