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4H 5EMA System

  • #1,021
  • Nov 12, 2008 12:57pm Nov 12, 2008 12:57pm
Sterling - great thread, I'm in awe of your committment to it, your patience and generosity.

A question regarding the reversal bar. You state earlier that the stop reverse order is not placed on the reversal bar until it has closed and in an even earlier post you state that this is in case they are triggerred in the wrong order; if you are watching the bar and you see your order triggerred, what is to stop you then putting a reversal at your stop loss (providing, of course, that this order isn't the result of a stop loss reversal)?
It looks to me as thought there is a serious risk of missing a big move if the SL is broken and the price then keeps on moving - like today.
Also - when backtesting, it would be very difficult to see whether a position is reversed or left flat in these instances.
I know this would not be possible when a position is opened thru the night but during the day I can't see where the downside would be?
Any thoughts?
You don't have to be right, just don't be too wrong
  • #1,022
  • Nov 12, 2008 1:45pm Nov 12, 2008 1:45pm
Quoting stersuhr
You would have been taken out before the big move down anyway. There was a buy setup bar and then the second bar triggered the buy and stopped us out in the same bar. Since this happened during the same bar we didnt have a reversal trade in and are therefore flat on the G/U right now. As I said before also other 4H close times may have stayed in and cought the ride down.

-Sterling
Hi Sterling,
I thought I got the rules right - In the attached chart the blue bar (Up-arrow) is a proper setup bar for a long, right?
The long trade is triggered 2 bars later (Down arrow).
But instantely the SL - AND REVERSAL ORDER - is set below the blue bar.
So the stoploss is hit, but at the same time the short is initiated.
If I got it wrong, we may consider a change of the rules http://www.forexfactory.com/images/icons/icon12.gif
Thanks for sharing this system - it's also profitable scalping 5M-timeframe.
Finn
Attached Image
  • #1,023
  • Nov 12, 2008 1:57pm Nov 12, 2008 1:57pm
Quoting El Dee
Sterling - great thread, I'm in awe of your committment to it, your patience and generosity.

A question regarding the reversal bar. You state earlier that the stop reverse order is not placed on the reversal bar until it has closed and in an even earlier post you state that this is in case they are triggerred in the wrong order; if you are watching the bar and you see your order triggerred, what is to stop you then putting a reversal at your stop loss (providing, of course, that this order isn't the result of a stop loss reversal)?
It looks to me as thought there is a serious risk of missing a big move if the SL is broken and the price then keeps on moving - like today.
Also - when backtesting,...
Hello to all,
I've been following this thread since last weekend only, but I have taken the time to read it all, and re-read it when I had doubts, to assimilate all the methodology. So until now I hadn't major doubts worth posting, except maybe regarding to the different Alpari closing times:
I'm in Europe, at GMT; my Alpari UK is GMT+1, so my candles close at 3, 7, 11... GMT, which corresponde with 4, 8, 12... from Alpari UK;
I'm still not sure who's posting with my closing time

El Dee, I think nothing stops you from doing that (if you are following it live), but the thing is this system was build to require intervention every 4 hours only... so by the rules, we shouldn't do that.

About the backtesting, if you do it manually it is impossible to know by looking at the 4H candles, but can be done by switching to smaller timeframes... but hard and time consuming, yes.

If a correct EA (by the rules) will be released, this backtest will then be possible.
  • #1,024
  • Nov 12, 2008 2:12pm Nov 12, 2008 2:12pm
Quoting finnsol
Hi Sterling,
I thought I got the rules right - In the attached chart the blue bar (Up-arrow) is a proper setup bar for a long, right?
Yes;
Quoting finnsol
The long trade is triggered 2 bars later (Down arrow).
Wrong; The long trade is triggered at the next bar;
The blue candle has a high of 1.5461, so the buy stop was placed at 1.5469 (high+5+spread);
The next candle made an high of 1.5467... but that's the bid price - at that point, the ask price (where you buy) was at 1.5470, so it triggered the order.
Quoting finnsol
But instantely the SL - AND REVERSAL ORDER - is set below the blue bar.
Yes;
Quoting finnsol
So the stoploss is hit, but at the same time the short is initiated.
Yes.

Someone correct me if I'm wrong.
  • #1,025
  • Nov 12, 2008 2:56pm Nov 12, 2008 2:56pm
Hi Toni,
thanks for responding - I don't think you are right in your correction.
Funny so difficult the bid/ask issue seems to be.
the high of my blue bar is 5462 - the next candle (Doji) has a high that says 5466. We are talking bidprices, right?
The second bar after the setupbar hits 5467 (bid) - so long is triggered and the price I pay is 5467+3=5470.
I wish everybody would stick to bidprices when talking priceaction.
When going long you always pay the spread (+3).
When going short you just get the bidprice.
Anyway it's less important if the long was triggered at the 1. or 2. bar.
The stoploss (and reversal) was latent at both bars.
Finn
  • #1,026
  • Nov 12, 2008 4:12pm Nov 12, 2008 4:12pm
Just some advice for people beginning this system...

