EMA 25-50 Trading System (Detailed)

that's why SL is Ask Price - ATR + Spread. Think about that, gimmie your concentration for a second.

atr = 29 eurusd spread = 2

bid//ask 1.5567 1.5569

we buy at at 1.5569 we want the SL trigger when our trade loses 29 pips ok? so when the bid price is 1.5540.

to reach that we don't have to wait for 29 pips but just for 27. that's exactly the - ATR + Spread thing.

if we make -atr-spread we're going to stop the loss when we have already lost 31 pips instead we want to lose just 29.

and to lose just 29 in a long order we have to use:
SL (long) = Ask Price - ATR + Spread

and in a short trade it is:
SL (short) = Bid Price + ATR - Spread

think about it, you'll see I'm right , the maximum amount of pips we want to lose is exactly the ATR. so, in the example 29 pips (this comes true when the price moves just of 27 pips that is ATR-Spread )

haha.. it seems this debate was spawned due to our different views of what stop loss is to us. we're both right in our own way.

now you have to gimmie your concentration for a second.

I see stop loss purely as pip movement.

I'll use your example.

atr = 29 eurusd spread = 2

if I use 29 as my stop loss, I want the price to MOVE 29 pips against my direction for me to get stopped out.

we buy at at 1.5569 which is the ASK. immediately once we buy, the trade starts looking at the BID, which is 1.5567. starting out at 1.5567, I only want to get stopped out after it moved 29 pips south. meaning BID price has to reach 1.5538 for the position to get stopped out.

1.5569 - 1.5538 = 0.0031 which is stop loss and spread

I'm also value oriented, which means my MoneyManagement algorithm will use this 31 pips to calculate the optimum lot size for the position using say 1.5 percent of Account balance, in the event that it gets stopped out, it will only lose that percentage.

I factor in spread for the stop loss calculation mainly because I want to give the trade a fair chance. think about it. every trade needs to fight through the spread to get to your TP, in my opinion, every trade should also be forced to fight through the spread in order to reach your SL.

I'll quote an extreme example.

atr = 10 gbpjpy spread = 9

by your logic, all it takes is for 1 pip of southward movement for you to get stop out. I'm not happy about that at all.

another one... more extreme

atr = 35 gbpjpy spread = 40 (news time spread widens, seen this quite a few times.)

again using your rules, trade probably won't get opened or it'll just get stopped out immediately after open. imagine when ATR and spread is of same value...

My stop loss method is acting on giving every trade a fighting chance.
Your stop loss method is about knowing how much you're willing to lose. but in a sense my method also encompass that aspect with the use of proper money management.

btw, your calculation for your method is also in need of correction...


should be


remember when you opened a Buy trade at the Ask, it immediately starts looking at the Bid. so spread is already counted in.

you've already got it right in your previous post,
I'm not sure why you changed it.

anyway, we both have our reasons for using our different stop loss methods. and they are both individually valid to ourselves. I won't be using your method and you probably won't consider mine either. let's just agree to disagree yes?

oh and btw, my EA allows both our methods. you'll just need to set the CustomSpread field in Inputs tab to "0" for yours.

regards,
Zen

sure, ok. but i feel we're getting lost on small details and we're leaving big things unsolved.

as the 4orders thing, etc. anyway don't worry. Just end the indicator as you prefer, it is a good thing anyway.

Hello guys,

Shouldn't be participating in the debate during this weekend, because I'm out for a quiet, no stress weekend... but something made me bring my laptop with me to connect in a cyber and follow you guys a little

First of all, about the SL thing, I get and follow more easily Zen_Leow's view... my 5 cents:
When we follow price movement in MT, which has our indicator in it, it's following and giving signals only in one of the prices (by default mine is bid price)...
But if we code it to an EA, like Zen_Leow said, after entering long it imediately starts looking only to bid; and if we enter short, it imediately starts looking only to ask.
So when we say 30 pip SL, in our indicator it's always on the bid, while in real trading, it's not.
We have to take this into account.

