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4H 5EMA System

  • #21
  • Oct 5, 2008 8:03pm Oct 5, 2008 8:03pm
Quoting RickW00716
Just making sure I've got the rules right...for a short, a candle trades at least 5 pips below the 5ema of the highs(but does not touch the 5ema of the lows).
Then you need within 2 candles have a candle with a lower high that also is at least 5 pips below the 5ema of the highs but still does not touch the 5ema of the lows...you enter short 5 pips below the low of this candle.

Am I correct?
PS. Thanks for sharing this system.
In order to have a proper setup for a short the rules state.

1.) Price must have broken the high 5EMA by 5 pips, it doesent have to close 5 pips above it, it just has to break it by 5 pips.

2.) One of the next two candles (reversal candle) must have a lower high than the setup bar and break the setup bars low by 5 pips.

When you see a proper setup bar form for a sell you would put a sell stop in the market 5 pips below the low of the setup bar and a stop loss 5 pips above the high of the setup bar. If during the next 4 hour candle the high of the setup bar is broken this is now your new setup bar and you repeat the steps until a proper reversal bar puts you in a trade.

Another very important point is the orders to go the other direction. When you get into a trade, lets say a short, you have a stop loss 5 pips above the high of the setup bar(include spread too so its more like 8 pips above). So you have a proper setup bar form and then you have a reversal bar make a lower low and a lower high so now your in the trade. At the close of the reversal bar you put a buy stop order in the market at the exact price your stop is at. This is true with every trade long or short. Once your in any trade and the reversal bar CLOSES you put that order in. Let me know if you understand.

Im in the process of labeling every trade for last month except for the 10 trades I already did you. This will give everyone a total pip count for last month according to how you should trade it via the rules. It may seem complicated but if you stick with it for a few days and ask questions the trades will start to stand out like a sore thumb and become a very simple system.

-Sterling
Founder of Day Trading Forex Live
  • #22
  • Oct 5, 2008 8:41pm Oct 5, 2008 8:41pm
hi sterling
are you short now . it opened with a gap , are the conditions met to go short ?
thanks
  • #23
  • Oct 5, 2008 8:47pm Oct 5, 2008 8:47pm
Ok heres the first 7 trades for the month of Sept.

1.) Setup bar breaks the lower EMA by 5 pips and is followed by a reversal bar that makes a higher low and breaks the setup bars high by 5 pips thus triggering are buy stop.

Buy stop - 1.7773
Stop loss - 1.7661

A signal to go short at 1.7761 is given and so we exit the trade and enter short. -12 pips

2.)Setup bar breaks the high EMA by 5 pips and is followed by a reversal bar that makes a lower high and breaks the low of the setup bar by 5 pips thus triggering are sell stop order.

Sell stop -1.7761
Stop loss - 1.7866

The trade goes in are direction and we exit at 1.7630 because a signal to go long is given. +131 pips

3.) Setup bar breaks the lower EMA by 5 pips and within 2 bars a reversal bar forms and hits are buy stop which is 5 pips above the high of the setup bar.

Buy stop - 1.7630
Stop loss - 1.7534

Trade continues to go in are direction and over the weekend gaps up in are direction( gaps are a double edged sword, we had a gap against us twice this month), we exit when a signal to go short is given at 1.7883. +250 pips

4.) Setup bar breaks the high EMA by 5 pips and is followed by a reversal bar that makes a lower high and a lower low by 5 pips. The reversal bar thus triggers are sell stop which we set 5 pips below the setup bar.

Sell stop - 1.7883
Stop loss - 1.7982

Trade continues in are direction until a buy signal is given and at that point we exit at 1.7595 and go long. +288 pips.

5.) Setup bars goes below the lower EMA and is followed by a reversal bar that makes a higher high by atleast 5 pips and a high low. The reversal bar gets us in the trade 5 pips above the high of the setup bar.