Don't worry too much about what time your candles close. If you like your broker and charting package there's no reason to switch just for different candle times, generally it all evens out. For example while Sterling was (is) up about 400 pips for the month I was only up around 75 because the way my candles closed stopped me out of a few trades. However, my candles caught the big move down and now I'm also up around 400 pips for the month so over time everything will smooth out.

Also, a lot of you will be tempted to sit out some trades after a losing streak. You absolutely can't do that with this system! Prior to the big move this morning I lost over 300 pips in just a couple of trades which is seriously a bummer. When you see your equity drop that much it's easy to think "I'm on a losing streak, I need to quit for a little while before I lose more". Remember, your probability of winning the next trade is the more or less the same no matter how many trades you lost before. Had I sat out my reversal trade after being stopped out for another 80 pips this morning, I would have been in serious trouble. This system is engineered so that the big wins easily cover a few multiple losses.

One last thing, everything you need to know about the system is in the rules!! It's really an extremely simple system, but because of the way the rules have to be worded it comes off complicated. Reread the rules over and over and over again, slowly, and it will become clear. Almost all questions are answered there, and it'll save both you and Sterling time.

Good luck making pips everyone
  • #1,027
  • Nov 12, 2008 4:30pm Nov 12, 2008 4:30pm
Quoting tlindle
Just some advice for people beginning this system...

Don't worry too much about what time your candles close. If you like your broker and charting package there's no reason to switch just for different candle times, generally it all evens out. For example while Sterling was (is) up about 400 pips for the month I was only up around 75 because the way my candles closed stopped me out of a few trades. However, my candles caught the big move down and now I'm also up around 400 pips for the month so over time everything will smooth out.

Also, a lot of you will be tempted to sit out some trades after a losing streak. You absolutely can't do that with this system! Prior to the big move this morning...
Very well put tlindle - it always staggers me how many wish to change a system which is obviously very profitable and simple - it requires nothing more than following a basic set of rules -that's it!
  • #1,028
  • Nov 12, 2008 5:02pm Nov 12, 2008 5:02pm
Quoting finnsol
Hi Toni,
thanks for responding - I don't think you are right in your correction.
Funny so difficult the bid/ask issue seems to be.
the high of my blue bar is 5462 - the next candle (Doji) has a high that says 5466. We are talking bidprices, right?
The second bar after the setupbar hits 5467 (bid) - so long is triggered and the price I pay is 5467+3=5470.
I wish everybody would stick to bidprices when talking priceaction.
When going long you always pay the spread (+3).
When going short you just get the bidprice.
Anyway it's less important if the long was triggered at the 1. or 2. bar.
The stoploss (and reversal) was latent at both bars.
Finn
Ah... OK, so we're both right!
It's just that I looked to your chart and it seemed the same as mine, so I thought we had the same values, but we don't.
But, as you said, in this case it didn't make a difference at all.

But I think we can't stop expliciting the spread on buys, specially for the people with less experience, so they won't forget that:
When we have to place a buy stop 5pips above a certain high of, let's say, 1.5500, we can't place it at 1.5500+5=1.5505, we have to place it at 1.5505+spread (this, as you said, is always and only on buys, but we can't forget doing it ).
It's not because we always pay the spread when going long, that is technically "incorrect"... it's because we have a bid based chart.
(The spread is equally divided between the bid and ask prices.)
  • #1,029
  • Nov 12, 2008 7:35pm Nov 12, 2008 7:35pm
Quoting Corre
if i'm not wrong, this system is a "Limit order" one.
When the orders trigger they are already at breakeven, there's no spread :|
Hi Corre, glad to see you here
But I don't follow you on that one...

Yes, it's based on placing stop buys (or sells), which are limit orders;
But what do you mean by "when they're triggered, they're already at breakeven", and "there's no spread"?

First of all, most of times we place the orders well in profit, or in other cases, still in loss... depending on the sign we have (when comes a new setup bar).
We never place orders at breakeven...

And what's that spread story?
  • #1,030
  • Edited 8:28pm Nov 12, 2008 7:46pm | Edited 8:28pm
In my chart, we're short since the stop & reverse situation we've talked about earlier (1.5341 in my case);
This last red candle is our actual setup bar, so we have our stop and buy stop above its high, at 1.4998 (my buy stop has already a stop loss, in case of being triggered, at the lows of the setup candle).

Anyone else has this setup?
Attached Image (click to enlarge)
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  • #1,031
  • Nov 12, 2008 8:31pm Nov 12, 2008 8:31pm
Quoting tonirai
In my chart, we're short since the stop & reverse situation we've talked about earlier (1.5341 in my case);
This last red candle is our actual setup bar, so we have our stop and buy stop above its high, at 1.4998 (my buy stop has already a stop loss, in case of being triggered, at the lows of the setup candle).