Corre:
Yesterday before leaving, I tried to PM you about other thing (didn't want to change the subject here), but you didn't activate your box.
But for now forget about that.

I have one other issue about the indicator, in which I started to think about, before leaving (that's why I brought the laptop, to test it):

I started thinking about the use or influence of having both MACD and Stochastic, in the performance of the indicator (both are oscillators).
So I did a change in the indi, removing the MACD and I tested it, for now in 2 pairs (the worst and the best previous performances):

To summarize it:
In GBPJPY, we get +24% of pips (10140 pips, previous was 8164);
In USDJPY, we get +14% of pips (3048 pips, previous was 2664).

Haven't had time to test it on other pairs, but I plan to.
I suggest everybody continues doing the work you have been doing, and I will later post if the other pairs confirm these results, in which case, I think we will all agree... MACD out!

See you soon,
Toni.

yes the presence of Stochastic make MACD much less rilevant, if it becomes even a damage it has surely to be replaced with Stochastic

when (if) you want, can you cut it from the indicator?

another thing, since we're using an oscillator filter with a bigger timeframe, so we have a slow filter we can use RSI at 50 and not 40-60

it has still to be tested, but this seems to be very efficient with a tight TP

I'm very sorry but I'm not able to modify the indicator so if you modify it I will test and count all

At first sight if we put the first TP (the one which brings SL to the BE) at 0.9-0.8 ATR and we leave all the other TPs simply at ATR distance from each other the new system can work incredibly better: it saves early gain, save 99% the trade from the loss.

Modifies to try:
-Remove MACD (thanks toni)
-Return to RSI:50
-Tighten a little TP1

if you can put this on the indicator would be great

I'm still thinking if the "just 1 trade per direction" isn't the best and safest way to trade this system.

It has to be checked but another time, now let's try this.

edit: about the PM, now they're on

I give you... EMA_25_beta1

ok I've yet to fully test this baby and as yet I'm still trying to resolve the issue with "OrderModify error 1", I know what it means but I've yet to figure out why the EA is causing it during backtests.

anyway here's the inputs description in brief.

"Signal Configuration"
================
extern int EA_MAGIC_NUM = 437943;
extern int iOpenHour = 6; // open day hour
extern int HoursToTrade = 24; // active hours to monitor. if 24, disregards iOpenHour;
extern int EMA_Period = 25;
extern int RSI_Period = 14;
extern int MACD_Fast_EMA_Period = 12;
extern int MACD_Slow_EMA_Period = 26;
extern int MACD_Signal_Period = 9;
extern int ATR_Period = 24;
extern int Stoch_Period = PERIOD_H4;
extern int Stoch_KPeriod = 5;
extern int Stoch_DPeriod = 3;
extern int Stoch_Slowing = 3;
extern int Stoch_MA_Method = 0;
extern int Stoch_PriceField = 0;
extern bool UseAlternatingSignals = false; // set to true to triggers signals only in alternating fashion. meaning if its a buy now, the next one will be a sell.
extern int LastSignal = NO_SIGNAL; // No issue unless you're using Alternating Signals

"Trade Configuration"
================
extern bool AddSpreadToStopLoss = true;
extern int CustomSpread = 0;
extern int Slippage = 3;
extern int TP_Pips1 = -1; // if < 0, ATR is used, if 0, no TP is set. if > 0, fixed TP is set
extern int TP_ATR_Multiplier1 = 1;
extern int TP_Pips2 = -1;
extern int TP_ATR_Multiplier2 = 2;
extern int TP_Pips3 = -1;
extern int TP_ATR_Multiplier3 = 3;
extern int TP_Pips4 = -1;
extern int TP_ATR_Multiplier4 = 4;
extern int StopLoss = -1; // Same rules as TP
extern int StopLoss_Multiplier = 1;

