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4H 5EMA System

  • #781
  • Nov 1, 2008 4:48pm Nov 1, 2008 4:48pm
Quoting batesmotel
Hi Sterling:

Can you comment on this chart attached?

The way I see it....there was no signal to get out of a nice short trade until it got stopped out for a -43 pip loss. Is this correct, or would you have taken the long on the only set up bar (labeled \"failed setup bar\") that materialized?

Greg
When the setup bar failed you would have used the 50% retracement rules and got out with half profit. You would have missed the run up tho.

-Sterling
Founder of Day Trading Forex Live
  • #782
  • Nov 1, 2008 7:07pm Nov 1, 2008 7:07pm
Hey Sterling - all,

Thanks! I just got done reading most of the post and wanted to help keep your motivation up with a post ;-} I am excited to start trading it tomorrow. Prudence says one should paper trade first to be sure, though I think with the help of this thread I'll go live with a micro or two just to keep focused. I have a hard time sticking with paper trades...

I hope a running post of positions continues. Thanks again for sharing your work on this system S, and for your continued support.

Shawn
  • #783
  • Nov 1, 2008 7:54pm Nov 1, 2008 7:54pm
Quoting batesmotel
Ok. The 2006 has been back tested using the 4 hr time frame with 0:00, 4:00, 8:00, 12:00, 16:00 & 20:00 bars... If anyone is interested, the monthly results for 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
Dec -156 pips (Dec 01-Dec 22 only)

Attached is spreadsheet for the 2006 back test...

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 back test is fairly accurate...I think my back test is reflective...
Hello batesmotel! have to apologize i didnt reply before, but been real busy. did a little backtesting as well, didnt put it in excel document yet. my results are worse than yours. i didnt apply the rule that if the trade was once reversed and stopped out, you dont put another reversal trade- will have to go over it again. my results are not 100 per cent exact and i did probably couple mistakes, but my results for august 2006 were loss around 210 pips. will go over it again. eg.march + 415 pips... thats after 3 pips spread per trade. did not consider closing trades on friday either. in august 2006 i did 31 trades. was a little confused about trade number 3 for example in august from you spreadsheet. you enter long with a stop loss of 18696 which i dont believe is correct. the low of the setup candle was 18741 and you would be stopped out, reverse the trade,and went short... it is just an example.
i am sorry, i dont mean to pick on anybody here, i am just trying to understand the system better and wish to get the same results u did.
will get back to backtesting as soon as i can, might take few days though...
good luck with ur trading, i really appreciate your contribution!
  • #784
  • Nov 1, 2008 8:02pm Nov 1, 2008 8:02pm
Quoting PowerBySol
Hey Sterling - all,

Thanks! I just got done reading most of the post and wanted to help keep your motivation up with a post ;-} I am excited to start trading it tomorrow. Prudence says one should paper trade first to be sure, though I think with the help of this thread I'll go live with a micro or two just to keep focused. I have a hard time sticking with paper trades...

I hope a running post of positions continues. Thanks again for sharing your work on this system S, and for your continued support.

Shawn
I dont plan on going anywhere. I plan to continue to post my daily charts for this system, and maybe the occasional screen shot of my scalping profits lol. When people see the money that can be made in this market it really tends to motivate them. I see so many threads on here that I look at and go WOW. People are really going to loose money if they follow this. I want to give people a ray of hope that they can really succeed in this market. Thanks for the continued support and hope to see you around more!

