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4H 5EMA System

  • #501
  • Edited 2:25pm Oct 24, 2008 2:24pm | Edited 2:25pm
Hi guys

I am of the opinion that this system is profitable and suits me perfectly well as I do not have time to watch the screen. What Sterling said about support and resistance is correct. Just take your time frame on the 1 hour and observe the position of the stop losses and pending orders. This are the levels the big dogs are watching. All said and done from monday I will be going live trading both GU and EJ. Thanks Sterling.
LISTEN TO MR FUNDAMENTAL AND MR TECHNICAL
  • #502
  • Oct 24, 2008 3:48pm Oct 24, 2008 3:48pm
Quoting okehiedon
Hi guys

I am of the opinion that this system is profitable and suits me perfectly well as I do not have time to watch the screen. What Sterling said about support and resistance is correct. Just take your time frame on the 1 hour and observe the position of the stop losses and pending orders. This are the levels the big dogs are watching. All said and done from monday I will be going live trading both GU and EJ. Thanks Sterling.
As Sterling has said before just make sure you stick to the MM of 1 mini per $2000 in your account and youll do good!.
  • #503
  • Edited 6:00pm Oct 24, 2008 4:46pm | Edited 6:00pm
Trade #20 was a buy and got stopped at the original stop for a -228 pip loss at which point it also hit are sell stop for trade #21

Trade #21 went huge in are favor its a shame we only got +196 from this trade but thats what you got if you followed the rules. When price hit bottom and started to reverse it couldnt break the high so the trade was cancelled. This is where the 50% rule comes into play. But price had already retraced past 50% so you just close at market at the start of the new bar(4PM). It opened at 1.5838 so you would have got 1.5841 for a +196 pip profit. This also shows how different time frames have better entries on one trade and worse on another. If your 4 hour candles close at 12,4,8 instead of 2,6,10 you made more pips, but just last week we did better on some trades so it all evens out over time.

We are currently flat for the weekend with no setup bars so we will have to wait and see what sunday night and monday morning bring.

-Sterling
Attached Image (click to enlarge)
Click to Enlarge Name: trade #20, #21.gif Size: 49 KB
Founder of Day Trading Forex Live
  • #504
  • Oct 24, 2008 6:19pm Oct 24, 2008 6:19pm
Please check rule number 3 under the "additional rules" section to better clarify the 50% retracement stop rule.

-Sterling
Founder of Day Trading Forex Live
  • #505
  • Oct 24, 2008 6:22pm Oct 24, 2008 6:22pm
hi!
thank you Sterling and Hiranya for the reply #468 #469
i just find it important to do at least 3-4 years backtesting to feel on a little safer side didnt have enough time to do bactesting myself so far. was just wondering whether this system was profitable say 3-4 years ago?
thank you guys for the hard work you are putting in
  • #506
  • Edited 7:04pm Oct 24, 2008 6:59pm | Edited 7:04pm
Quoting tonny47
hi!
thank you Sterling and Hiranya for the reply #468 #469
i just find it important to do at least 3-4 years backtesting to feel on a little safer side didnt have enough time to do bactesting myself so far. was just wondering whether this system was profitable say 3-4 years ago?
thank you guys for the hard work you are putting in
I havent backtest that far and dont really see a need to do that. Future results are the important part. Will this system work as it stands forever? I donno. I do know that the fundamentals behind the system (support/resistance) will work forever in any market. That being said if the market were to start having 80 pip a day ranges instead of 300 pip a day ranges you might want to go to a 1H timeframe. Until then im just gonna take my +700 pips a month average and run with it. When it starts averaging 400 pips a month or less then Ill start looking to optimize this system to the current market condition.

I say optimize becasue the main fundamentals of the system will NEVER need to be changed, they have ALWAYS worked in EVERY market and they will ALWAYS work in EVERY market. That being said I think were pretty safe for the near and distant future.