"Volume Management"
================
extern bool MoneyManagement = true; // if true, percentage of account balance will be used to calculate the optimum lot size.. only works if your StopLoss input is set to anything other than 0. if false, fixed lots is used.
extern double RiskPercent = 1.5;
extern double Lots = 1.0; // fixed lots
extern int LotsDecimalAllowed = 2; // this is dependent on your broker, if your broker allows micro lots, set to 2. If your broker allows only minimum mini lots, set to 1.
extern double MaxLots = 15.0; // this is just added control in case your risk appetite doesn't match your pocket.
extern double MinLots = 0.01; // same here. set to 0.1 for mini accounts.
extern bool SplitLotSize = true;

p.s.,
AddSpreadToStopLoss and CustomSpread inputs are there for you to decide what kinda stop loss you want to set. read the little discussion Corre and I have a few post back. If you don't want spread to be factored into stoploss calculation, set AddSpreadToStopLoss to false and leave CustomSpread as 0.
if you want to include spread in the calculation, set AddSpreadToStopLoss to true. if AddSpreadToStopLoss is set to true, and you leave CustomSpread as 0, the EA will automatically grab the current spread of that currency pair upon EA initialisation. you can set it to any other value of your choice. this is here to allow more control.

p.p.s,
Do not touch Signal Configuration and Trade Configuration unless you know what you're doing, or you've read the codes and understood how this EA will react. and only try this EA on demo for now.

again, this EA still has bugs. I'm still working on it. if you have suggestions or would like to highlight more bugs, do not hesitate to post here or PM me.

have fun and happy trading!

regards,
Zen

ok I really should've refreshed the page before posting, then I would've read the latest posts by toni and corre.

Toni, so its confirm? I'll remove the macd from the EA.

Corre, I didn't code the multiplier to allow fraction. not a problem. just have to change int to double.

will post up the corrected EA later.

regards,
Zen

just tp1 has to be a 0.9atr the other tps are still 1*atr. anyway it must be tested before we decide to insert it in tha ea.

tonirai, have you seen effilang has been banned?... now it's just you and me working on the input of the indicator.

What's new in beta 2?
=====================

1. MACD removed from signal identification.
2. all ATR multipliers Input fields allows the use of fractional value.
(values like 0.9, etc are possible now)

I took the liberty of making the amendments to the indicator to remove macd so you guys can test Toni's new findings too.

regards,
Zen

the multipliers are configurable inputs you can set in the inputs tab when u attach the EA.

and you said, "the other tps are still 1*atr"... I've always thought the other TPs have incremental ATR multiplier.

by default, TP1 is 1*ATR, TP2 is 2*ATR, TP3 is 3*ATR, TP4 is 4*ATR. (all counting from the open price)

isn't that right?

again the multipliers are configurable. but they must be either same value or incrementing. meaning TP2 multiplier cannot be smaller than TP1. else the EA may go bonkers.

regards,
Zen

can you just put the RSI=50 please? so the indicator would really be up-to-date.

long signal check is not anymore RSI>60 but RSI>50 and short segnal check is not anymore RSI<40 but RSI<50

this should be really easy

Woww... this discussion is going way too fast than what I can follow, during this weekend

The first 3 pairs I started testing without MACD were curiously the ones who performed best.
There's 3 pairs with much better performance, and 3 with small worse performance.

In resume:

GBPJPY
with: 8164 pips
without: 10140 pips (+24,2%)

USDJPY
with: 2664 pips;
without: 3048 pips (+14,4%)

GBPCHF
with: 4532 pips
without: 7920 pips (+74,8 %)

EURUSD
with: 6396 pips
without: 6110 pips (-4,5%)

GBPUSD
with: 4200 pips
without: 3960 pips (-5,7%)

EURJPY
with: 3536 pips
without: 3128 pips (-11,5%)

Don't know what happened... maybe someone stepped into his toes!
I'll look it up later.