-Sterling
Founder of Day Trading Forex Live
  • #785
  • Nov 1, 2008 8:12pm Nov 1, 2008 8:12pm
Quoting tonny47
Hello batesmotel! have to apologize i didnt reply before, but been real busy. did a little backtesting as well, didnt put it in excel document yet. my results are worse than yours. i didnt apply the rule that if the trade was once reversed and stopped out, you dont put another reversal trade- will have to go over it again. my results are not 100 per cent exact and i did probably couple mistakes, but my results for august 2006 were loss around 210 pips. will go over it again. eg.march + 415 pips... thats after 3 pips spread per trade. did not consider closing trades on friday either. in august 2006 i did 31 trades. was a little confused about trade number 3 for example in august from you spreadsheet....
I dont want to be rude here guys so please take what I say as trying to help and thats all. You guys are worrying about what the market did 2+ years ago. A time when the G/U had a average daily range of 50 to maybe 100 pips on average...most of the time closer to 50. Today the G/U has a daily range of 200 pips or more....way more! In a year I will probably see the need to change certain aspects to this system, the base of the system will remain the same but as the market changes so should your system. Those that dont fail! This system relies on support/resistance for the entries and the exits and that will never change, but other things might have to. Instead of looking in the past, let me make a suggestion for your time use. I am open to anything that makes this system better. That being said why not backtest things in the past 3 months making small changes such as timeframe or other small changes. Stilll keeping the system the same but trying to optimize it if you will. This would be most benifical to everyone including yourself. Not onyl will it benifit you now but in the future. It will allow you to see what the small changes do and when the market changes you will already know what works best in certain markets.

Now that having been said if you have a bad month you just dont go and change a system. This has been working the way it is very well for the past year. So if i were to have a bad month and you will, you dont just change it. You need to see a few bad months and backtest your new theory on those months and see if it would have helped. I hope some of this helps and please dont take any of it negatively. I do all I do in this thread to help you guys and I do it because I WANT to help you guys, I get nothing from it. That being said im sure you will take this post as a positive and a thank you for the effort you put into this system now and in the future! So thank you.

-Sterling
Founder of Day Trading Forex Live
  • #786
  • Edited 9:31pm Nov 1, 2008 9:21pm | Edited 9:31pm
Trade no 2
Why you did not put a sell stop at 1.6415 to follow the rule? The lowest price for this candle was 1.6423, plus -5 pips and broker pips spread total 1.6415 count based on lower high reversal bar. Am I right?

Quoting howard
27/10

Trade no 1 closed +680

30/10

Trade no 2

Short at 1.6308
Stop at 1.6683

Stop moved to 1.6508

Stop safely moved to 1.6294

Stop moved to 1.6276
  • #787
  • Nov 1, 2008 10:27pm Nov 1, 2008 10:27pm
Quoting forex888
Trade no 2
Why you did not put a sell stop at 1.6415 to follow the rule? The lowest price for this candle was 1.6423, plus -5 pips and broker pips spread total 1.6415 count based on lower high reversal bar. Am I right?
Hey Howard if your around could you post a 8H chart, im on my cousins computer right now and dont have access to a 8H to answer the previous questions. If you could do that thank you, if not ill answer it when I get home.

-Sterling
Founder of Day Trading Forex Live
  • #788
  • Nov 1, 2008 11:56pm Nov 1, 2008 11:56pm
Quoting tonny47
Hello batesmotel! have to apologize i didnt reply before, but been real busy. did a little backtesting as well, didnt put it in excel document yet. my results are worse than yours. i didnt apply the rule that if the trade was once reversed and stopped out, you dont put another reversal trade- will have to go over it again. my results are not 100...
Hi Tonny47:

I'm glad that you have also back tested this 5ema system. If I have made any errors in my back test...I welcome any corrections...any corrections can only give traders more confidence trading this system.

Please note that my back test was tested using the 4hr TF with the following bar shift... 0:00, 4:00, 8:00, 12:00, 16:00 & 20:00... this may make a difference to your tests depending on which bar shift you are testing on...

but keep up the good work Tonny47!!

Greg
  • #789
  • Edited 12:24am Nov 2, 2008 12:09am | Edited 12:24am
Quoting stersuhr
I dont want to be rude here guys so please take what I say as trying to help and thats all. You guys are worrying about what the market did 2+ years ago. A time when the G/U had a average daily range of 50 to maybe 100 pips on average...most of the time closer to 50. Today the G/U has a daily range of 200 pips or more....way more! In a year I will probably see the need to change certain aspects to this system, the base of the system will remain the same but as the market changes so should your system. Those that dont fail! This system relies on support/resistance for the entries and the exits and that will never change, but other things might have to. Instead of looking in the past, let me make...
Hi Stering:

To some degree, I agree with you ...but as my mentor urged me..."back test, back test and back test again". If we didn't back test how would we know the system works or doesn't work?

