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Simple 5 / 8 moving average crossover

  • #461
  • Nov 8, 2007 5:35am Nov 8, 2007 5:35am
Quoting peterM
Yes, that does sound like a MACD indicator rather than a standard moving average. Are you using MT4?
Hello Peter and let me first thank you for sharing your experiences and expertise.

I have a question, on the 5 EMA and 8 EMA, are the parameters "simple" or "exponential". I am having difficulty figuring it out.

Thanks!

Ash
Humble Lifetime Member
  • #462
  • Edited 6:12am Nov 8, 2007 6:10am | Edited 6:12am
Quoting peterM
I have been using a strategy for a few months now. It is very simple and I have followed the rules exactly. Its certainly not holy grail but it has made me some nice pips over the last few months.

I use the 5 EMA and 8 EMA crossover on the daily chart. For the stop loss I use the low or high for the previous day (depending on if we are or short). Alternatively if this is too close or too far away, so the risk/reward ratio would be too low, I draw fib lines on the daily chart and trendlines to try and pickout important support and resistance points and place the stops at these. I always give priority to points where the market has bounced previous. I usually place the stop just above or below these points.

I have used it on these pairs: NZD/JPY, GBP/JPY and GBP/USD. It has worked best on these pairs in the past.

For the take profit, I trail it, usually by 50 pips on nzd/jpy , 100 on GBP/JPY and 50 on GBP. It loves trending markets but doesnt work to well in ranging markets, however as I used strategic stops and tps, The losses have been very small when the market ranges, sometimes even a small profit. On the plus side it has picked up and rode some nice trends. I picked up the first part of the major carry unwinding on gbp/jpy and nzd/jpy for some very very nice pips, A nice gain on equity whilst not risking too much. I had the sell signal on GBP/USD but that one got stopped out at +2 pips.

Here we go ...very first post.....

good luck

Rye


p.s. EMA =Exponential Moving Average
  • #463
  • Edited 7:17am Nov 8, 2007 7:15am | Edited 7:17am
Quoting Ryecatcher
Here we go ...very first post.....

good luck

Rye


p.s. EMA =Exponential Moving Average

Thanks!
Believe it or not, I was using SMA but when I read the thread, I was a little confused. I thank you for your assistance.

P.S. I have been have great success with EUR/CAD and GBP/CAD. Minimum of 40 pips on the 1hr and maximum of 160 pips so far. As soon I move into a profit, I move my SL to a positive 1 pip and let it go from there.

Also, Since CAD is highly correlated with OIL, I also keep an eye out on oil prices.
Humble Lifetime Member
  • #464
  • Nov 8, 2007 10:33am Nov 8, 2007 10:33am
Quoting BookerT
Actually I believe Peter uses 5close ema / 8close ema.
The mention of 5close 8open was by another poster.
Thanks man..
  • #465
  • Nov 8, 2007 10:34am Nov 8, 2007 10:34am
another change?
  • #466
  • Nov 8, 2007 2:01pm Nov 8, 2007 2:01pm
Dear Mr. Marsden, Hi, my name is Vince. I had follow up question to your post. It is where am I supposed to put the values 5, 8 in the moving avg box. What I do is I go to indicators then moving avg, then the box pops up saying enter values for period, shift, ma method. I use SG trader and I think I am supposed to put the values where it says period but I just wanted to check with you for sure.I know that I am not using the MACd box anymore and when I enter the values I have to do it twice, once for 5, once for 8. By the way your website is very cool and informative. Thanks for any help.
  • #467
  • Nov 8, 2007 3:58pm Nov 8, 2007 3:58pm
vince, yes you are correct.

Put a 5 in where it ask for period,

then

where it says ma method select "Exponential",

then

do not put anything in the shift space.

IF it ask for "Apply To" select "CLOSE"

hit "OK"


Then Repeat all that using 8 in the period .

Then you might want to change one of the ma's colors to make it easier to see the different lines.

you should have 2 moving averages on your chart .

  • #468
  • Nov 8, 2007 6:33pm Nov 8, 2007 6:33pm
I have had a slow and almost bad week so far...Got into a trade and went 200and somethine pips negitive and can't even see why I got in it...No cross at all...Maybe my eyes are crossed from the 189 trades last month..Must still be seeing crosses...


Slkosier
  • #469
  • Nov 8, 2007 8:13pm Nov 8, 2007 8:13pm
Quoting Slkosier
I have had a slow and almost bad week so far...Got into a trade and went 200and somethine pips negitive and can't even see why I got in it...No cross at all...Maybe my eyes are crossed from the 189 trades last month..Must still be seeing crosses...