-Sterling
Founder of Day Trading Forex Live
  • #507
  • Oct 25, 2008 4:20am Oct 25, 2008 4:20am
fairst im sorry about my english im from israel and awer lenguege is hebreaw.
the sys is look great and im using it at 1h chart
fairst im looking for long tail bar and if the tail is longer then 10 pips + spread and the next bar is shorter from the bar before at last 10 pips from the higher/lower point im going into the position.
my fairst take im moving the stop loss to the fairst 5ma the bar pass after he pass the ma at 15 pips.
take profit im taking profit when the bar tuch the far 5ma
good luck u all
Tal
  • #508
  • Edited 5:24pm Oct 25, 2008 5:10pm | Edited 5:24pm
I am very interested in testing this - how can I donload it?
Needless to say I am new at this...
Thanks,
Alan

Think I got it! v2.1 in attachments.
  • #509
  • Oct 25, 2008 6:40pm Oct 25, 2008 6:40pm

Initial Stop Placement



1.) Initial stop placement is 5 pips above the setup bars high in the case of a short, and 5 pips below the low of the setup bar in the case of a short. Most charts use the bid for highs/lows, so in the case of a short the stop must be 5 pips above the high and then add the spread as well.

i think i found a typing error in the second sentence which i highlighted shouldn't it be LONG. cheers and thanks heaps for this system.
  • #510
  • Edited 3:51pm Oct 26, 2008 6:10am | Edited 3:51pm
Quoting tonny47
hi!
thank you Sterling and Hiranya for the reply #468 #469
i just find it important to do at least 3-4 years backtesting to feel on a little safer side didnt have enough time to do bactesting myself so far. was just wondering whether this system was profitable say 3-4 years ago?
thank you guys for the hard work you are putting in

I'm starting to backtest this system starting from January 2006. I've only backtested 11 months so far (Jan-Nov). The monthly results for these 11 months of 2006 are as follows:

2006
Jan +835 pips
Feb +212 pips
Mar +880 pips
Apr +803 pips
May +1124 pips
Jun +279 pips
Jul +700 pips
Aug +54 pips
Sep +446 pips
Oct +49 pips
Nov +578 pips

Attached is spreadsheet backtest...

I subtracted approximately 200 pips per month to account for the spread (8 pips per trade)...I'm not sure if that is the proper amount...if someone can fill me in on that...I would appreciate it,

I think my backtest is fairly accurate...there were a few judgment calls in there, but overall, I think my backtest is reflective of the the results that you are seeing with Sterling at present. I'll keep you all posted as I backtest more....

Greg
Attached File(s)
File Type: xls gbp_4hr_5ema_Backtest(2).xls   246 KB | 414 downloads
  • #511
  • Oct 26, 2008 12:20pm Oct 26, 2008 12:20pm
Quoting 4xgolfer
I am very interested in testing this - how can I donload it?
Needless to say I am new at this...
Thanks,
Alan

Think I got it! v2.1 in attachments.

I have another EA coming that is more accurate to the system. This one does not trade the system as it should.

-Sterling
Founder of Day Trading Forex Live
  • #512
  • Oct 26, 2008 12:21pm Oct 26, 2008 12:21pm
Quoting kien27

Initial Stop Placement




1.) Initial stop placement is 5 pips above the setup bars high in the case of a short, and 5 pips below the low of the setup bar in the case of a short. Most charts use the bid for highs/lows, so in the case of a short the stop must be 5 pips above the high and then add the spread as well.

i think i found a typing error in the second sentence which i highlighted shouldn't it be LONG. cheers and thanks heaps for this system.
Thanks for catching the error, ill fix that right now. Thanks again!!!

-Sterling
Founder of Day Trading Forex Live
  • #513
  • Oct 26, 2008 12:26pm Oct 26, 2008 12:26pm
Quoting batesmotel
I'm starting to backtest this system starting from January 2006. I've only backtested 7 months so far (Jan-July). The monthly results for these 7 months of 2006 are as follows:

2006
Jan +835 pips
Feb +212 pips
Mar +880 pips
Apr +803 pips
May +1124 pips
Jun +279 pips
Jul +700 pips

I subtracted approximately 200 pips per month to account for the spread (8 pips per trade)...I'm not sure if that is the proper amount...if someone can fill me in on that...I would appreciate it,

I think my backtest is fairly accurate...there were a few judgment calls in there, but overall, I think my backtest is reflective of the the results that you are seeing with Sterling at present. I'll keep you all posted as I backtest more....

