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4H 5EMA System

  • #1,061
  • Nov 13, 2008 9:38am Nov 13, 2008 9:38am
Quoting tonirai
We only take profit when we have a signal to enter the opposite way (or if we get stopped in profit)...

Do you understand the concept of the setup bar?
If you are short and have a setup bar to go long:
If its high is broken by 5 pips+spread, it's a sign to enter in the opposite trade, so we get stopped from the previous short there, and enter long there, also.

You'll have an example of the current situation in my next post.
Understand this:For Example
You have a setup Bar it broke through the top 5 ema.
When the next bar opens which is your Reverse Bar you put your
Sell stop at the bottom of your Setup Bar and StopLoss at the top.
Now lets say your Reverse bar takes out your Sell stop and your in the trade.
Lets say that it made +30 pips on that Reverse bar, when do you take your
Profit or Exit, because your next Bar can get you in negative and you lost
your +30 pips. Thanks
My Email For Help: [email protected]
  • #1,062
  • Nov 13, 2008 9:45am Nov 13, 2008 9:45am
Quoting tcmm
I understand this:For Example
You have a setup Bar it broke through the top 5 ema.
When the next bar opens which is your Reverse Bar you put your
Sell stop at the bottom of your Setup Bar and StopLoss at the top.
Now lets say your Reverse bar takes out your Sell stop and your in the trade.
Lets say that it made +30 pips on that Reverse bar, when do you take your
Profit or Exit, because your next Bar can get you in negative and you lost
your +30 pips. Thanks
You only exit that trade when you'll have a new setup bar to go long, or if it takes out your stop;
Even if that trade goes 100 pips positive, you don't book them.
If it will reverse to your stop, you take a loss.

Read carefully the rules, it's well explained.
  • #1,063
  • Nov 13, 2008 10:41am Nov 13, 2008 10:41am
Quoting tonirai
You only exit that trade when you'll have a new setup bar to go long, or if it takes out your stop;
Even if that trade goes 100 pips positive, you don't book them.
If it will reverse to your stop, you take a loss.

Read carefully the rules, it's well explained.
Can work on Daily, less time on computer, you would do your changes every day at 5.00pm est. when the bar opens a few minutes and your done til the next day. Right
My Email For Help: [email protected]
  • #1,064
  • Nov 13, 2008 10:57am Nov 13, 2008 10:57am
In theory, yes, it could, but it's a question of backtesting it a bit...
Sterling might have better feedback to that.
  • #1,065
  • Nov 13, 2008 11:35am Nov 13, 2008 11:35am
Quoting tcmm
Can work on Daily, less time on computer, you would do your changes every day at 5.00pm est. when the bar opens a few minutes and your done til the next day. Right
That's right, Sterling has decided that the 4 hour time frame gives the best balance between time at the computer, profit and drawdown. If you are on a one day timeframe, your stop loss levels will get quite interesting!
Some of the users (check out Howard's posts) are testing the 8 hr timeframe.
You don't have to be right, just don't be too wrong
  • #1,066
  • Nov 13, 2008 12:04pm Nov 13, 2008 12:04pm
Quoting El Dee
...If you are on a one day timeframe, your stop loss levels will get quite interesting!
Some of the users (check out Howard's posts) are testing the 8 hr timeframe.
Yes, specially in this volatility
I think I also read here somewhere about users using it in lower timeframes also, and even in scalping at openings of certain markets (wonder where I read that, would like to know how they're doing?)
  • #1,067
  • Nov 13, 2008 12:32pm Nov 13, 2008 12:32pm
Yes, a user suggested scalping in 5 mins - Sterling strongly advised against!
You don't have to be right, just don't be too wrong
  • #1,068
  • Edited 3:28pm Nov 13, 2008 3:03pm | Edited 3:28pm
Just a heads up:
Our setup bar has been triggered, so we've just entered long with a buy at 1.4865, with SL placed at 1.4577.
This last short made +476 pips.

edit:
according to rule 2 of additional rules, we must move the SL to 5 pips below the low of the current bar, because it made a lower low first, and then triggered the buy, so we will use this bar as if it is a setup bar;

But since the system requires intervention only every 4 hours, I assume for now we let the stop where it is (at the low of the setup bar), and when the current bar will close, we will then move it to the low of the current reversal bar (as if it is a new setup bar).

Is this correct, Sterling? Or someone else?
  • #1,069
  • Nov 13, 2008 3:53pm Nov 13, 2008 3:53pm
A question:
In the case of getting stopped at the entry bar - the reversal bar (and having to reverse only when the bar will close), in this case the entry price will be a little discretionary, won't it?