Buy stop - 1.7595
Stop loss - 1.7500

Trade continues for a while until a signal to go short is given at 1.7587, at which point we exit the trade and go short. -8 pips

6.) Setup bar breaks the higher EMA by 5 pips and is followed by a reversal bar that makes a lower high and a lower low than the setup bar by 5 pip, thus triggering are sell stop.

Sell stop - 1.7587
Stop loss - 1.7714

Trade goes in the intended direction and gives us a buy signal, thus we exit at 1.7543 and go long. +44 pips

7.) Setup bar breaks the lower EMA by 5 pips and is followed by a reversal bar that breaks the high of the setup bar by more than 5 pips.

Buy stop - 1.7543
Stop loss - 1.7441

Trade goes in are direction until we are given a signal to go short at which point we close the buy and go short at 1.7985. +442 pips

I have 10 or so more trades to go to finish up last month...there coming this just takes a lot of time so give me 20 min or so.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp2.gif Size: 58 KB
Founder of Day Trading Forex Live
  • #24
  • Oct 5, 2008 8:50pm Oct 5, 2008 8:50pm
Quoting imad
hi sterling
are you short now . it opened with a gap , are the conditions met to go short ?
thanks
No iam currently long from 1.7718 with a stop of 1.7551, which is according to the rules of the system.
Founder of Day Trading Forex Live
  • #25
  • Edited 9:11pm Oct 5, 2008 8:50pm | Edited 9:11pm
Quoting stersuhr
In order to have a proper setup for a short the rules state.

1.) Price must have broken the high 5EMA by 5 pips, it doesent have to close 5 pips above it, it just has to break it by 5 pips.

2.) One of the next two candles (reversal candle) must have a lower high than the setup bar and break the setup bars low by 5 pips.


-Sterling
Question-
If you enter at the L of the setup bar - 5 pips, how do you know what the high of this bar will be?
It could break the entry point, retrace and go higher than the set up bar.

Another way of asking this is, how can you be sure that #2 (above) will be met?
  • #26
  • Oct 5, 2008 8:52pm Oct 5, 2008 8:52pm
Quoting stersuhr
In order to have a proper setup for a short the rules state.

1.) Price must have broken the high 5EMA by 5 pips, it doesent have to close 5 pips above it, it just has to break it by 5 pips.

2.) One of the next two candles (reversal candle) must have a lower high than the setup bar and break the setup bars low by 5 pips.

When you see a proper setup bar form for a sell you would put a sell stop in the market 5 pips below the low of the setup bar and a stop loss 5 pips above the high of the setup bar. If during the next 4 hour candle the high of the setup bar is broken this is now your new setup bar and you repeat the steps until a proper reversal bar puts you in a trade.

Another very important point is the orders to go the other direction. When you get into a trade, lets say a short, you have a stop loss 5 pips above the high of the setup bar(include spread too so its more like 8 pips above). So you have a proper setup bar form and then you have a reversal bar make a lower low and a lower high so now your in the trade. At the close of the reversal bar you put a buy stop order in the market at the exact price your stop is at. This is true with every trade long or short. Once your in any trade and the reversal bar CLOSES you put that order in. Let me know if you understand.

Im in the process of labeling every trade for last month except for the 10 trades I already did you. This will give everyone a total pip count for last month according to how you should trade it via the rules. It may seem complicated but if you stick with it for a few days and ask questions the trades will start to stand out like a sore thumb and become a very simple system.

-Sterling
In step 1 in your reply did you mean that for a short the candle must trade at least 5 pips below the high ema? You have written above...just trying to clarify things
  • #27
  • Oct 5, 2008 8:55pm Oct 5, 2008 8:55pm
Quoting billbss
Question-
If you enter at the L of the setup bat - 5 pips, how do you know what the high of this bar will be?
It could break the entry point, retrace and go higher than the set up bar.

