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EMA 25-50 Trading System (Detailed)

  • #1,721
  • May 12, 2008 1:39pm May 12, 2008 1:39pm
Hello Effi

Very good information especially in this case from the interest rate point of view but countertrend trading is quite risky. This is a textbook example of S&R. In this example resistance was not reached. In this case going with the trend was the best option. I have found that trading with the trend and setting good stops works better. The saying of the trend being the friend is more powerful than buy low sell high. I highly agree that S&R are very important but alot of times it just doesn't bounce off the channel. In these cases I look to the stochs to give clues as to the sentiment of price. The divergences clearly show that market sentiment was not going to let the price get expensive hence no return to resistance. The best bet here is to short off the divergence. Granted a loss in the interest rate may be seen but profits would make up for it.

I look forward to reading your insight and opinions. Thanks.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: s&r4.gif Size: 21 KB
  • #1,722
  • May 12, 2008 1:54pm May 12, 2008 1:54pm
Hi Techtrader10,

I agree with you in saying that the trend is definitely your friend and that following its direction together with the emphasis on well placed stop losses is a technique and subject which lacks attention here.

On the other hand however, i have to disagree in saying that the trend comes before S and R.

It is the market interest (Technically) that creates enough disbalance to create the trend within the market, and that interest is defined by the relative value of the price i.e. If it is not considered a cheap instrument to buy there will be few buyers and vice versa, if it is not expensive enough in comparison to near historical values, there will be a lack of interested sellers.

Although not always visible when we're looking at the screen, i believe that in order for someone to buy something, similar to a Company working in import and export, they must already have a client, and know where he is.

The same way, when a product becomes cheap by having its price revisiting previous lows we purchase it to get a better deal, so we can sell it to those we know are there to buy at a higher price.

It's all high and lows, buyers and sellers. If you stop using additional tools like fibonnaci and moving averages, you will begin to notice that within the information present on a daily or weekly chart, you are able to justify every buy and sell... the problems we have as traders however is justifying our reasons for not respecting their presence despite us having established it.

If there are buyers, its cheap, if there are sellers its expensive. From a technical point of view, the R and S determine that on a chart and the fluctuation of those interests creates our trends and ranges.

Thats my personal point of view on that matter.

Best Regards,
E. Lang
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #1,723
  • May 13, 2008 1:14am May 13, 2008 1:14am
I thank you for clearing that up for me. You have given me some food for thought here and I'll be taking some time to digest it. I admit I tend to rely mostly on my indicators and less time on my trendlines and the fair market value. I have looked at pullbacks as some traders taking profits at certain points such as large moves up, along with nervous types that think price has gone too far. I also think that,"ok some scalpers are bailing out and once it retraces a bit then the move will continue." I am completely un familiar with the "trading naked" way of thinking, would you have some suggestions on what is a good read for this method? I know Greg Capra does quite a bit of it but he deals with commodities which I have difficulty understanding. Thanks again for the information and clarification.
  • #1,724
  • May 15, 2008 3:55am May 15, 2008 3:55am
In checking out which pair I was going to work with I checked out what the analysts were saying. Because today is the release of the TIC data, I checked out the following video from PFXGlobal http://www.pfxglobal.com/video-archi...-analysis.html .

Since they suggested the Aussie was the pair to watch, I thought I'd give it a peek to see where it was. I was pleasantly surprised when I saw the trend was turning to the long side. I was working with the 5min.,15min.,and 30 min. I used the 200 ema in the 15 and 30 min. chart as my profit targets since if the price moves toward the 200 it will hit it 95% of the time.

If there are any questions let me know.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: chart22.gif Size: 22 KB
Click to Enlarge Name: chart23 15 min.gif Size: 23 KB
Click to Enlarge Name: chart24 30 min.gif Size: 23 KB
  • #1,725
  • May 20, 2008 7:06am May 20, 2008 7:06am
hey effi, haven't heard from you in awhile, nice to see you stop back from time to time here and give us a little more insight on how to use this system.

