4H 5EMA System

Quoting Hiranya

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Yes you would have had your sell stop in at the stop loss of Trade #20. Your stop goes 5 pips above the highest high, from after the previous buy order. 1.6334 is the current stop on this sell order. There is a rule for placement of your stop on reversal trades located on the first page.

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Quoting suwuming

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Hi Hiranya,

Did the rules mention \"highest high from after the previous buy order\"? or just \"high\" of the reverse bar, or even \"high\" of the previous bar?

Thanks,
Simon

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Quoting Hiranya

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@gregoga

If I can get you right, you said that we should put a stop order entry and a stop loss at the same end of the setup bar, so that when the stop loss is taken another entry is made.

Because if we wait for the reversal bar to close, it would have passed the end of the setup bar (and the 5pips) by hundreds of pips.




That is right.. So if we are going long and we get a new higher high we are putting in a new stop loss and a new short order at the stop loss that way if it hits the stop loss it will put us in a short.

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Quoting alllivemind

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Well the candle closed so we can move our stop. The last bat is a setup Bar, so our stop goes above it. Mine is: 1.6162. This candle already has a lower low so in 4 hours hopefully it will be even lower and we can move the stop again.
M[/quote

You must have a 4 pips spread.

-Sterling

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Quoting stersuhr

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You got it right but id like to add a little bit to that. In this case you are talking about a long entry. So...the setup bar at some point had to break the lower EMA by 5 pips right? Ok...that being said when the setup bar closes you put a buy stop order in 5 pips plus the spread above the high of the setup bar and your stop 5 pips below it. At this point we dont put the reversal order in, because we dont know if during the next 4 hours if are buy is going to be hit and stopped out. The rules state that after the reversal bar triggers are buy and then the bar closes, then we put the reversal sell stop order in to go short. The stop loss on that order is 5 pips plus the spread above the high...above what high? Above the highest point the market went when we got in the original buy order. I put in a chart to illustrate the point.

In the chart the red arrow points to the setup bar and the blue arrow points to the reversal bar. at the close of the reversal bar you put the sell stop order in at the same price the buy order will get stopped out. So the trade went in are favor a bit, came back down and triggered are stop on the buy and are sell stop order. After we had are original buy order price went to 1.6326 so 5 pips above that plus a 3 pip spread gives us are stop loss on the sell stop order of 1.6334. If price had been above the higher EMA you would have been looking for a short trade so do the opposite if the above ovbiously. I hope this makes sense, if not re-read the rules that might help. If that dosent feel free to ask again and I will do my best to answer it better.

-Sterling

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Quoting ekkuso

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Greeting to everybody.... (from the beautiful Bali island )

I just wanna say that I like Sterling's system, now trying it on my broker's demo account (liteforex) with time : GMT + 3

When I first look at the example chart, and comparing it to mine, I just got confused... because of time differences...

And then, after 1st and 2nd trading (I've just started on 21st october and missed the 'big waves down') which is totally loss....I felt a little bit uncertain.

But every time I read comment from everybody here, somehow I feel this system really works

And for those whose trading time is the same as mine, maybe I can learn something from you all, I bet I will...

OK, good luck to you all, keep trading..

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Quoting Kosomolate

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are there any ways or should I say rules one can filter out loosers?

I took time to separate the loosers and the winners in september trades and I discovered that most of the trades that the 1st reversal candle did not make it as to trigger the buy/sell stops ended up as loosers.

another example happened today to if you look carefully.

therefore if from your experience there is any way to filter out or recognise those that are likely to end up in minus.

This would save us some pains, and for those of us newbies it would help protect our account, cos me personerlly I dont think my account can withstand three loosers at a stretch

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Quoting leis

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Been thinking this over and a couple of simple filters to discuss would be once 4H 5EMA System criteria entry for say long is met check the standard MACD setting if below 0 do not take signal (sort of James16 price action & MACD divergence thinking maybe). If System criteria says short and MACD below 0 take it. I also like to have a 20 day moving average on the chart only taking suitable short signals if below the 20 day ma and long signls if above the 20 day ma. Downside to filters is it cuts the number of trades but I think both or either of these would have meant the losing long trades would not have been taken. Comments/Alternatives/Fine tuning anyone?
BTW thats one heck of a drop currently going on - now down to 15280!!

edit... just one other thought re the losing long trades if a Jacko style hedging pending order had been placed would they have been profitable? Sorry can't see a chart at the moment so unable to confim that ....

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Quoting suwuming

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It is very clear now.

One last 2 questions: 1. what if the reverse bar is also a setup bar for opposite signal, which order will you choose? the \"reverse sell stop order\" or a normal \"sell stop order following the setup bar\"? 2. how long the \"reverse sell stop order\" last? 1 bar (4hours), 2 bars or until an opposite signal appears?

Thanks a lot!

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Quoting howard

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I believe you have to put up with the some losing trades in this system in order to take full advantage of the trends, any filters will eat into the profits in the long run. Just my opinion.

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Quoting earret

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Sterling

So have you placed a rule to close on fridays or is this up to each individual trader to make that decision?

IMHO the way the markets are right now I am not going to take the risk of a gap the wrong way...just wanted to here your thought.

Are you still short on this long bar down or did you implement the 50% stopless that you talked about in past posts?

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Quoting stersuhr

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Im gonna have to side with Howard on this. Thats not to say that if you learn the system and want to backtest it and have better results I wont change, because I would. This system relies on something that will NEVER fail in the long term. Support/Resistance. Do you really think that bank managers have all sorts of indicators on there screen when they trade? Indicators were made to allow people to feel warm and fluffy and say I have these three \"lagging\" indicators and they all point in one direction so that what I do. Thats why indicator systems come up get some attention and then die out on this forum.

The 4H 5EMA system does use 2 5EMA but neither are there to determine if a trade is taken. Back to support and resistance. Why use that as the base of your system? Simple, price bounced of a level before so chances are its gonna do it again...if it dosent it will probably continue so we have are reversal order. If you look at the way the stops were designed, the order entries, and everything else you will see they are all based on support and resistance....something that will NEVER fail in ANY market so long as it is applied along with good MM and just as important consistantly. This system has all of that. Ok im done...I shall return my soap box
-Sterling

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Quoting alllivemind

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I think those who cannot take 3 losing trades in a row are using too high of a contract size, and should reduce. I am only trading this system for two weeks but I will assume that both the losers and the winners are larger during this historically volatile time in the markets. I have already exited for the weekend. The GBP/USD could open 300-500 pips higher or lower Sunday night. Why take the risk?
Most likely the volatility will keep up which means larger winners and larger losers but overall I believe it translates out to more profits, so I am excited about the next few weeks.
It seems quite a shame to be 600 pips ahead and have your stop near break even. The moving your stop halfway rule, the way I understand it doesn't come into effect until about 30 min from now, when the second bar after the SU bar closes, at 2pm EST. Probably in the long run as Sterling said it is best to just stick to the system, but I believe we've seen the panic selloff and maybe a bottom. So when 1/2 my profits evaporated, I went flat for the weekend. So far the GU continues up and I'm glad I did.
Those with the charts that close at different times, who did not as well as the rest of us, have gone flat or reversed long already, so this time around you may well be doing better. Like Sterling said, it will all even out. Also, I am really watching this on a 8 hr chart. The 8 hr chart went short back on Sunday night at 1.7293 and ust now got out at and just revesrsed now at 1.5896. 1397 pips profit!
Have a great weekend all!!!
Michael

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