Greg
Hey thanks for backtest it. I appreciate the effort your putting into it. I do have one question tho, what do you mean by a "few judgement calls". Wiuth this system there should be no judgement calls. As far as how I backtest lets use a buy example. Say the high of the setup bar was 1.8513 I would just write down 1.8520 and I would do this on the exit too. This way it gives you even worse results than what you would really get and I believe it is safer to do it that way too. I hope that makes sense, and again thank you very much for the effort and I look forward to seeing more results!

-Sterling
Founder of Day Trading Forex Live
  • #514
  • Oct 26, 2008 1:27pm Oct 26, 2008 1:27pm
Sometimes on the back test, I'm not sure if the reversal bar made a lower low (for a long trade) before or after it took out the set-up bar...so it is sometimes hard to say whether the trigger would have be reached.

Maybe you can expand on that...if the reversal bar makes a new low after you've put in your buy stop for set-up bar (and have gone back to sleep perhaps because it was an early morning set-up)...what happens then?? Do we cancel the buy-stop and wait another 4 hours? How would we know to cancel buy stop...if we're not at the computer or are sleeping??

Greg
  • #515
  • Oct 26, 2008 2:06pm Oct 26, 2008 2:06pm
Quoting batesmotel
Sometimes on the back test, I'm not sure if the reversal bar made a lower low (for a long trade) before or after it took out the set-up bar...so it is sometimes hard to say whether the trigger would have be reached.

Maybe you can expand on that...if the reversal bar makes a new low after you've put in your buy stop for set-up bar (and have gone back to sleep perhaps because it was an early morning set-up)...what happens then?? Do we cancel the buy-stop and wait another 4 hours? How would we know to cancel buy stop...if we're not at the computer or are sleeping??

Greg
In the case of a long trade as you mention:

1- If the reversal bar made a new low first and then triggered the long entry, we are long and move the stop from below the setup bar to below the reversal bar (new low and new support) as this reversal bar could be a new setup bar as well.

2- If the reversal bar triggered the long entry first and then went to make a new low we should be stopped out of the long and reversed to short. However Sterling somewhere mentions NOT to put in the reverse trade until the reversal bar closes; this is a dark area for me too: where should we place our new order after the close of the reversal bar which stopped out our long? Should we regard the reversal bar as a new setup bar and go along accordingly or any other option?
Regards
  • #516
  • Edited 4:05pm Oct 26, 2008 2:54pm | Edited 4:05pm
Quoting howard
In the case of a long trade as you mention:

1- If the reversal bar made a new low first and then triggered the long entry, we are long and move the stop from below the setup bar to below the reversal bar (new low and new support) as this reversal bar could be a new setup bar as well.

2- If the reversal bar triggered the long entry first and then went to make a new low we should be stopped out of the long and reversed to short. However Sterling somewhere mentions NOT to put in the reverse trade until the reversal bar closes; this is a dark area for me too: where should we place our new order after the close of the reversal bar which stopped out our long? Should we regard the reversal bar as a new setup bar and go along accordingly or any other option?

Yes...you are right Howard...and I would also like to clear up this grey area....because it does happen on a regular basis....

BTW....if anyone has the "Gumption"....try backtesting Aug, Sep & Oct of 2006....I have backtested it (page 34 #510)...with BE (+ a little profit) results....but I would like to compare my backtest with anyone's out there...so I'm sure I didn't make any mistakes.....it was a bad 2 out of 3 months....