question for you: how do you set up where you support and resistance is??? i see so many numbers out there it is getting confusing. what time frame do you set them from??? is there a site that you get them from, or do you figure them yourself???
  • #1,726
  • May 22, 2008 5:06am May 22, 2008 5:06am
Today, I got stopped out on the Aussie on my first trade. I didn't know it until later but the Japanese Government shifted money out of the markets and bonds to put it into stocks. It seems the Nikkie dropped 255 points which was -1.82%. This made the AUD/JPY drop 100 pips from 99.92 to 98.92. Oh well, at least I made back the loss plus two times more by doubling my lot size on the short. So all in all, it wasn't a bad day. I'll take everyday like this. Hope everyone else had just as good a day.
  • #1,727
  • May 22, 2008 7:08am May 22, 2008 7:08am
actually i didn't trade yesterday except a demo trade. made a few pips, should have left it alone would have had more. but then again,"don't cry over spilled milk, missed pips". maybe i can ask you the question i asked effi, techtrader. how do you figure S & R's?? what time frame???

thanks
  • #1,728
  • May 22, 2008 9:44pm May 22, 2008 9:44pm
Quoting mtrmth
actually i didn't trade yesterday except a demo trade. made a few pips, should have left it alone would have had more. but then again,"don't cry over spilled milk, missed pips". maybe i can ask you the question i asked effi, techtrader. how do you figure S & R's?? what time frame???

thanks
There are many different ways to figure s&r. Some people use TLs and some use PPs. I use both, personally. This is how I use them

1) Trendlines and Channels: used on the 4hr,1hr,15 min. I set up one of my charts for trendlines only. I color code each chart with one color each so I can tell which line is from which chart. I make sure all lines on each chart are visible on all TFs. This saves me time having to switch charts and on lower TFs only the closest lines will appear so it don't look cluttered.

2) Pivot Points: I used to use the pivot point calculator at pivotpointcalculator.com but have since switched to a self adjusting indicator for my platform.

I have found,the way I do it, that the best s&r levels where TLs from multiple charts overlap or when TLs overlap PPs on my trading chart.

Now this is only how I do it, others will have different methods. Try each method and see which one works for you. I hope that helps.
  • #1,729
  • May 29, 2008 12:56pm May 29, 2008 12:56pm
Late ASIA through London
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #1,730
  • Jun 3, 2008 2:46am Jun 3, 2008 2:46am
Hey, I've been using this stat actually for quite some time but originally based on another system... Hmmmm... I'll probably post my trades here...
  • #1,731
  • Jun 3, 2008 3:09am Jun 3, 2008 3:09am
Ok... my first trade post... Price is in between 25 and 50... and just below 200 and R1... Hmmm... ok let's see how this build up to positive pips!
Attached Image (click to enlarge)
Click to Enlarge Name: eu_4h_3jun_1.JPG Size: 87 KB
  • #1,732
  • Jun 4, 2008 4:12am Jun 4, 2008 4:12am
Hi i had modified a crossover ema indicator into a candle-close crossover ema.An arrow appear with an alert on the close candle above or below ema:is there anyone who can how limit alert only to the candle of the signal and not every each period?(the problem is that if the signal is at 11:00 on hourly at 12: it is reapeaed).Thanks and i hope that this indicator can help you to better visualize signals of this amazing system.Sorry for my bad english ...i'm from Italy.Bye
Attached File(s)
File Type: mq4 CANDLE_TRIGGER_EMA.mq4   4 KB | 633 downloads
  • #1,733
  • Jun 4, 2008 5:35am Jun 4, 2008 5:35am
Hi All,
I was spending some of my time at work creating an indicator for the EMA 25-50 system.
The reason I chose this system is that it is simple and I wanted something easy to start with (In order to focus on the programming part and not the trading logic part).
For my surprise the indicator seems to give nice trading signals (according to the findings of the back testing).

The logic, as implemented in the indicator, is as follows:
Long signal: If the price opens above the 50 (configurable) EMA and the RSI 14 is above or equal 50 - buy at the open of the same candle *.
Short signal: If the price closes below the 50 (configurable) EMA and the RSI 14 is below or equal 50 - sell at the open of the same candle *.
Take profit one signal: 50 (configurable) pip profit (from the open of the buy/sell signal candle) - close 1/4 of your trade, move stop loss to BE.
Take profit two signal: 100 (configurable) pip profit (from the open of the buy/sell signal candle) - close the second 1/4 of your trade, move stop loss to 50 pip profit.
Take profit three signal: 150 (configurable) pip profit (from the open of the buy/sell signal candle) - close the third 1/4 of your trade, move stop loss to 100 pip profit.
Take profit four signal: 200 (configurable) pip profit (from the open of the buy/sell signal candle) - let the forth 1/4 of your trade run until a stop loss or until a reverse signal was received, move stop loss to 150 pip profit.
Stop loss signal: Close the entire trade.

