EMA 25-50 Trading System (Detailed)

You are correct.

This is one trade that shows the system is not perfect. The entry and stop that was hit are marked. This I chalk up to bearish sentiment along with U.K. market being closed today so there is no news or anything to keep the direction going. The entry was late due to a late fill on my order. The correct entry was supposed to be @1.9773.

I reckon you entered the short just after this trade, when your 21EMA crossed the 55EMA down? It was a good dip...

also, yout stoch was hanging in the ob area for a very long time. people get nervous and then they take profits, that is why i like to use another indicator like rsi or macd, they both probably went below 50 or negative at the drop. just my 2 cents.

thanks for the info.

Actually I got in before the cross in this case. Due to the fact that the price action was strong to the downside and the cross was not far off I jumped on the short with a high probability it would continue. My target was S1 but after a few hours and decreasing volume I decided to take the profit
and call it a day.

Good point. Also there was divergence which helped. Thanks for pointing that out.

this market is getting crazy, what is going on!!!!!!!!!!!!!!!!!!

looks like it is just a short term scalp deal until the rate decisions later this week.. trade the rumors!!!! the facts are boring!!

The following charts were taken before the London open. Chart 16 is the 15 min., chart 17 is the 4hr, and chart 18 is the daily. In each one the market sentiment is bearish. So here a short position would be in order and an entry sought.

Here you can see what the results were. As the charts earlier showed there was a bias to the downside and the price going below the pivot would be the time to take a short position as chart 19 shows. If you look at chart 20 (4hr), you see the red candle before the last red one has touched the 21 and closed lower. The last red candle retested the 21 and failed there and here again the short position should be taken just below the CP for a nice move and good profit taking.

since there was no new low made on the next bull candle it retested the 21 on the PMI news being over 50 which was good, given a 2 full point deviation. A break above the m3 was a good indication of a test of the 55, based on past performance (90% of the time). With bias still bearish on the 4hr and daily, I see the bullish trend to be only a correction, so the bias is still bearish. Especially since on the daily chart, a new low was achieved and a higher high was not.

i am so lost on your chart, lines everywhere!!! sorry dude, i like things a little more simple. all those lines make my eyes go buggy!!! i was over on the dicussion page and they were talking about a move to 103 area, is that what you are looking for, or do you just take what you can get????

Which lines are you talking about and what charts? I'm not sure what your looking at. 103 area? do you mean 1.9103? If so I don't look that far ahead, that's for carry traders. As far as what I'm looking at on the charts is market sentiment and where I may find trouble spots.

sorry dude, i was thinking you were trading the yen. i see it is the gbp. my bad. all the lines for support and resistance and pivot points. kind of makes it hard to see price meovement.

Hey that's ok. Let me suggest this for you, when looking at those charts, the only thing you want to see is where the price is at compaired to the lines in the range of the previous candle. Then think of those lines as trouble areas. That should cut down alot of the useless information for you. The trendlines chart is how I see the market and give me clues as to the information I need at any given time. I don't expect everyone to set up their charts the same as me. I can make suggestions and show everyone what I see the market doing or may do. How each person sets up their charts is up to them. You can make it as simple as, just showing the trend to as complicated as telling you what the high was on a certain date or the average range of Aug 1999 or see what the trend has been since jan. 1, 2001. The pivot points are visible on all time frames, I could set it up to only show on my 15 min. chart if it's more convenient for you. No problem, I'll work with you on this.

I personally like only as much information as I need, no more. Set up your charts to how you feel comfortable. Then we can compare notes, you might see something I don't or I may see something you don't. I am always open to looking at others see.

that is cool, i can deal with that. the only thing is i am unsure how to get a chart on here. i use alpari for my charts.

No problem, you use metatrader platform. On a chart you want to post right click the chart and goto "save as picture". give it a name and save to your documents. when you go to post here go down below to where it says "manage attachments" and click on it. A window will open go to "browse" at the top and find the chart you saved and click it then click "open". Then hit "upload" and it will show up with your post. My charts are metatrader also but with another broker. Let me know if you have any problems.

ok, will give it a try. thanks for the help, i am sure i will screw it up once or twice befoer i get it right.

on to other happy notes, wtf with this markets???? we had a big build in inventories and oil goes up, damn the french and their dock strike!!!!! why has the yen and the swissy decoupled??? they do not like each other anymore??? or is the jcb manipulating while everyone has their eyes towards ecb and gcb????

then again, who cares, the signals said down, luckily i was trading with play money

Hi Efillanng,

Ema 25 apply to ............. close or what

EMA's unless otherwise noted are closed. SMA's usually are Simple Moving Averages, again closed unless otherwise stated.

I know what you mean, I've been staying out until the dust clears. With the bad news out of Europe and the pound in the same boat as the Dollar, there have been some unexpected moves. I find that when things don't make sense it's best to sit it out and hold on to my capital. The market will swing back eventually.

http://img440.imageshack.us/img440/3274/eur2jm8.jpg



Hello guys.

This is a typical trade. (SHORT)

1.Identify the trend (Trend or Range)
-Being able to visually distinguish the trend allows you to determine the market psychology you should adapt in looking for logical areas of resistance and support and most importantly, the tools to apply for that.
As I have explained before, in a sideways ranging movement, the areas of R and S are similar; terminating around the extremities of the defined consolidative region, thusly making it easier to determine where to sell and where to buy.