Slkosier
lo. take it easy man.
  • #470
  • Nov 9, 2007 5:17am Nov 9, 2007 5:17am
Quoting vinceish567
Dear Mr. Marsden, Hi, my name is Vince. I had follow up question to your post. It is where am I supposed to put the values 5, 8 in the moving avg box. What I do is I go to indicators then moving avg, then the box pops up saying enter values for period, shift, ma method. I use SG trader and I think I am supposed to put the values where it says period but I just wanted to check with you for sure.I know that I am not using the MACd box anymore and when I enter the values I have to do it twice, once for 5, once for 8. By the way your website is very cool and informative. Thanks for any help.
hi vince, I am not sure about SG Trader, I use MT4. You need to create two EMAs on your chart. One 5 period EMA and one 8 period EMA.
  • #471
  • Nov 9, 2007 5:18am Nov 9, 2007 5:18am
Quoting Ash
Hello Peter and let me first thank you for sharing your experiences and expertise.

I have a question, on the 5 EMA and 8 EMA, are the parameters "simple" or "exponential". I am having difficulty figuring it out.

Thanks!

Ash
parameters are exponential. You can use simple, but the moving averages will be more lagged. Exponential moving averages give a greater bias to recent price action.
  • #472
  • Nov 9, 2007 5:19am Nov 9, 2007 5:19am
Quoting Slkosier
I have had a slow and almost bad week so far...Got into a trade and went 200and somethine pips negitive and can't even see why I got in it...No cross at all...Maybe my eyes are crossed from the 189 trades last month..Must still be seeing crosses...


Slkosier
damn.. never deviate from your trading plan. You have done very well when you stuck to it. It took me a long time to be able to trade my strategy like a robot, but it's something we must learn to be consistently successful.
  • #473
  • Nov 9, 2007 8:20am Nov 9, 2007 8:20am
Quoting peterM
damn.. never deviate from your trading plan. You have done very well when you stuck to it. It took me a long time to be able to trade my strategy like a robot, but it's something we must learn to be consistently successful.
agree with PeterM.
stick to the rules. do not have too many system in your head. even supercomputer get jammed when there is too many OS in it. hehe
  • #474
  • Nov 9, 2007 9:03am Nov 9, 2007 9:03am
Quoting peterM
parameters are exponential. You can use simple, but the moving averages will be more lagged. Exponential moving averages give a greater bias to recent price action.
Hi Peter & all,

Just to let you know i have been very very disciplined this week and although i have been trading on a demo account, my figs for this week are

EURO/GBP = £24
EURO/CHF = £55
GBP/CHF = £60
GBP/EURO = £53
GBP/JPN = £170
USD/JPY = £80
TOTAL = £442.00


I intend to demo trade this system for a couple of weeks yet but i am very happy with my total this week, waiting for RSI crosses at 56 & 44 and waiting for 5 to cross 8 ema and i could have hung in for more profits but i am thinking like its my own money here at risk, rather make £30 than lose £30

Seems to me that nothing really moves until 11.30 gmt and again at 6pm gmt, dont know matbe just me?

Also trading the news, like today on bad GBP trade balance but i do wait a few minutes after results have come out, rather long term gains than short term losses (or Gains)

Thanks Peter for all the info you have shared with us and it is very true

BE DISCIPLINED, BE PATIENT AND ABOVE ALL KEEP IT SIMPLE
  • #475
  • Nov 9, 2007 11:48am Nov 9, 2007 11:48am
Quoting peterM
damn.. never deviate from your trading plan. You have done very well when you stuck to it. It took me a long time to be able to trade my strategy like a robot, but it's something we must learn to be consistently successful.
Well I got very lucky.. it came back to where I needed and took 383pip profit... That is one very important thing to try and do in forex...Stick to your rules and if there is no trade don't try and make one...

Slkosier
  • #476
  • Nov 9, 2007 6:12pm Nov 9, 2007 6:12pm
Quoting pbalfe@tisca
Thanks Peter for all the info you have shared with us and it is very true

BE DISCIPLINED, BE PATIENT AND ABOVE ALL KEEP IT SIMPLE
Nice trading, I like your final line :-)
  • #477
  • Nov 9, 2007 6:14pm Nov 9, 2007 6:14pm
Quoting Slkosier
Well I got very lucky.. it came back to where I needed and took 383pip profit... That is one very important thing to try and do in forex...Stick to your rules and if there is no trade don't try and make one...

