My 1 hour system, but I need YOUR help!

Hello all! For the past few months I have been using the following system which is very easy but since I'm not a pro at using MT4 I need some help from you guys on back testing my model. I was just curious how successful it's been over the long haul so if any of you guys could fill me in I'd greatly appreciate it.

Ok, now as far as my system goes it's very easy as stated above. Basically, I set up a 14 exponential moving average (PUT IN A -2 SHIFT) and a 50 exponential moving average (0 SHIFT) and just follow the crossovers on the 1 hour time frame. I've noticed some other systems similar to mine but it seemed like they're settings were too sensitive and you'd end up closing the position too early. I played around a little bit and I found that this setup allows you to hold a trade longer especially during a nice long one. Currently, I'm up over 200 pips (only 4 trading days) on an open trade where I sold the GBP/USD at 1.9790 and as of now it's at 1.9577. I won't close this position until the next crossover. Prior this trade I went long from 1.9370 to 1.9790 for a total of 420 pips (only 9 trading days)! I used to play the 15 minute time frames but I just don't have the time to sit and babysit the trade. When I see a potential crossover I set up my trade, take my position (after confirmation or just prior if it's looking good), set a stop loss of 50, and let it ride! In addition, I set up a RSI of 35 and I put a horizontal line in at the 50 mark. I find that this helps me see spot the upcoming opportunities and as long as the index is above the 50 line you can stay long and close out when it drops below (and vice versa when shorting). Anyways, have fun and like I said I'd greatly appreciate your thoughts on perfecting this setup as well as what the back testing has to say about it.

Anyone out there, lol? I'm telling you this simple system so far smokes a lot of what I've seen out there!

I like the simple approach to trading so your system appeals to me. I'll have a go tomorrow and see what signals it can give me. Unfortunately i cannot assist with backtesting as this is beyond my knowledge...

Just a quick question that came to me , do you set any TP levels?

That's a good question! Acutally what I'll do is if I see a good trend develop I will leave the trade open until the moving averages crossover. For instance I'm currently short the GBP/USD at 1.9790 and I won't close it until the 14ema crosses the 50ema. Sometimes if it's a choppy market and I feel it's not going to turn into a big trend I don't mind taking a profit of 10+ pips and sitting back to watch things develop. Hope this helps!

try to test this method with orabhe method .. , this can serve like a filter..

Kind regards,
Marcelo Marques
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Strange you haven't gotten more response. Mondays are often sloooow. Keep posting further clarifications/charts/ etc. Thanks!

HI

I love simple systems!! Can i just confirm that it is a 14 Exp. moving average with -2 period shifts? and it is a RSI with 45 period shifts............will give it a go and let you know my results. Thanks for the post.

1712 pips for 2006.
just a 50 stop loss and close on cross RSI above/below 50 for buy/sell

Will try a breakeven and trail next

1998 pips
SL 50, BE 50 Trail 50

You are correct in that you need to put in a 14 exp. moving average with a -2 shift and a 50 exponential moving average (no shift). Also, the RSI should be set at 35 with a horizontal line place in at the 50.0000 level on the chart. Once again I use these setups during the 1 hour time frame.

By the way I closed out my short at 1.9620 and I was short from 1.9790. Also, I am now long at 1.9620 as the crossover to the long side is beginning, FWIW! We'll see how she goes. By the way my stop loss is in at 9570 but I'm gonna watch things here into the London and Frankfurt sessions.

Hi QuikTrader,
Do you set your ema's at the close, open or median etc. Thanks in advance...

Here's a nice chart check it out

at the close

Here's another picture

Out of curiosity if you take a position and your going to be away from your computer on what basis do you set your tp or do you not and hope for the best?? Thanks...

Sorry guys here's a better picture

Part of the reason for the lack of response is that it's a moving average crossover system. There are lots of these around, and they all have the same problem. Whipsaw. They work, if the market is trending, and profits can be impressive. If it's ranging or in congestion then they can be murder, and the profits vanish much quicker. Moving averages are trend following indicators. However, when moving averages cross you do not have a trend. You have congestion. Same thing is true for indicators like MACD that depend on moving average crossovers. You have a trend when the averages move in parallel, with shorter averages accelerating away from longer ones. Therefore to keep from getting killed by whipsaws, you need to incorporate some kind of filter to keep them out. There goes the simplicity, but therein lies survival. A filter can be lots of things i.e. a particular angle on the 14 period average, a requirement that the slope of the long term average always be in the direction of the trade, or another indicator. Say put a 10 period 1 deviation Bollinger band around price, and watch for the averages to cross but only trade when the price actually closes above the Bollinger, or maybe require that the RSI cross 50. This establishes momentum and trend and makes success more likely. This isn't criticism. It's just an explanation of why there isn't a lot of action and discussion on this type of system. Most everybody has been there and done that. Good trading!

Thanks for posting your system Qwiktrader; it is very interesting.

Regarding your latest trade - the crossover hasn't actually occurred yet (at least not on my data feed). As I write this, assuming the present trend doesn't rapidly reverse, the MAs look as if they will probably touch 30 minutes or so after your entry - and a confirmed cross probably won't happen until 45 minutes or more after your trade.

Your exit and entry on this occasion seems to involve a degree of judgement in anticipating the crossover (as you intimated in your first post). Is this typical - i.e. how often (in approximate percentage terms) would you trade in anticipation of the crossover rather than waiting for the actual event?

I ask because if you regularly anticipate the crossover your actual results will vary from a back test based on crossover points. Would you say that anticipating the crossover improves results?

Thanks.