trading eurusd/gbpusd M5

try out this system as of now demo and trade it like your real account with strict money management rules thats what I will be doing till I don't make 200% then I won't go a live account. One reason you also must be losing is because your trading with a market maker, try ecn brokers or futures brokers.

Do you mean the default parameters of -80 and -20?
Do they need to be changed to -50 ?
Thant would leave two parameters in -50, is this correct?
Thanks.

As in almost every system, this one works in trending markets.
Once it hits a slow period all your profits are chopped, re-distributed and lost.
I back-tested for 3 days and I got chopped to death every time.
System looks good in charts (just as when you see Stoch or Trix and you say "wow, it can predict the future") but when back-testing it fails.

Have you tried some indicator to stop you from getting chopped? System looks good: simple, elegant. However this flaw makes it unusable.
Sorry about being honest, just trying to share what I saw so we can maybe look for a solution together.

I made an indicator so it's easier to see the signals, as a histogram, I changed the minus thing, so it works from 0 to 100, with the signal in 50. Some people like linkes better, I prefer historgrams because I can easily see the value in the horizontal roof of the bar.
Hope this helps.

Let's figure this out, damonl, looks promising. 10 pips a day, that's all you need.

yes, you backtested it for three days, but was your backtest during times when you shouldnt' be trading? I think it was. Please read the first post with my recommended trading times. 5 GMT until you get your pips and then you are done!

Why would you trade anyother time except when the market is moving with a system like this? It would eat you alive. Please re-backtest starting your trading at 5 GMT (12PM CST). get the pips you need and stop testing because you will not be trading anymore for that day. How can you expect any system to work at times when the market isn't moving?

also did you put your orders 1 pip above or below the entry bar? if not then you should have have because you would have done your backtesting wrong. we are placing no market orders here just because are signals give us the entry point

thanks for the indicator, i will check it out.

i am not getting anything on your indicator, just solid vertical green lines on every candle

this PSAR system is a good system if you can determine when the breakouts will occur. I had trouble determining breakouts with any degree of accuracy, not to mention that i learned it may be better to trade into the PSAR rather than away from it.

It was okay, but i wanted something better and so kept looking

Another thing to keep an eye out for is if there was a lot of trending movement during the asian session, if this was the case, it could be the london will not do very much. also look out for red news, as many times the market will not move until the news comes out.

what i was also going to play with is taking the ATR (14) and setting the trade to b/e when the atr amount has been reached and then taking profit 2X the atr.

Also, i think you could also re-enter for some additional pips say 5 whne the market retraced and crossed the 6 SMA and then closed back on our trade side of it without a reversal signal. This is usually good for a quick 5 pips and cna be used with a much smaller s/l.

just remeber to take profit if you are up by 7 pips or so and not let the market come back and put you into the negative, you can always use the re-entry tool stated above to grab some more.

Hey Damon,

I like your system and plan on trading it on Oanda starting Monday. I hate to modify ther people's efforts, but here I go, anyway. LOL For starters, I simply added a nonlag zigzag indicator to help keep me out of making a bunch of losing entries during ranging markets. It also tends to help keep me in mild trends when I otherwise would probably bail. I will also be testing some other methods of avoiding ranging markets (you already have helped this cause by advocating trading during the active market times).

More power to you, as it looks like this system is sweet during trending markets. Please keep this thread alive as we continue to hone a great start.

Thanks,
Bob

You're absolutely right
I live in Costa Rica (GMT-6), I'll check the hours.

Regarding the indicator, I think I left the "Fixed min" and "Fixed max" with fixed numbers. I think you could just check the properties and leave the boxes unchecked.

I'm posting the fixed indicator.
The horizontal "top" has helped me a lot, specially douring violent movements in 2 or 3 candles.

5 GMT is equivalent to 11 pm of the previous day in Costa Rica.

Which one are you using? I have this, it says it doesn't repaint but... all of them do.

Bummer. So action is starting the same minute I'm going to bed!!!!

I happen to feel naked without the macd on my charts so I thought I would mention this in .....
if you follow DAmions rules but only in the direction of MACD divergence in the five min you will get plenty of trades and your win ratio will be much better .. Now I made a beautiful chart with line and arrows to make it all clear what I'm talking about but cannot figure how to post it when I do I will post it .. I only backtested times from about 10 min before the London open for several hours past because thats when I trade.. Time of trade with Forex is very Important so those of you that back tested Daminons system with non active market Times will get bad results...

i like this stradegy

Hear is another shot of using Divergence with DAmions setup

Notice on my other charts we were at the 50% retracement on the daily

had a pin bar bottom on the four hour and double bottom on the 1 hour up against S2 the deck was staked in our favor

divergence in the 5 min and the I noticed but missed div with DAmions signal in the sto and it sold right down to S2 again

Hi damonl

Thanks for sharing your system!

Is there any particular reason as to why you recommend trading the system from 5 GMT and not during the european/early US session?

Cheers!

Damon
Just wanted to thank you also for this sweet entry system after using it for a while I see you have really dialed this thing in waiting for 1 tic past the bar that gave signal really saves you allot of time from getting in to early
thanks for sharing

Something has been bothering me with this sytem and it is the whipsawing which was brought up in this thread. while trying to to find an answer for the whipsawing i discovered something completly unexpected and you can use it to trade usdjpy/eurusd and usdchf M5 and gbpusd M15.

