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EMA 25-50 Trading System (Detailed)

  • #21
  • Sep 8, 2007 7:11pm Sep 8, 2007 7:11pm
Spot on.
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #22
  • Sep 8, 2007 7:13pm Sep 8, 2007 7:13pm
Entry TIP*

Trading when RSI is under/above 50 can help clear out a lot of false signals!
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #23
  • Sep 8, 2007 9:05pm Sep 8, 2007 9:05pm
Hi Effilang

I also trade a 25/50 ema strategy and have been for sometime now, however my entry criteria is slightly different to yours which i find filters out alot of the false trades.

Criteria - For a Buy (vise-versa for Sell)
1. Candle 1 - Must open below the 50 ema and close above the 50 ema
2. Candle 2 - Must open & close above the 50 ema
Entry is 10 pips above the high of Candle 2.


Hope this helps.
  • #24
  • Sep 8, 2007 10:35pm Sep 8, 2007 10:35pm
Hi Effilang,

I have one question regarding risk:reward ratio. gbpjpy ATR on a 4Hr timeframe is normally over 100pips..so if we are risking anywhere from 150-200 pips in stoploss but primarily limiting for 50+ pips....very soon you will be playing catchup. What has your monthly pip record been?

Looking to see how this thread develops.
Thanks
  • #25
  • Sep 9, 2007 3:06am Sep 9, 2007 3:06am
what ma is it
Simple, exponential??? Applied to Close or Open?
  • #26
  • Sep 9, 2007 5:06am Sep 9, 2007 5:06am
Quoting FxConqueror
Hi Effilang,

I have one question regarding risk:reward ratio. gbpjpy ATR on a 4Hr timeframe is normally over 100pips..so if we are risking anywhere from 150-200 pips in stoploss but primarily limiting for 50+ pips....very soon you will be playing catchup. What has your monthly pip record been?

Looking to see how this thread develops.
Thanks
Hello Conqueror,

I am new to posting in this forum, but i have quite a record on Babypips.com and i've issued live trading signals on a day to day basis for over a month and two with several systems. The results have been well over 1000 Pips on a regular basis and i actually issue the signals before they appear.

Many tend to argue, but i've learnt in the years that you just need to look away, do your thing, keep moving forward and let them get smaller in the distance as you advance ahead. As they say; "a ripe rice plant, bows its head"

As for SL. The thing with the system is that you in almost all situations get a Signal in the other direction before you even hit 1 x's ATR.

So if you were in one trade, locked in 50 or 100, but didn't move to B/E, your position may move to negative 100 or 150 if the price reverses, but that will give you another entry signal and the opportunity to lock in another 50 or 100 pips as an initial target.

So you locked 100 takeaway 150 + another 50 or 100, which puts you on top with 50 or 0 or -50. This will happen in cases of fake outs, it is expected. It can happen once, twice, thrice even a forth time if it is heavy consolidation, but once you break out. BOOM. You're in the money.

My experience tells me that price will generally bounce off channel consolidation maybe 3 to 6 times before breaking out, so even in a worse case scenario things don't get shady. Just make sure to keep to good management.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #27
  • Sep 9, 2007 5:07am Sep 9, 2007 5:07am
Quoting stace
what ma is it
Simple, exponential??? Applied to Close or Open?
Exp..

Regards,
Effi Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #28
  • Sep 9, 2007 6:28am Sep 9, 2007 6:28am
i guess even 2*ATR for my stop loss isn't enough in nzd/usd because now ATR=0.0018. I i guess S/R would do a better job?! (i must pass a test where all the trades must have maximum stop loss at 50pips so the risk management must be very good. I guess that gbp/jpy isn't recommended? What pairs do you recommend? Is your system good for them?

Thank you!

Stefan Marinica
  • #29
  • Sep 9, 2007 6:34am Sep 9, 2007 6:34am
the value for ATR was for the 1h chart...but still on h4 chart ATR=0.0066 so 2*ATR means 0.01|32 ,still not good for me if that means 1 pip stop loss.
  • #30
  • Sep 9, 2007 6:53am Sep 9, 2007 6:53am
Thank for sitem which is good , can you to tell usefulness of EMA 25 ..??
regards
Entung
  • #31
  • Sep 9, 2007 7:04am Sep 9, 2007 7:04am
Quoting stfmotion
i guess even 2*ATR for my stop loss isn't enough in nzd/usd because now ATR=0.0018. I i guess S/R would do a better job?! (i must pass a test where all the trades must have maximum stop loss at 50pips so the risk management must be very good. I guess that gbp/jpy isn't recommended? What pairs do you recommend? Is your system good for them?

Thank you!

Stefan Marinica
Hello Stefan,

On my NZD/USD chart my ATR is currently 20, so 2 x 20 = 40 (Yes you can use S/R) - You can implement the Manual Trailing technique i've explained in the system.

GBP/JPY is recommended. It is the primary pair i trade. - Please read the System rules Pages 1-9, pairs are recommended on Page 5 (STOP LOSSES & MANAGEMENT) - at the bottom of the page. The system works either with pairs that move sharply or ones that trend continuously.