Another way of asking this is, how can you be sure that #2 (above) will be met?
I'm wondering if he means the low of the reversal bar...But then again, I'm not really sure...the chart posted is not making any sense to me
  • #28
  • Oct 5, 2008 8:58pm Oct 5, 2008 8:58pm
Hey Stershur,

Could yu provide a download attacmnent template for those of us just learning and dont know how to install indicators for thi system...Looks great....thanks
  • #29
  • Oct 5, 2008 9:18pm Oct 5, 2008 9:18pm
8.) Setup bar breaks the higher EMA by 5 pips and is followed by a proper reversal bar with a lower high and a lower low than the setup bar by more than 5 pips.

Sell stop - 1.7985
Stop loss - 1.8138

Trades continues to go in are direction until we get a signal to go long at which point we exit at 1.7972 and go long. +13 pips

9.) Setup bar breaks the lower EMA by more than the required 5 pips and is followed by a proper reversal bar and we go long.

Buy stop - 1.7972
Stop loss - 1.7759

Trade gets stopped out at which point we already have a sell stop to reverse the trade in the market (refer to the rules or ask me if you dont understand) and so we go short as well as get stopped out. -213

10.) When we got stopped out on the last trade are sell stop that was already in the market got us short. And we also get stopped out on this one when a buy signal is given right away. We exited when we went long becasue of the signal to go long at #10. I included this trade with the #10 trade. -155 pips

Setup bar breaks the lower EMA by 5 pips and is followed by a reversal bar that makes a higher low and a higher high by 5 pips or more and we therefore go long 5 pips above the high of the setup bar.

Buy stop - 1.7894
Stop loss - 1.7726

We stay in the trade until a signal to go the other direction is givin at which point we exit and go short. Exit price was 1.7805. -89 pips

11.) Setup bar breaks the higher EMA by 5 pips and is followed by a reversal bar that makes a lower high and lower low by atleast 5 pips thus getting us short.

Sell Stop - 1.7805
Stop loss - 1.7987

Trade goes against us and stops us out -182 pips

12.) As the rules state, after a proper reversal bar closes and gets you in a trade, you place a trade to switch the direction of the original trade at the stop loss. This is what happened her when we went long right when we got stopped out on the last trade.

Buy stop - 1.7987
Stop loss - 1.7793

Trade continues in are direction until a sell signal is given, at which point we exit at 1.8158 which is where we get short. + 181 pips

13.) Setup bar breaks the higher EMA by more than 5 pips and is followed by a reversal bar that makes a lower high and a lower low by 5 pips, thus getting us in short.

Sell stop - 1.8158
Stop loss - 1.8284

Trade continues in are direction until we are givin a long signal at which point we exit and go long at 1.8109. +149 pips

14.) Setup bar breaks the lower EMA by 5 pips or more and is follwed by a proper reversal bar, and we go long.

Buy stop - 1.8108
Stop loss - 1.7910

Trade continues in are direction until we are givin a sell signal at 1.8528 at which point we exit and go short. +420 pips

3 more trades left to complete the month, almost done and then ill tally the pips for sept
Founder of Day Trading Forex Live
  • #30
  • Oct 5, 2008 9:18pm Oct 5, 2008 9:18pm
Quoting stersuhr
No iam currently long from 1.7718 with a stop of 1.7551, which is according to the rules of the system.
With the gap down this evening, the high setup candle was taken out. Hence should you not be short now?
  • #31
  • Oct 5, 2008 9:20pm Oct 5, 2008 9:20pm
Quoting RickW00716
In step 1 in your reply did you mean that for a short the candle must trade at least 5 pips below the high ema? You have written above...just trying to clarify things
No I mean above. Price has to go threw the high EMA to look for a short and to go long it has to break the lower EMA by atleast 5 pips also.
Founder of Day Trading Forex Live
  • #32
  • Oct 5, 2008 9:22pm Oct 5, 2008 9:22pm
Quoting ChloeDog
With the gap down this evening, the high setup candle was taken out. Hence should you not be short now?
Your stop loss is 5 pips below the setup candle in the case of a long trade. This puts your stop below the last swing low and is a good spot because if price breaks it then most likely its still headed down.
Founder of Day Trading Forex Live
  • #33
  • Oct 5, 2008 9:24pm Oct 5, 2008 9:24pm
Quoting billbss
Question-
If you enter at the L of the setup bar - 5 pips, how do you know what the high of this bar will be?
It could break the entry point, retrace and go higher than the set up bar.

