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4H 5EMA System

  • #301
  • Oct 20, 2008 7:16pm Oct 20, 2008 7:16pm
We are currently short with our stop and reverse at 1.7268. Here is where I get confused:
There are two long down candles that helped our short, the second being the current setup bar. The two bars after that, as of this writing (20:00 and 00:00 Alpari Time), have higher lows, thus could be reversal bars. If one of those bars had a lower low instead, would they be new setup bars replacing the last down candle, or do we have to wait two bars no matter what?
Thanks for your patience,
Michael
  • #302
  • Oct 20, 2008 7:33pm Oct 20, 2008 7:33pm
Quoting batesmotel
I guess the only way around the scenario of the setup bar being taken out by an invalid reversal bar is to set up an alert to warn you that the set bar's low has been breached....then you could eliminate the setup bar's validity....Does that make sense??

Lol....so much for a sound 4 hour sleep...it's back to sleeping with 1 eye open again...

Greg
Yeah thats why I personally wouldnt do that. If someone wants to then thats fine. Most of the time when this happens the trade turns out good anyway so its no issue really. I would just move the stop to the new low and let the trade run. Only having to look at the market once every 4 hours is a huge advantage and I definatly dont want to change that!

-Sterling
Founder of Day Trading Forex Live
  • #303
  • Oct 20, 2008 7:38pm Oct 20, 2008 7:38pm
Quoting alllivemind
We are currently short with our stop and reverse at 1.7268. Here is where I get confused:
There are two long down candles that helped our short, the second being the current setup bar. The two bars after that, as of this writing (20:00 and 00:00 Alpari Time), have higher lows, thus could be reversal bars. If one of those bars had a lower low instead, would they be new setup bars replacing the last down candle, or do we have to wait two bars no matter what?
Thanks for your patience,
Michael
Feel free to ask as many questions as you want, no problem at all! You got it right if one of these bars would have or does make a lower low they would be the new setup bar. If however they dont make lower lows or a lower high the trade is cancelled and the third bar after the original bar becomes the setup bar if it is lower than the 5 EMA by 5 pips. If this happens it does not have to make the lowest low because the other trade was cancelled, it just has to meet the basic requirements of a setup bar. Hope that makes sense.

-Sterling
Founder of Day Trading Forex Live
  • #304
  • Oct 20, 2008 7:59pm Oct 20, 2008 7:59pm
Quoting stersuhr
Feel free to ask as many questions as you want, no problem at all! You got it right if one of these bars would have or does make a lower low they would be the new setup bar. If however they dont make lower lows or a lower high the trade is cancelled and the third bar after the original bar becomes the setup bar if it is lower than the 5 EMA by 5 pips. If this happens it does not have to make the lowest low because the other trade was cancelled, it just has to meet the basic requirements of a setup bar. Hope that makes sense.

-Sterling
Thanks Sterling,
Maybe the rules should say somewhere "a setup bar may only be replaced in the following two candles by a lower low (or higher high if we are in a long) than the existing setup bar"
If I said that right it clears up a lot for me.
-M
  • #305
  • Oct 20, 2008 8:54pm Oct 20, 2008 8:54pm
Quoting alllivemind
Thanks Sterling,
Maybe the rules should say somewhere \"a setup bar may only be replaced in the following two candles by a lower low (or higher high if we are in a long) than the existing setup bar\"
If I said that right it clears up a lot for me.
-M
I guess i just figured it was a given that if in the case of a long, the price keeps making lower lows that you make it your new setup bar. I will look over the rules and see how they are worded and make that more clear. Thank you for the suggestion alllivemind I will clear it up.

-Sterling
Founder of Day Trading Forex Live
  • #306
  • Oct 20, 2008 9:11pm Oct 20, 2008 9:11pm
Hey alllivemind look at number three under the entry section of the rules and see if this explain it better. Im always open to perfecting the rules so any suggestions for making the current rules clearer or making them better im open to.

Whoever posted about using SMA's instead of EMS's, I havent backtested it yet but I will so give me a little time.

-Sterling
Founder of Day Trading Forex Live
  • #307
  • Oct 20, 2008 9:19pm Oct 20, 2008 9:19pm
Quoting stersuhr
Hey alllivemind look at number three under the entry section of the rules and see if this explain it better. Im always open to perfecting the rules so any suggestions for making the current rules clearer or making them better im open to.

Whoever posted about using SMA's instead of EMS's, I havent backtested it yet but I will so give me a little time.

-Sterling
Very Well Worded and much more clear IMHO!
Thanks!
  • #308
  • Oct 20, 2008 9:26pm Oct 20, 2008 9:26pm
Quoting alllivemind
Very Well Worded and much more clear IMHO!
Thanks!
No problem!