This will really be completely off target from where we were, but after eliminating the whipsaw I was just able to use these same indicators to enter and then added one more to give me an additional entry thanks to a new thread on thhe forum.

I will start now and finish when I wake up tonight for trading, as I do not need to keep watch every minute to trade this way even with 4 pairs. This method has been adapted from Imrans thread......

there are two different scenarios where we look to enter trades .....here we go.........

Indicators

Fractals (found on all MT-4 charts). this will be used for our initial s/l only

laguerre2a with defulat settings

Laguerre ....change gamma to .80 with levels at .1, .45 and .90

Trade scenario #1


This is a trade to enter when laguerre .85 is below level .15 and laguerre .80 is below level .45.

When laguere .55 crosses above level . 85 and then crosses below level .85 you would enter short. your initial s/l would be a close above the nearest formed fractal even if this changes. you would then take the trade until laguerre .55 croses below level .15 and then you would trail your stop 1 pip above the high of the previous bar.

the opposite for a long trade.....

that is all that is too it. Here is a sample trade that I took today:



As you can see from the chart above, the down arrow is where the close of the bar, the laguerre .55 had crossed below the .85 level and the laguerre .80 was below the .45 level and the laguerre .85 was below the .15 level. we entered the market at the open of the next bar, set out s/l to trigger if the price closed above the bar with the blue "X" (the nearest fractal) and followed the trade down until the laguerre .55 closed below level .15 and then trailed out trade with a 1 pip + previous bars high which would have closed us out on the trade with the "thumbs up"

this trade got me 11 pips

I will give you trade Scenario #2 when I get up to trade london at 5 GMT

Okay, in the previous post, I gave you Trade Scenario #1 where the 1st trade was worth 11 pips. Here I will give you trade scenario #2.

Trade Scenario #2

Trade Scenario #2 does not come into play until all three laguerre indicators are either below the lowest levels for each (here we would look for a long) or above the highest levels for each (looking for a short).

Short Orders

Okay....all laguerre indicators are above the highest level for each one, then we wait for the laguerre .55 to close below the .85 level and we place a market order, and figure that our initial s/l is a close above the most recent formed fractal and should change if a new fractal is formed.

If the laguerre .55 closes back above the .85 level, we will place another order next time it closes below it again and continue to do so each time this indicator reverses back above and falls below again using the newest formed fractal for our s/l

We will then take this trade lower and add another position when the laguerre .80 closes below the .90 level.

Then we will ride this trade down until the laguerre .80 closes below the .10 level and then we will trail our trade using 1 pip above the high of the previous bar for our s/l

Long Orders

Okay....all laguerre indicators are below the lowest level for each one, then we wait for the laguerre .55 to close above the .15 level and we place a market order, and figure that our initial s/l is a close below the most recent formed fractal and should change if a new fractal is formed.

If the laguerre .55 closes back below the .15 level, we will place another order next time it closes above it again and continue to do so each time this indicator reverses back above and falls below again using the newest formed fractal for our s/l

We will then take this trade higher and add another position when the laguerre .80 closes above the .10 level.

Then we will ride this trade down until the laguerre .80 closes above the .90 level and then we will trail our trade using 1 pip above the high of the previous bar for our s/l

Here is a step by step of each trade yesterday.......

You already have trade #1 from the previous post. +11 pips

Trade #2



as you can see from this picture, the first blue arrow was our 1st entry and the blue "x" was our initial stop of price closed below this level. The 2nd blue arrow was where price closed below the .15 level and then back above it again and the same for the 3rd arrow. Then the 4th arrow was where the laguerre .80 closed above level .10 and the "thumbs up" was the bar in which our trade would have been stopped out.

with all orders on this trade we made +74 pips giving us a total of +85 pips

Trade #3



as you can see from this picture, the arrows indicate our entries, the "thumbs up" indicates the bar that closed our position and the "x" indicates our initial s/l and then where we moved our s/l too at the formation of a new fractal. you will see that we never closed above the formed fractals which is the rule for exiting the trade or trades.

with all orders on this trade we made + 90 pips giving us a total of 175 pips

Trade #4



same scenarios here where we made 30 pips giving us a total of 205 pips

Trade #5



this trade gave us 82 pips using trading scenario #1 for a total of 287 pips and i also did not place a market order of for this trade as i wanted to give the other laguerre indictors a chance to come back down and so place the order 1 pip above the high of the trigger bar.

Trade #6



here is the next trade giving us 33 pips for a total of 320 pips

now...i think that this was an extraordinary day and may not be typical of trading this system. be careful with adding on new positions as the trades can go against you.

I have also found that gbpusd is too volitile on M5 and so M15 is necessary, but the rules are a little different. usdjpy is also a little volitle and may be best on M15 with some slightly modified rules. usdchf goes well on M5, but remeber that it is almost 100% opposite eurusd at times and so if you are in both and one takes a loss, the other most likely will as well, but the gains can be quite nice.

enjoy and post once in a while how you are doing......

Interesting. I would probably only add positions if they were at a better price than the last. I will watch this... Thanks for sharing.