Another way of asking this is, how can you be sure that #2 (above) will be met?
You cant be, but if you look at the past most of the time it does not trigger the trade and then go up and make a higher high. Did this answer your question. Sometimes it does tho and that is why I dont put my order to go the other way in until the reversal bar closes. I hope this answers your questions. I think im going to just post the trades live. People are seeming to not understand my way of conveying the system.
Founder of Day Trading Forex Live
  • #34
  • Oct 5, 2008 9:26pm Oct 5, 2008 9:26pm
Quoting jimbnc
Hey Stershur,

Could yu provide a download attacmnent template for those of us just learning and dont know how to install indicators for thi system...Looks great....thanks
All you need to put on your chart is a 5 EMA applied to the high and a 5 EMA applied to the close. Thats it
Founder of Day Trading Forex Live
  • #35
  • Oct 5, 2008 9:26pm Oct 5, 2008 9:26pm
Sorry Stersuhr, I know how to install indicators but i cant find or dont know what yu mean by 5ema? Im new and learning...Could anyone pls attach their template on this system..I would like to look at it....Thanks
  • #36
  • Oct 5, 2008 9:28pm Oct 5, 2008 9:28pm
This is the chart for post #29. I forgot to attach it sorry.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp3.gif Size: 57 KB
Founder of Day Trading Forex Live
  • #37
  • Oct 5, 2008 9:37pm Oct 5, 2008 9:37pm
There is three trades left that I didnt describe, im tired of typing so im just going to give the total for the month, I will include them as well. You should be able to figure those threee trade out #15,#16,#17 if you understand the system.

Total for the month is +997 pips. I dont know where I got 1200 from. I think when I was looking at my broker printout it included a trade that was started in august and continued into sept.

-Sterling
Founder of Day Trading Forex Live
  • #38
  • Oct 5, 2008 9:40pm Oct 5, 2008 9:40pm
Quoting jimbnc
Sorry Stersuhr, I know how to install indicators but i cant find or dont know what yu mean by 5ema? Im new and learning...Could anyone pls attach their template on this system..I would like to look at it....Thanks
Go to moving averages and put "5" in for the "period". Then where it says "apply to" make one of the applied to the high and the other applied to the low. Make sure also where it says "MA method" that it is set to EMA or it may be worded exponential moving average. Sorry I dont know how to post a template or I would. Let me know if you get it.

-Sterling
Founder of Day Trading Forex Live
  • #39
  • Oct 5, 2008 9:45pm Oct 5, 2008 9:45pm
This one really mind boggles me - I've been over the rules and your 1/2/3/4... explanation on how you enter and exit the trades. I think because we can't see the actual numbers on the pip count of where your talking about it makes it a bit harder to understand.

So from what I understand your just going from Buy to Sell to Buy to Sell and so on and so fourth.

It seems like a good idea I just wish I could better understand it better, as far as I know it's based on the same method as Effi brought to us except you just go on every 5 EMA hit in the opposite direction untill stopped out and then reverse the trade.

If you could post your trades live that might help us better to understand, I think that would be a good idea.

Well, all the best, your method looks promising

Cheers,

VB,
  • #40
  • Oct 5, 2008 9:46pm Oct 5, 2008 9:46pm
Hey thanks Sershur,

I you tubed it and learned how...thanks for yur good explanation..i will give it a whirl...
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