Anyone else has this setup?
that's correct.. that's a reversal trade, and you should be around 300 pips positive now..
  • #1,032
  • Nov 12, 2008 8:32pm Nov 12, 2008 8:32pm
I may add that I'm at 30 min from the candle's close, and for now it doesn't qualify for a setup bar;
So if it won't break the high these last 30 min (surely it won't), the next candle will be our second try for a reversal candle (and the orders will stay where they're placed now).
  • #1,033
  • Edited 9:42pm Nov 12, 2008 8:38pm | Edited 9:42pm
Quoting ivonivon
that's correct.. that's a reversal trade, and you should be around 300 pips positive now..
400 pips... and the stop (what really counts) is at 343 pips.
I started practising at the previous trade, which was a loss of 128 pips.

But I won't be able to take every trade... when I'll sleep, and when I'll be at work, I'll be out of practising
  • #1,034
  • Nov 12, 2008 10:06pm Nov 12, 2008 10:06pm
Hi Sterling,
I just want to confirm something about the recent reversal trade, see pic.
The bar with one over it triggered the reversal sell trade after entering a buy as we know. Now I know we don't put a reversal order on a reversal we just have a stoploss.
But in this case candle 1 was also a new setup bar, so when it finished it was correct to a buystop AS WELL as move stoploss above it correct? I was just a little confused at the time as it meant moving the SL for the reversal back further from it's original spot above the doji bar before.

I did this anyway just checking for sure.

Paul
Attached Image (click to enlarge)
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  • #1,035
  • Nov 12, 2008 10:29pm Nov 12, 2008 10:29pm
tonirai,

could you post that news notification indicator. It would be appreciated. Thanks
  • #1,036
  • Nov 12, 2008 11:02pm Nov 12, 2008 11:02pm
If I may try giving a shot at answering that.
Sterling, correct me if I'm wrong:

Quoting viperzz
Hi Sterling,
I just want to confirm something about the recent reversal trade, see pic.
The bar with one over it triggered the reversal sell trade after entering a buy as we know.
Yes;

Quoting viperzz
Now I know we don't put a reversal order on a reversal we just have a stoploss.
Correct, we don't;

Quoting viperzz
But in this case candle 1 was also a new setup bar, so when it finished it was correct to a buystop...
Yes, when finished;

Quoting viperzz
...AS WELL as move stoploss above it correct? I was just a little confused at the time as it meant moving the SL for the reversal back further from it's original spot above the doji bar before.
Now you confused me a bit...
The SL was never above the doji.
When you started the long, it was below the bar before the doji (setup bar that triggered the long);
When you got stopped and reversed (at bar 1), the rules state that, as in this case you come from a SL&reverse situation, the new SL is placed above the high of the bar where you reversed.
  • #1,037
  • Nov 12, 2008 11:07pm Nov 12, 2008 11:07pm
Quoting Pipsnagger
tonirai,

could you post that news notification indicator. It would be appreciated. Thanks
It's the FF news indicator, so it's here somewhere in the forum... but here it goes.
If I remember right, you must tick "allow dll" for it to work.
Attached File(s)
File Type: mq4 FFCal.mq4   46 KB | 321 downloads
  • #1,038
  • Nov 12, 2008 11:12pm Nov 12, 2008 11:12pm
Quoting tonirai
In my chart, we're short since the stop & reverse situation we've talked about earlier (1.5341 in my case);
This last red candle is our actual setup bar, so we have our stop and buy stop above its high, at 1.4998 (my buy stop has already a stop loss, in case of being triggered, at the lows of the setup candle).

Anyone else has this setup?
We were not in on the drop down. The bar that triggered the buy also stopped it out. The rules state that you only enter you reversal order in once the reversal bar closes, so we missed the move down.

-Sterling
Founder of Day Trading Forex Live
  • #1,039
  • Nov 12, 2008 11:16pm Nov 12, 2008 11:16pm
If I have missed any questions in the last few days that still need to be answered please ask them again and I will answer them all. Im back from my trip now and so the daily charts will resume as normal starting with bringing us up to current and that will be in the next post. It will also include the total pip count.

-Sterling
Founder of Day Trading Forex Live
  • #1,040
  • Nov 12, 2008 11:30pm Nov 12, 2008 11:30pm
Quoting stersuhr
We were not in on the drop down. The bar that triggered the buy also stopped it out. The rules state that you only enter you reversal order in once the reversal bar closes, so we missed the move down.

-Sterling
Hi Sterling,

OK, but apparently, I have different values than the rest of you guys (at least you and finnsol);
The high at the setup bar was in my case 1.5461 (finnsol had 1.5462);
The doji was my reversal bar, it made a high of 1.5467 (1.5466 for finnsol);

So in my case, the doji triggered the long (not the next bar) - so it wasn't the same bar for me (doji triggered the buy; next bar stopped it).
So I didn't miss the ride down

Don't know why I have different values than you guys... I'm with a demo Alpari UK, could be for that?
Anyone out there has same values I have?
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