We can give more weight to the last 6 months...that's for sure....but the basics should be consistent from year to year. If your system changed every 3 months as it seems that you are suggesting...we would not catch that change in the system until it's too late...ie...until we've lost a lot of pips each 3 months as it evolves....

I'm just back back testing in order to reveal the consistency of such a system....

I may be all wet here...but that's my 2 cents anyway...please feel free to critique my approach to this system...

Greg
  • #790
  • Nov 2, 2008 12:27am Nov 2, 2008 12:27am
Quoting batesmotel
Hi Stering:

To some degree, I agree with you ...but as my mentor urged me...\"back test, back test and back test again\". If we didn't back test how would we know the system works or doesn't work?

We can give more weight to the last 6 months...that's for sure....but the basics should be consistent from year to year. If your system changed every 3 months as it seems that you are suggesting...we would not catch that change in the system until it's too late...ie...until we've lost a lot of pips each 3 months as it evolves....

I'm just back testing in order to reveal the consistency of such a system....

I may be all wet here...but that's my 2 cents anyway...please feel free to critique my...
No i definatly think your right about the backtesting. I think you definatly have to backtest. Im just saying that given how much the market has changed you should definatly put more into the last year than the last 3 years. Having said that this system has as ive said many times before, it has its base in support/resistance which works in every market, it always has and it always will. The base of this system, the way you enter and exit will never need to be changed. Smaller parts to the system such as timeframe made need to be changed tho. As I said before I appreciate the effort your putting into this system, just dont get to cought up in what it did 2 years ago. It looks like its still profitable 2 years ago...very profitable, so thats good to know.

-Sterling
Founder of Day Trading Forex Live
  • #791
  • Nov 2, 2008 6:25am Nov 2, 2008 6:25am
Hi Sterling:

Can you take a look at this long trade at 1.9597? This is a messy trade and it doesn't seem clear to me where I would close the long and go short...

If u can enlighten me on this one...it would clear up a lot of confusion....thanks

Greg
Attached Image (click to enlarge)
Click to Enlarge Name: messy setup.gif Size: 20 KB
  • #792
  • Nov 2, 2008 7:36am Nov 2, 2008 7:36am
Quoting stersuhr
Hey Howard if your around could you post a 8H chart, im on my cousins computer right now and dont have access to a 8H to answer the previous questions. If you could do that thank you, if not ill answer it when I get home.

-Sterling
Chart attached
Because it is an 8 hour time frame I try not to exit on close of Friday as per new rules but carry on as it is

Green line shows entry no 2 and red line is the latest stop
Attached Image
Regards
  • #793
  • Nov 2, 2008 7:41am Nov 2, 2008 7:41am
Quoting forex888
Trade no 2
Why you did not put a sell stop at 1.6415 to follow the rule? The lowest price for this candle was 1.6423, plus -5 pips and broker pips spread total 1.6415 count based on lower high reversal bar. Am I right?
Is your chart the same as mine as posted above or is it with a different starting time? If you post your chart I will be able to check it against mine

I do not see any low of 1.6423 on any candle.
Regards
  • #794
  • Nov 2, 2008 7:48am Nov 2, 2008 7:48am
Quoting batesmotel
Hi Sterling:

Can you take a look at this long trade at 1.9597? This is a messy trade and it doesn't seem clear to me where I would close the long and go short...

If u can enlighten me on this one...it would clear up a lot of confusion....thanks

Greg
Hi Greg,
I'm sure Sterling can give the most correct answer but here is a chart I drew up how I think that trade would play out,
To me I think you have the initial buy in the wrong place, it should be 5+ spread above the previous candle at 1.9584.
Given the entry is there, and since then you had no triggered sell setups in the mean time, you follow the 50% stop out rule, the trade went +150 pips max profit at the highest high, so you place a stop at 75pips back from there- so you would have got stopped out +75 pips somewhere in the middle, Looks like you would miss out on the sell then as there are literally no sell setups I can see...... but you would get back in on the next buy for the run up.