In an trending environment however we have to use tools like trendlines, fibs, basic price logic and most importantly candlesticks to aid us in pinpointing potential areas of exhaustion, or points where the market creates new support or resistance.

2.Find Resistance to confirm Stochastics. Resistance is an area at which the price due to recent facts and events is considered expensive at a certain value. This area of expense during the life of a product or asset then becomes of interest to potential sellers looking to sell while expensive and buy back later somewhere else where there are buyers willing to purchase what they have on offer for a cheaper price then where it was initially purchased for, at resistance.

- Based on the trendline we’ve drawn, were capable of determining that based on the confines of the current areas of expense and cheapness, the price/product may yet again be at a point where it is considered to expensive to purchase, causing the buyers who are looking to purchase the product at a cheap price and sell at an expensive price in another market, town, country (High, Swing High, Resistance) to lose interest and consecutively start selling in order to close their positions, triggering a bearish reaction which is just the confirmation potential sellers at the high are waiting for to sell their product.

3. Candlesticks. It is important having spotted S or R, to validate the markets participation interests in these levels by monitoring the candlestick formations. They are an integral component in portraying and efficiently translating the current, past and future market psychology through their composite structure.

- On this chart, were able to determine signs of of bearish interest through the formed, shooting star, followed by a hanging man, evening star and another hanging man, all of which are indicative of bearish market interest. In fact the current candle is looking to close as yet another shooting star. I could go into more detail about this and write for hours on end, but there are enough books out there on candlesticks.

4. Stop Losses are behind the new reference point, don’t be shy, don’t keep too tight of a stop loss.

5. Targets. What you are looking for here as a seller; that is a market participant interested in selling a product he owns at an expensive price, to buy it back later somewhere where it is considered cheaper. The question is, what determines, the market levels or value of a product at which it is considered cheap or expensive ? This is a time relative question, but I will try and answer it the best way I can. When we give value to something we use, relative information, in order to make an estimated comparison between two items. Be it, beans and rice, or toilet paper and tampons (yes for girls) : ) – All these products have had, have and will have a certain price value. Between 1990 and 2000 between 2000 and 2005 and between January 2008 to May 2008 our current date. At everyone one point in time during these periods, the product or price will have a particular value, corresponding to the consumer demand and manufacturing supply. The way we decide when it is “considerably” or “relatively” expensive or cheap, is by looking at the information we are able to acquire on chart from recent data. Data which shows the markets tolerance levels based on interest within a concentrated period of time.

What I mean is, you do not have to look at Weekly charts if you trade an H1 chart, because you are occupying yourself with market interest levels that are oblivious and of no concern to a trader who just bought at a intraday Swing Low and is looking to Sell when the product becomes expensive relative to R and S levels on an H1 space of time. The interest level spawned at R and S levels, in buying and selling, is based on immediate areas at which the market can evidently establish prior participation from the market. In other words, a small time trader, working in Town X (Abundant in potato farming), purchasing a crate of potatoes from market Y (on the East Side of town), will prefer to use less fuel, to travel to market Z (on the West Side of town) (Potato Shortage) – so sell his product at a more valued price in order to make money from the cost of purchase…. To that trader.. market z where potatoes are more expensive, is a good deal for him. He spends less recourses. He can get there, but more than that. He is pretty certain There is a shortage of potatoes there so he can sell them at a much higher price since the demand from the population is greater due to scarcity. Does that mean that, there are no other markets, or areas, or price values, where what he is selling could be worth 2 or 3 or 4 times more; where there is a lot more buying interest, no. But, he can’t afford to be so bold. Although, he accepts the possibility of events of force majeure, economic fluctuation, or a sudden lack of interest in potatoes within market z, to him, based on his analysis and preparation, this is the are at which buying interest is the greatest (to his knowledge). And if there is Buyers there… then he is gonna take what he bought.. and sell it to them, to take his profit… There reason why I underlined, “to his knowledge”, is because, common to the FX market, within smaller organizations, humans are behind the wheels, and as long as that exists, so will the inequality of opinions, knowledge, information and advantage; all of which can be clearly related to reasons why, the price never reverses at a single point, buying and selling is always distributed unevenly and why you never have perfect tops and bottoms. Because one person might be selling at a higher price to get a better deal, while another may be modest and would prefer a safer bargain, while there is still a lot of buying interest. This is one reason why you shouldn’t have tight stop losses; emotional fluctuation; a clash of opinions and buying and selling interests.

Blow all this out and have me type a little more about it and you have a living breathing everyday picture of the forex currency market.
So having said all of that… I want you to look at the current chart, and based on price values in the resent past at which the market deemed the price/product to be cheap, consider or engineer a method to take profit. Ask yourself. Based on recent market sentiment and/or economic or fundamental influences or interests we are unaware of as technical traders, was the price considered a cheap asset to purchase, and think yet a move ahead, by asking yourself, IF you were a potential buyer at this place, in the future, where would you look to sell your product or asset.

In other words if Support is Market 1, where EURUSD is cheap to buy, find Market 2; Resistance, where EURUSD was recently in high demand, so you can sell it there at a “relatively” market reasonable price.
If you can manage to adapt this basic trader’s psychology and think about buying and selling as if you were managing a physical business, you will gain a better perspective of how things happen.

Don’t skip around time frames like crazy. Maintain a selection of 2 time frames which will allow you to accurately gauge the markets buying and selling interest points.

Regards,
E. Lang


PS: excuses typos in advance, i havent checked for errors.