That has been my establishment.


--------------------------------------------
the value for ATR was for the 1h chart...but still on h4 chart ATR=0.0066 so 2*ATR means 0.01|32 ,still not good for me if that means 1 pip stop loss.
--------------------------------------------

If it is 66 on the 4H chart then the recommended SL should be either 66 or 132. (0.00|66 x 2)

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #32
  • Sep 9, 2007 7:05am Sep 9, 2007 7:05am
Quoting entung
Thank for sitem which is good , can you to tell usefulness of EMA 25 ..??
regards
Entung
Please read the system Pages 1 to 9, all of this is explained.

I don't understand why questions are being asked that have already been detailed in the rules of application.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #33
  • Sep 9, 2007 7:12am Sep 9, 2007 7:12am
Quote:
Originally Posted by *********
Effie - I am assuming that since this is a 4hr method this is the time frame for charts shown at 1, 3 and 4. Also with a return of 500-1000 pips per month and a stop of 2ATR (about 300 pips atm) we are looking at 3-6% ROE based on a 2% risk per trade?

ROE - Rules of Engagement ? http://forums.babypips.com/images/smilies/confused.gif

I'm assuming you mean Interest Returns.
They are generally 3 to +10% per trade.

SLs will rarely be hit, because you will get another entry signal before it is triggered.

PS: Effi (Effiong)**

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #34
  • Sep 9, 2007 11:53am Sep 9, 2007 11:53am
Hi Effilang,

Thanks for the earlier response. From reading your last post the ATR value is calculated form the 1HR timeframe and not the 4Hr as I thought from reading the system?

Thanks
  • #35
  • Sep 9, 2007 11:58am Sep 9, 2007 11:58am
Quoting FxConqueror
Hi Effilang,

Thanks for the earlier response. From reading your last post the ATR value is calculated form the 1HR timeframe and not the 4Hr as I thought from reading the system?

Thanks
Hello,

The ATR is calculated on the system that you are trading.
If you are looking for large profits, you will need a stop loss based on the current price movement. You can't use a 5 Minute ATR on a 4H time frame, you'd probably get stopped out right after you enter the trade.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #36
  • Sep 9, 2007 4:34pm Sep 9, 2007 4:34pm
Quoting effilang

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.


Regards,
E. Lang
Let me follow up on the part I have underlined:

Does this mean, for example, to only take a long trade when the 4Hstochastic is crossed, headed up and not oversold?
Or does it mean that the 4H stochastic should be crossed upward and in the oversold area (<20)?
  • #37
  • Sep 9, 2007 4:35pm Sep 9, 2007 4:35pm
Give me 5 mins.
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #38
  • Sep 9, 2007 5:02pm Sep 9, 2007 5:02pm
this little gem is in post 6, I missed it the first time through as well, sometimes get too excited!

Quoting effilang
Please read the system Pages 1 to 9, all of this is explained.

I don't understand why questions are being asked that have already been detailed in the rules of application.

Regards,
E. Lang
  • #39
  • Sep 9, 2007 5:03pm Sep 9, 2007 5:03pm
Quoting effilang

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


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


E. Lang


First off, excuse the ugly charts, but my MT4 server is crap.

On Friday or Saturday we, said that if we have a cross on Stochastics on H4 we would long on M5 using the 2550 entry criteria.

Stochs, never crossed, but to show what would have happened lets take a look:

We would have have entered long at Point 1 with 2 x the ATR as our STOP.
- We got did not get stopped out, but we got a signal in the opposite direction at point 2, so it must be taken.

- The price dropped and your exit would have been at the Ex. Op.; Stochs had crossed and RSI was piercing its lower extremity, a perfect Exit Optimization signal.

- The price retraced creating an area of Resistance at point 3. Note however that the price did not cross 25 EMA.
If you recall we can only reenter a trade in the same direction when the price moves beyond 25 EMA, maybe tests 50 then closes back below 25. The close below 25 after the retracement would be another reentry signal.

The way to tackle these situations is using RSI and Stochastics.
Note that at Point 3, Stochastics had an Ex. Op. signal, but it was not supported by RSI.

TIP: When RSI does not cross 50 BUT Stochastics produce a cross, you may consider Reentering the position in the same direction of your previous trade, despite the fact that price didn't cross 25 and then come back to close below it.

The reentry in such cases, is based on a break of the low. After which the SL is placed at the high just created (READ the Manual Trading part of my system)

From here on ways, you just use Manual Trailing.

Thats that.

On H4 (Left Chart) - you will notice our first successful trade.
Entry at the H4 close >> 90 Pip pullback >> 163 drop in your direction.

Regards,
E. Lang


http://img444.imageshack.us/img444/9529/updatekw5.jpg

"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #40
  • Sep 9, 2007 5:14pm Sep 9, 2007 5:14pm
Our reentry was at the break. 228.88 for me approximately (after spread)

MANUAL TRAILING: we have new R at 229.10 >> we may consider moving our SL from the previous H (229.70) to this new point.

Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
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