The signals are marked in the indicator as follows:
Long signal: Large 4 pixels (fat) green bar.
Short signal: Large 4 pixels (fat) red bar.
Take profit one signal: 1 pixels (skinny) medium golden bar.
Take profit three signal: 2 pixels (normal) medium golden bar.
Take profit four signal: 3 pixels (slightly fat) medium golden bar.
Stop loss signal: Medium 4 pixels (fat) silver bar.

The code is, in my opinion, well documented so you can see exactly what happens inside - any improvments, comments etc. would be highly appriciated.

* The reason I used the open price and not the close price is because the close price is dynamic and the open price is constant and also - you can check the indicator every new candle to choose your entry.

The indicator:
Attached File(s)
File Type: mq4 25_50.mq4   10 KB | 803 downloads

Just copy to the ...\experts\indicators directory.

For any questions or clarifications please dont hesitate to ask - [email protected].
  • #1,734
  • Jun 4, 2008 5:51am Jun 4, 2008 5:51am
Quoting ronmatzkin
Hi All,
I was spending some of my time at work creating an indicator for the EMA 25-50 system.
The reason I chose this system is that it is simple and I wanted something easy to start with (In order to focus on the programming part and not the trading logic part).
For my surprise the indicator seems to give nice trading signals (according to the findings of the back testing).

The logic, as implemented in the indicator, is as follows:
Long signal: If the price opens above the 50 (configurable) EMA and the RSI 14 is above or equal 50 - buy at the open of the same candle *.
Short signal: If the price closes below the 50 (configurable) EMA and the RSI 14 is below or equal 50 - sell at the open of the same candle *.
Take profit one signal: 50 (configurable) pip profit (from the open of the buy/sell signal candle) - close 1/4 of your trade, move stop loss to BE.
Take profit two signal: 100 (configurable) pip profit (from the open of the buy/sell signal candle) - close the second 1/4 of your trade, move stop loss to 50 pip profit.
Take profit three signal: 150 (configurable) pip profit (from the open of the buy/sell signal candle) - close the third 1/4 of your trade, move stop loss to 100 pip profit.
Take profit four signal: 200 (configurable) pip profit (from the open of the buy/sell signal candle) - let the forth 1/4 of your trade run until a stop loss or until a reverse signal was received, move stop loss to 150 pip profit.
Stop loss signal: Close the entire trade.

The signals are marked in the indicator as follows:
Long signal: Large 4 pixels (fat) green bar.
Short signal: Large 4 pixels (fat) red bar.
Take profit one signal: 1 pixels (skinny) medium golden bar.
Take profit three signal: 2 pixels (normal) medium golden bar.
Take profit four signal: 3 pixels (slightly fat) medium golden bar.
Stop loss signal: Medium 4 pixels (fat) silver bar.

The code is, in my opinion, well documented so you can see exactly what happens inside - any improvments, comments etc. would be highly appriciated.

* The reason I used the open price and not the close price is because the close price is dynamic and the open price is constant and also - you can check the indicator every new candle to choose your entry.

The indicator:
Attachment
Just copy to the ...\experts\indicators directory.

For any questions or clarifications please dont hesitate to ask - [email protected].

thanks for sharing.. will check it out
  • #1,735
  • Jun 4, 2008 6:07am Jun 4, 2008 6:07am
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_25_50_indicator.gif Size: 24 KB
  • #1,736
  • Jun 4, 2008 7:08am Jun 4, 2008 7:08am
Quoting ronmatzkin
Hi All,
I was spending some of my time at work creating an indicator for the EMA 25-50 system.
The reason I chose this system is that it is simple and I wanted something easy to start with (In order to focus on the programming part and not the trading logic part).
For my surprise the indicator seems to give nice trading signals (according to the findings of the back testing).