Slkosier
good that u got lucky, but we don't want to be depending on luck to succeed. Like you say stick to your rules and don't try to make trades when there arn't any. I know it's easier said than done.. only to well!! good luck next week :-)

Pete
  • #478
  • Nov 9, 2007 8:04pm Nov 9, 2007 8:04pm
  •  TrevA
  • | Joined Oct 2007 | Status: my brain has a mind of its own | 166 Posts
Quoting peterM
For the take profit, I trail it, usually by 50 pips on nzd/jpy , 100 on GBP/JPY and 50 on GBP. It loves trending markets but doesnt work to well in ranging markets, however as I used strategic stops and tps, The losses have been very small when the market ranges, sometimes even a small profit. On the plus side it has picked up and rode some nice trends. I picked up the first part of the major carry unwinding on gbp/jpy and nzd/jpy for some very very nice pips, A nice gain on equity whilst not risking too much. I had the sell signal on GBP/USD but that one got stopped out at +2 pips.
If you've ready any of my previous comments you would know that I'm not a big fan of the moving average crossover systems, mainly because they chew up capital while ranging and the losses tend to take an emotional toll on the trader. Having said that, they seem to be very popular with people new to Forex and teach trending quite effectively. For that reason I would like to contribute to this thread.

Peter, I completely agree with you about the difficulty using this system for ranging markets. The $million$ dollar question is... when do we know when the ranging ends and the strong trend commences? The answer.... we don't, not until after the trend begins and we have hindsight. Once it begins do we know when it ends? Is it 5 pips or 350? Once again...... no we don't hence the numerous stop loss and take profit strategies that abound.

I'd like to introduce Fractals at this point. Fractals help solve the entry timing question quite well and show when a pullback occurs. They also reduce losses by forcing a trend confirmation when the pricing is ranging. Quite simply, you do not get a valid fractal when the market is ranging, mostly when it is trending. The downside is that profits can be reduced using fractals because you can miss the start of some trends but losses are significantly reduced through minimal trades in ranging markets.

How many times have we purchased in a trend only to find that it pulls back and we find ourselves waiting nervously for the continuation to begin? I recommend to anybody reading this thread to learn and use fractals to time your entry points. They come standard with MetaTrader but very few people know how to use them and they really help a lot.

If you're not comfortable using fractals or just find them downright confusing then I suggest you add an additional moving average to the 5/8 system... perhaps an EMA of 30. Wait for the trending to pull back near to the EMA 30 before buying. This strategy ensures that you're buying in the money and not paying too much.

Happy pipping.

TrevA
  • #479
  • Nov 9, 2007 11:32pm Nov 9, 2007 11:32pm
Quoting TrevA
If you've ready any of my previous comments you would know that I'm not a big fan of the moving average crossover systems, mainly because they chew up capital while ranging and the losses tend to take an emotional toll on the trader. Having said that, they seem to be very popular with people new to Forex and teach trending quite effectively. For that reason I would like to contribute to this thread.

Peter, I completely agree with you about the difficulty using this system for ranging markets. The $million$ dollar question is... when do we know when the ranging ends and the strong trend commences? The answer.... we don't, not until after the trend begins and we have hindsight. Once it begins do we know when it ends? Is it 5 pips or 350? Once again...... no we don't hence the numerous stop loss and take profit strategies that abound.

I'd like to introduce Fractals at this point. Fractals help solve the entry timing question quite well and show when a pullback occurs. They also reduce losses by forcing a trend confirmation when the pricing is ranging. Quite simply, you do not get a valid fractal when the market is ranging, mostly when it is trending. The downside is that profits can be reduced using fractals because you can miss the start of some trends but losses are significantly reduced through minimal trades in ranging markets.

How many times have we purchased in a trend only to find that it pulls back and we find ourselves waiting nervously for the continuation to begin? I recommend to anybody reading this thread to learn and use fractals to time your entry points. They come standard with MetaTrader but very few people know how to use them and they really help a lot.

If you're not comfortable using fractals or just find them downright confusing then I suggest you add an additional moving average to the 5/8 system... perhaps an EMA of 30. Wait for the trending to pull back near to the EMA 30 before buying. This strategy ensures that you're buying in the money and not paying too much.

Happy pipping.

TrevA
Hi Trev,

Yes it is difficult to know how far to run with a short or long bet, what i do is set out my supprot & resistance lines through my chart package, then i set out my fibonacci retracement lines, and then set my fibonacci retracement lines.

All this should give you an idea where the price is going but always look at where the nearest high or low point is on your chart also.

The whole point is - What are you happy to make on a particular bet and be happy with that, i have pulled out of longs & shorts only to see it drop or rise further = MOTTO - there is always another day and markets will always be up or down, BE HAPPY WITH TAKING MONEY FROM THE MARKET and not trying to get the optimum amount of profit from every trade

By the way i have put a 30 ema on my chart and i noticed that if you are short and the next candle closes above the 30 ema then get out, or visa versa but then you could reduce your profits, i think mainly to work on your 44 & 56 rsi and then decide yourself through either your own instinct of where the market is going or what profit you are happy with

Anyway thats nmy twopenny worth for the weekend and good trading next week
  • #480
  • Nov 10, 2007 9:06am Nov 10, 2007 9:06am
Hi Trev , I prefere use Gann hilo line to enter or exit , for me is more near the market.
Look at the chart , acqua line is 30 ema and blue is Gann.
What do you thing guys ?
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