I have not traded this yet.
My plan is to develop this, and hopefully see a simple yet profitable system in the making
The indicators
On the 4hr chart.
We would wanna have the
- 30 and 120 SMA
- RSI 14
Reasons for using 30 and 120 SMA :
30 represents the weekly trend and 120 represents the monthly trend.
The Setup
- We want to be on the longside as long as price is trading above 120 SMA
- Buy when RSI sheds more than 15% points from its previous known peak.
I did not state any use for 30 SMA, but fact is on a strong trend, i usually find value trades around those lines too(for system sake, lets make sure it lines up with the rsi or heck, just remove it)...habits of a discretionary trader i guess.
STOPS
Before we could decide on the TP, i would like to hear your views on planning the stops.
Personally i am thinking along the lines of ATR(mt4 default) x 1.5 or 2 stop figure. Any comments?
Take Profit
Multiple TP or single? hmmmm
Lets say we use GBPUSD, which has an ATR(14) of 60pips. Im planning a modest 1.5:1 win ratio, for this to happen, using the various stop models,
Using ATR(14) x 2 stop strategy
My stops would be a 120pip stop.
Which means i would need to harvest at least 180pips per trade.
GBP has an avg daily range of 120pips, this trade would likely last more than a day.
Using ATR(14) x 1.75 stop strategy
My stops would be a 105pip stop.
Which means i would need to harvest at least 158pips per trade.
So far 1.75 looks like the ideal esp for trading the gbp
Using ATR(14) x 1.5 stop strategy
My stops would be a 90pip stop.
Which means i would need to harvest at least 135pips per trade.
I have a feeling that i'll be whipsawed quite badly in this one.
Well the whole plan does look really simple eh? Oh well, i was never a fan of complicated stuff, guess my brain's just aint good enough to digest those.
So off we go to the backtesting lab to see which works best. Ideas and comments appreciated. Hopefully i can muster the time to come up with some proper backtest results. If else, it would seem to me this thread is doomed to lurch in dust. Backtesting pair....GBPUSD. cheers
regards
jest
My plan is to develop this, and hopefully see a simple yet profitable system in the making
The indicators
On the 4hr chart.
We would wanna have the
- 30 and 120 SMA
- RSI 14
Reasons for using 30 and 120 SMA :
30 represents the weekly trend and 120 represents the monthly trend.
The Setup
- We want to be on the longside as long as price is trading above 120 SMA
- Buy when RSI sheds more than 15% points from its previous known peak.
I did not state any use for 30 SMA, but fact is on a strong trend, i usually find value trades around those lines too(for system sake, lets make sure it lines up with the rsi or heck, just remove it)...habits of a discretionary trader i guess.
STOPS
Before we could decide on the TP, i would like to hear your views on planning the stops.
Personally i am thinking along the lines of ATR(mt4 default) x 1.5 or 2 stop figure. Any comments?
Take Profit
Multiple TP or single? hmmmm
Lets say we use GBPUSD, which has an ATR(14) of 60pips. Im planning a modest 1.5:1 win ratio, for this to happen, using the various stop models,
Using ATR(14) x 2 stop strategy
My stops would be a 120pip stop.
Which means i would need to harvest at least 180pips per trade.
GBP has an avg daily range of 120pips, this trade would likely last more than a day.
Using ATR(14) x 1.75 stop strategy
My stops would be a 105pip stop.
Which means i would need to harvest at least 158pips per trade.
So far 1.75 looks like the ideal esp for trading the gbp
Using ATR(14) x 1.5 stop strategy
My stops would be a 90pip stop.
Which means i would need to harvest at least 135pips per trade.
I have a feeling that i'll be whipsawed quite badly in this one.
Well the whole plan does look really simple eh? Oh well, i was never a fan of complicated stuff, guess my brain's just aint good enough to digest those.
So off we go to the backtesting lab to see which works best. Ideas and comments appreciated. Hopefully i can muster the time to come up with some proper backtest results. If else, it would seem to me this thread is doomed to lurch in dust. Backtesting pair....GBPUSD. cheers
regards
jest