The logic, as implemented in the indicator, is as follows:
Long signal: If the price opens above the 50 (configurable) EMA and the RSI 14 is above or equal 50 - buy at the open of the same candle *.
Short signal: If the price closes below the 50 (configurable) EMA and the RSI 14 is below or equal 50 - sell at the open of the same candle *.
Take profit one signal: 50 (configurable) pip profit (from the open of the buy/sell signal candle) - close 1/4 of your trade, move stop loss to BE.
Take profit two signal: 100 (configurable) pip profit (from the open of the buy/sell signal candle) - close the second 1/4 of your trade, move stop loss to 50 pip profit.
Take profit three signal: 150 (configurable) pip profit (from the open of the buy/sell signal candle) - close the third 1/4 of your trade, move stop loss to 100 pip profit.
Take profit four signal: 200 (configurable) pip profit (from the open of the buy/sell signal candle) - let the forth 1/4 of your trade run until a stop loss or until a reverse signal was received, move stop loss to 150 pip profit.
Stop loss signal: Close the entire trade.

The signals are marked in the indicator as follows:
Long signal: Large 4 pixels (fat) green bar.
Short signal: Large 4 pixels (fat) red bar.
Take profit one signal: 1 pixels (skinny) medium golden bar.
Take profit three signal: 2 pixels (normal) medium golden bar.
Take profit four signal: 3 pixels (slightly fat) medium golden bar.
Stop loss signal: Medium 4 pixels (fat) silver bar.

The code is, in my opinion, well documented so you can see exactly what happens inside - any improvments, comments etc. would be highly appriciated.

* The reason I used the open price and not the close price is because the close price is dynamic and the open price is constant and also - you can check the indicator every new candle to choose your entry.

The indicator:
Attachment
Just copy to the ...\experts\indicators directory.

For any questions or clarifications please dont hesitate to ask - [email protected].
Hi thanks for your indicatorlease can you help me to avoid the problems on my first post on my simple indicator?Thanks a lot(i'm not a programmer...)Bye
  • #1,737
  • Jun 5, 2008 2:38am Jun 5, 2008 2:38am
Hi All, I have slightly improved the indicator to show the indications on the graph itself - it is much better
Yo uare more then welcome to test it (I guess there will be more versions since I am learning new programming stuff every day).

The signals are marked in the indicator as follows:
Long signal: A green arrow.
Short signal: A red arrow.
Take profit one signal: The digit 1 in a circle.
Take profit two signal: The digit 2 in a circle.
Take profit three signal: The digit 3 in a circle.
Take profit four signal: The digit 4 in a circle.
Stop loss signal: A black X - get out!

The new indicator:
Attached File(s)
File Type: mq4 25_50_V1.1.mq4   11 KB | 558 downloads
  • #1,738
  • Jun 5, 2008 4:34am Jun 5, 2008 4:34am
Hi all, just wanted to show you this great trade on USDJPY 1H chart (Still in progress)
!!! Of course, I must show you the failed short trade three bars before the good one we are having right now.
This is not a perfect indicator (As any other system) and I do not recomend working with anything in the Forex market without studying it well!
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_25_50_indicator.gif Size: 10 KB
  • #1,739
  • Jun 5, 2008 5:19am Jun 5, 2008 5:19am
I have performed back testing for the indicator on USDJPY 1H chart from the 1st of May 2008 to the 4th of June 2008.

I have simulated starting each trade with four lots with a combined SL of 75 Pip and advancing my trades in 50 Pip increments as described in my previous posts.
The results are great:
Total of 1820 Pip profit (Combining all lots profits - a 4 TP trade would be 50 + 100 + 150 + 200 = 500 Pip).
An average Lot profit of 32.5 Pip (1820/ (14 trades X 4 lots)).
I have examined 14 trades in this time period - 11 successful or BE and 3 failed with less then 75 Pip loss (Combined max of 75 X 4 = 300).

The only thing I am not sure about is if automatic SL and TP would have worked the same.
The system only shows signals on Open of bars but if the Highs and Lows will be calculated in automatic trading maybe we will get different results.

Attached are captures of the entire period:
Attached Image (click to enlarge)
Click to Enlarge Name: usdjpy_25_50_indicator_back_testing_1.gif Size: 30 KB

Attached Image (click to enlarge)
Click to Enlarge Name: usdjpy_25_50_indicator_back_testing_2.gif Size: 29 KB

Attached Image (click to enlarge)
Click to Enlarge Name: usdjpy_25_50_indicator_back_testing_3.gif Size: 24 KB


Any comments?
  • #1,740
  • Jun 5, 2008 5:24am Jun 5, 2008 5:24am
your methodology looks good to me. as for sl and tp being automatic, it all depends on your broker and how they execute that. normally it is within a pip or 2, but if it is volitile, you never know.
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