Paul
Attached Image (click to enlarge)
Click to Enlarge Name: gbpsetup3.gif Size: 14 KB
  • #795
  • Nov 2, 2008 8:18am Nov 2, 2008 8:18am
Quoting viperzz
Hi Greg,
I'm sure Sterling can give the most correct answer but here is a chart I drew up how I think that trade would play out,
To me I think you have the initial buy in the wrong place, it should be 5+ spread above the previous candle at 1.9584.
Given the entry is there, and since then you had no triggered sell setups in the mean time, you follow the 50% stop out rule, the trade went...
Thanks Paul...that clears up this grey area for me. 1 question though...isn't the bar that I had as setup bar the lowest low...thus making it the setup bar?

Greg
  • #796
  • Nov 2, 2008 8:34am Nov 2, 2008 8:34am
Quoting batesmotel
Thanks Paul...that clears up this grey area for me. 1 question though...isn't the bar that I had as setup bar the lowest low...thus making it the setup bar?

Greg
Greg, you would have already been in a sell trade previously and put your buy stop and SL 5 pips above the bar before that lowest low once it completed( where I marked entry), then even though the next bar was a lower low as you say, it also went up higher than the previous at some point and would have triggered that buy stop in the process, this is assuming it went to the lower low first and then gone higher and hit and entered the buy, if it was the other way (went up first then down) it would have got stopped out then and there- Unfortunately we can't tell which way it went first, my IBFX doesn't have smaller time frame data back that far to check for sure, I guess I'm just assuming the bar formed the way it did- It looks probable it happened like that anyway
  • #797
  • Nov 2, 2008 8:40am Nov 2, 2008 8:40am
Quoting viperzz
Greg, you would have already been in a sell trade previously and put your buy stop and SL 5 pips above the bar before that lowest low once it completed( where I marked entry), then even though the next bar was a lower low as you say, it also went up higher than the previous at some point and would have triggered that buy stop in the process, this is assuming it went to the lower low first and then gone higher and hit and entered the buy, if it was the other way (went up first then down) it would have got stopped out then and there- Unfortunately we can't tell which way it went first, my IBFX doesn't have smaller time frame data back that far to check for sure, I guess I'm just assuming the bar...

ok...thanks....for whatever reason I have the data that far back and I use the same broker as you...it did go lower first before heading up...but I see what you mean...if I wasn't at the computer, the failed setup bar would have been triggered....so I would have to adjust the SL and entry on backtest data....but everything else would be almost the same....thanks for explaining that to me...

Greg
  • #798
  • Nov 2, 2008 9:11am Nov 2, 2008 9:11am
Hi Sterling and others,

After about 2 wks of demo trading the 5EMA I intend to start trading it on a live account from 3rd of Nov. following every rules. and keeping the record of all the trades I take, right through to the end of Nov. to see what happens.

I only have an account of 2k so STERLING I need advice on the following:

what size should I start with?
at what stage should I increase the size? e.g weekly...
and what should be the increase ? eg 0.01 to 0.02 ...

I would really need this and more cos I have finally decided to stick to this system

We all know that there is difference between demoing and live trading

thanks
John 3:16 - From THIS love no power on earth can me sever.
  • #799
  • Nov 2, 2008 9:49am Nov 2, 2008 9:49am
Hi, thanks for sharing your system...

I just want to ask regarding your first chart (post#2) and the explanation given in post#6.

Your chart (I've marked candle that confuse me):

http://img393.imageshack.us/img393/9198/chartux6.jpg

You said you enter trade in no.2, and regarding to your rules:

1.) Price must go above/below the 5EMA by 5 pips for it to be considered a setup bar. If price breaks the lower EMA you only look for longs and if price breaks the high EMA you only look for short entries. Price must touch one or the other not both, if it touches both EMS’s it cannot be used for a setup bar.

isn't the candle that i circled in green is the most appropriate setup bar? As it breaks the lower EMA by 5 pips and touch lower 5 EMA? And the reversal bar will be the following bar, as it breaks the setup bar by 5 pips.

I am confused why would your setup bar be the candle that i circled in blue light-blue instead?

Thanks for some explanations!
  • #800
  • Nov 2, 2008 12:18pm Nov 2, 2008 12:18pm
Hey Ivon -

The green circled bar from 9/25 20:00 does not actualy touch the 5EMA Close. You can't tell from the posted picture but if you go to the actual chart you can see it. At least you can on my Alpari US Demo.
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