After backtesting 11 months of 2006...I realize that this system heavily relies on those "large moves" in order to make a profit...if you stick to the system you will NEVER miss a big 300+ pip move....but you have to tolerate the losses when the GU is ranging....Oh...and never miss a trade...if you do...u chance missing that big move that will put you from a loss into profit....
  • #517
  • Oct 26, 2008 4:28pm Oct 26, 2008 4:28pm
Quoting batesmotel
Yes...you are right Howard...and I would also like to clear up this grey area....because it does happen on a regular basis....

BTW....if anyone has the \"Gumption\"....try backtesting Aug, Sep & Oct of 2006....I have backtested it (page 34 #510)...with BE (+ a little profit) results....but I would like to compare my backtest with anyone's out there...so I'm sure I didn't make any mistakes.....it was a bad 2 out of 3 months....

After backtesting 11 months of 2006...I realize that this system heavily relies on those \"large moves\" in order to make a profit...if you stick to the system you will NEVER miss a big 300+ pip move....but you have to tolerate the losses when the GU is ranging....Oh...and never miss a trade...if you do...u chance missing that big move that will put you from a loss into profit....
When price in the case of a long makes a lower low and triggers the trade you move the stop below the new low. You have no choice about it being triggered so you just move the stop to the new low and continue with the system as usual. When I was backtesting and this happened I would move it down to the hour chart to see which came first to determine what the outcome would have been.

As far as it triggering the buy order and then getting stopped out in the same bar, you do not have a reversal order in the market (howard). The rules state you do not put the reversal order in until the reversal bar closes. If you were to put the reversal order in who to say that order wouldnt get triggered without even triggering a buy? That is why you dont do that. I hope this clears things up.

I think you guys see why I say you have to take every trade. This system does rely on the big 3-4 trades per month to be positive. The other 20-25 trades end up only slightly positive and so you have to have the big ones. I personally dont care how this system gets to 700 pips a month, I just know it usually does and thats all that matter. Let me know if my explinations of the trade rules werent clear. I believe what I said is wrote in the rules so check those out to for a little more clarification.

-Sterling
Founder of Day Trading Forex Live
  • #518
  • Oct 26, 2008 4:30pm Oct 26, 2008 4:30pm
Quoting howard
In the case of a long trade as you mention:

1- If the reversal bar made a new low first and then triggered the long entry, we are long and move the stop from below the setup bar to below the reversal bar (new low and new support) as this reversal bar could be a new setup bar as well.

2- If the reversal bar triggered the long entry first and then went to make a new low we should be stopped out of the long and reversed to short. However Sterling somewhere mentions NOT to put in the reverse trade until the reversal bar closes; this is a dark area for me too: where should we place our new order after the close of the reversal bar which stopped out our long? Should we regard the reversal bar as a new setup bar and go along accordingly or any other option?
Yes the new low is the new setup bar and you put the buy stop 5 pips plus spread above the high and the stop 5 pips below the low like a usual trade. Hope this clears things up.

-Sterling
Founder of Day Trading Forex Live
  • #519
  • Oct 26, 2008 4:37pm Oct 26, 2008 4:37pm
Quoting stersuhr
Yes the new low is the new setup bar and you put the buy stop 5 pips plus spread above the high and the stop 5 pips below the low like a usual trade. Hope this clears things up.

-Sterling
It is clear now, thanks
Regards
  • #520
  • Oct 26, 2008 8:32pm Oct 26, 2008 8:32pm
As of this writing, the first bar of the week on Alpari looks like a setup bar. I closes at 7 pm PST and so I believe our first trade of the week will be to go long 5 pips plus spread above the high, which currently is 1.5877. So unless that high is broken in the next 30 minutes my order will be 1.5886 (long). The low of the current setup bar is 1.5654 so my sell stop and reversal trade will be 1.5649. Of course, that short signal is good only if the long order is filled.
Michael

edit: wow! right after I posted it dropped over 100 pips in less than 10 mins, so the odds of that long trade being filled just went down. Since we are not in a trade, I don't know that there is any official short signal. Sterling, given the 50% rule that got us out of our short last week, would you have a short entry below the recent low?
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