-Sterling
Founder of Day Trading Forex Live
  • #309
  • Oct 21, 2008 1:25am Oct 21, 2008 1:25am
Don't anyone risk money on what I say, but the way I understand it now the 4:00 bar is the new setup bar, the high is 1.7197, so 5 pips plus 3 pips spread is 1.7205 as our new stop and reverse? I am setting my new stops now.....
  • #310
  • Oct 21, 2008 2:42am Oct 21, 2008 2:42am
It looks pretty quite around here......must be sleep time on the other side of the world........oh well, I'll keep on eye on the GU
What you do is a reflection of you....what I do is a reflection of me.
  • #311
  • Oct 21, 2008 5:31am Oct 21, 2008 5:31am
Hi Sterling

In order to further clarify the rules you may also want to add the following phrase at the end of Rule 4:

" and in this case the low of the current set-up bar which is now invalidated is not of any importance and the new set-up bar should only meet the basic criterion of piercing the 5EMA by minimum of 5 pips to be a valid set-up bar"
Regards
  • #312
  • Oct 21, 2008 6:01am Oct 21, 2008 6:01am
Hi, can anyone confirm the last closed bar as a set up bar. Thanks!
What you do is a reflection of you....what I do is a reflection of me.
  • #313
  • Oct 21, 2008 6:28am Oct 21, 2008 6:28am
Quoting Ezzy
Hi, can anyone confirm the last closed bar as a set up bar. Thanks!
That is correct the last closed 4 hr bar with a low of 1.6994 is the set-up bar so far
Regards
  • #314
  • Oct 21, 2008 8:19am Oct 21, 2008 8:19am
Quoting howard
Hi Sterling

In order to further clarify the rules you may also want to add the following phrase at the end of Rule 4:

\" and in this case the low of the current set-up bar which is now invalidated is not of any importance and the new set-up bar should only meet the basic criterion of piercing the 5EMA by minimum of 5 pips to be a valid set-up bar\"
Yeah that a good one. Ill put something about that in there right now. Thanks for the suggestion.

-Sterling
Founder of Day Trading Forex Live
  • #315
  • Oct 21, 2008 8:25am Oct 21, 2008 8:25am
Well the trades up +385 pips or so now. Price continues to make lower lows so we continue to move are orders down. At 10AM we will offically be able to lock in around +280 pips. The good things about when you get a long sell off like this is there are usually some pretty big retracements at some point and this system catches most of them. Next trade adjustment at 10AM looks like this:

Stop loss - 1.7081

Potential trade #18

Buy stop - 1.7081

Buy stops stop loss - 1.6953


-Sterling
Founder of Day Trading Forex Live
  • #316
  • Oct 21, 2008 9:04am Oct 21, 2008 9:04am
You guys are making out like bandits on this short. I missed it because I wasn't ready to go live yet (kill me).

My broker's 4H bars start at 12, 4, and 8, so my trades will be a little off, but as it has been stated it will probably be a wash. But I've done some manual backtesting for a couple of months, and I'm fired up about this system. I can't stand being glued to the screen all day. Great job, Sterling.
  • #317
  • Oct 21, 2008 9:33am Oct 21, 2008 9:33am
Quoting killertrader
You guys are making out like bandits on this short. I missed it because I wasn't ready to go live yet (kill me).

My broker's 4H bars start at 12, 4, and 8, so my trades will be a little off, but as it has been stated it will probably be a wash. But I've done some manual backtesting for a couple of months, and I'm fired up about this system. I can't stand being glued to the screen all day. Great job, Sterling.


This is a great system and the one thing that i do like is that you do not have to be at your computer all the time. With all this 5min chart systems you are glued to the screen and if your not you will miss out on most of the trades.
  • #318
  • Oct 21, 2008 10:26am Oct 21, 2008 10:26am
Referring to post #302 that candle set up you talked about (lower low and a higher high for a long entry) would still be an engulfing candle which is a pretty good reversal candle in and of itself.
  • #319
  • Oct 21, 2008 1:13pm Oct 21, 2008 1:13pm
Quoting volcano
Referring to post #302 that candle set up you talked about (lower low and a higher high for a long entry) would still be an engulfing candle which is a pretty good reversal candle in and of itself.
I have to agree with you and that why if I come back to the computer and see this has happened I leave the trade on, I just move the stop 5 pips below the new low to protect me from an early stop out. Good point Volcano.

-Sterling
Founder of Day Trading Forex Live
  • #320
  • Oct 21, 2008 1:16pm Oct 21, 2008 1:16pm
Quoting killertrader
You guys are making out like bandits on this short. I missed it because I wasn't ready to go live yet (kill me).

My broker's 4H bars start at 12, 4, and 8, so my trades will be a little off, but as it has been stated it will probably be a wash. But I've done some manual backtesting for a couple of months, and I'm fired up about this system. I can't stand being glued to the screen all day. Great job, Sterling.
Yeah its up almost +500 pips! As I said on monday or over the weekend even before we took this trade, I know this system averages 3-4 big trades a month and the little one average out. That being said we were 20 days into the month and only had one big trade. Now does that mean there has to be that many big ones in a month, of course not. Anyone whos been trading for a while never uses phrases like it has to, or its going to. The market does what it wants we just follow it.

-Sterling
Founder of Day Trading Forex Live
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