About the RSI, I think I took a look to that possibility some days ago (I think after the Stochastic has been added).
But at the time it didn't look better... don't know if with that thing of TP1 at 0.9ATR, it will look better.

Do you want the Indi with that change in RSI, to check it?
But the change in TP1 won't be so fast to make... specially as I'm almost without battery, with no charger around.

If I understood right, you meant:
TP1 with specific multiplier (to put it at, for example, 0.9ATR)?
Other TPs with normal ATR and common multiplier?

atr multiplier of TP1 = customizable

atr multiplier of TP2,3 = 1

Now I have an idea with TP4. We all agree that sometime (often, really) happens that TP4 is reached fast and the system keeps on placing orders but then market is choppy and we keep losing because we run into several SL.

This is going to be very cool here:

Let the fourth part of the trade free to run without a TP let's just put a SL on TP3, we have just to decide how to trail the SL.

imho if we decide a good way to trail this can really really really make the difference and we would drop a 30% of the loss.

I would really let the SL large at that point. you, toni?

I always had the vision of letting the fourth quarter run with trailing stop.
Not so sure about the always alternating long/short thing (depends a lot if we are in trending or ranging mode).

But I feel that changes have to come slow, and always be tested.
Since I don't have the time now to code, neither to test this EA (I would looove to start ), let's leave it like this for now.
Some of the changes could be directly made in the EA, in order to compare the changes more rapidly (hand counting is long and boring)

Have to go now, keep up the good work, guys.
See you soon,
Toni.

I'm going to leave the EA alone for now, to me this indicator is still at a developing stage

I'll do you one better. I'll set those values as configurable too. just set RSI_Buy_Value and RSI_Sell_Value to 50.

I've also added MACD back in but modified it to allow user to decide which indicator to use. you can now choose between different combination of the 3 indicators. EMA is always mandatory else we'll need to change the name of the system... here's the new indicator. I've also made the same changes in the EA.

btw, Toni, I hope you don't mind. I've made a slight change to the Stochastic comparison for signal catching.


is now changed to


This is to further reduce the chances of getting mixed signals when Stoch Main line is EQUAL to Stoch Signal line. I know there's RSI as confirmation but now that I know we're using just 50 instead of 40 and 60. it'll generate both a buy and a sell signal when Stoch Main line is EQUAL to Stoch Signal line and RSI = 50. I know the chances of that happening ain't high. but... just in case.

regards,
Zen
-----------------------------------------------------------------------
What's new in beta 3?
=====================

1. Inserted RSI_Buy_Value and RSI_Sell_Value in inputs.
2. Gets to choose which indicators will be used for signal identification.
3. MACD added back in.

due to citizen's obligations, I'll be reporting to the army for my annual military training from 4th to 20th august. till then I won't be able to actively participate in this forum except maybe during weekends if i get to book out. or i can use my mobile phone (if I can keep it with me) to reply in this thread. coding from me will have to wait. Till then, all the best in the developments.

if anyone would like to take up the EA and indicator's enhancements coding and debugging for the time being, feel free to do so. I think the beta 3 forms a good enough baseline to work with. just be sure to log down at the top what changes you've made so I won't be lost when I'm back. Thanks.

Good luck and good trading!

regards,
Zen

Hello all,

Been following the post with interest and there is some great work being done here. I have tried the EMA 25 Indicator but cannot seem to get it to work in the system tester. Also when the alert box comes up when I attach to a chart, the number of trades it indicates differs from what shows on the chart. I am also having trouble getting the last lot of indicator attachments to work at all. They import and compile ok. Am I missing something.
I am not familiar with MT4 programming language as I have only just started using MT4.
Would it be possible (please) for someone to build this indicator with the ability to put in profit targets as 1:1 of SL, then 1:2 and so on as opposed to using ATR.
Also does anyone know of a plain language manual or site that explains MT programming language.
Thanks all for your efforts.

Regards.