Example:
We were short with a proper setup bar, and stop and buy stop placed accordingly;
We arrive at the computer 5 min before the bar close;
We realise our buy was triggered, but the bar reversed to the lows and was stopped - so we are out of the market;
Now we have to open a short reverse at the new bar's open - but the price is moving and we don't have a specific value to enter...
  • #1,070
  • Nov 13, 2008 3:56pm Nov 13, 2008 3:56pm
Quoting tonirai
Just a heads up:
Our setup bar has been triggered, so we've just entered long with a buy at 1.4865, with SL placed at 1.4577.
This last short made +476 pips.

edit:
according to rule 2 of additional rules, we must move the SL to 5 pips below the low of the current bar, because it made a lower low first, and then triggered the buy, so we will use this bar as if it is a setup bar;

But since the system requires intervention only every 4 hours, I assume for now we let the stop where it is (at the low of the setup bar), and when...
Good question, I assume we just left the stop where it is and also put the reversal order there when this current candle finishes,
Sterling please confirm what would happen here?
  • #1,071
  • Nov 13, 2008 4:06pm Nov 13, 2008 4:06pm
Quoting howard
Hi sterling

I was under the impression that you would close the position on Friday at the closing price which you did, and then wait for a new setup bar on Sunday evening to enter a new trade; if this was the case the 1st blue bar of your chart on Sunday evening should be the 1st setup bar and going short from there without first going long and then reversing to short.

Is this not correct?
Your right that bar was a setup bar to go short but the bar that closed the Friday session was a setup bar to go long so when market gapped above that bar we bought at open and then went short after we had a proper setup bar and reversal bar.

-Sterling
Founder of Day Trading Forex Live
  • #1,072
  • Nov 13, 2008 4:10pm Nov 13, 2008 4:10pm
Quoting amari
Hi Sterling,

I'm new to forex and would just like to express my thanks to you.

After trawling through the forums, this is the best system to base my future trading on, I have come across. It suits my timeframe and I like the fact it is totally mechanical. The system is fairly simple to understand and you have put a lot of work into this thread; keep up the great work.

My question to you concerns akukaya's system which was a result of your challenge to come up with a more profitable mechanical system. Would you consider using this type of...
The worst drawdown I have had in the last 2 years was 600 pips which is rather high. But let me put it to you another way. Say this system averages just +500 pips a month, it really averages more. 500 pips times 24 months (2 years) equals 12,000 pips or $120,000 per standard lot. Ill rick $6,000 at any given time to have a long term equity curve like that. Just my opinion tho. If you stick to the MM of no more than 1 standard lot per $20,000 in your account youll be fine.

-Sterling
Founder of Day Trading Forex Live
  • #1,073
  • Nov 13, 2008 4:14pm Nov 13, 2008 4:14pm
Quoting tonirai
A question:
In the case of getting stopped at the entry bar - the reversal bar (and having to reverse only when the bar will close), in this case the entry price will be a little discretionary, won't it?

Example:
We were short with a proper setup bar, and stop and buy stop placed accordingly;
We arrive at the computer 5 min before the bar close;
We realise our buy was triggered, but the bar reversed to the lows and was stopped - so we are out of the market;
Now we have to open a short reverse at the new bar's open - but the price is moving and...
Glad you asked that question. The current setup bar made a lower low right. So now we put the stop below that bar...ive mentioned this before as well. So if the stop for the buy order is there then that is where the reversal order is as well. If you ever think to yourself that a trade placement is left to a personal decision then your applying the rules wrong. This may not be written in the rules but ive said it many times. If it isnt I will add it to avoid further confusion.

Also I would like to thank you very much for answering questions when im not here it is very much appreciated. I never thought this thread would get a following this big and its hard for me to answer all the questions all the time. I want every question to be answered so if I skip your question more than twice PM me and I will get it for sure then. Again thank you Tonirai for answering questions and everyone else who does it as well there are a lot of you that do and its much appreciated.

-Sterling
Founder of Day Trading Forex Live
  • #1,074
  • Nov 13, 2008 4:19pm Nov 13, 2008 4:19pm
Daily chart is coming up in a bit. Im gonna do it from Hiranya's house (eric) so Ill answer other questions and get that out within an hour.

-Sterling
Founder of Day Trading Forex Live
  • #1,075
  • Nov 13, 2008 4:31pm Nov 13, 2008 4:31pm
Quoting stersuhr
The current setup bar made a lower low right. So now we put the stop below that bar...
So if the stop for the buy order is there then that is where the reversal order is as well.
Yes and no :
If we didn't come to the computer since this bar's open (we're supposed not to), we still don't know it made a lower low;
So the stop is still where it was, and we still don't have a reversal order placed;
We will only realize this in a while

Quoting stersuhr
Also I would like to thank you very much for answering questions when im not here it is very much appreciated. I never thought this thread would get a following this big and its hard for me to answer all the questions all the time. I want every question to be answered so if I skip your question more than twice PM me and I will get it for sure then. Again thank you Tonirai for answering questions and everyone else who does it as well there are a lot of you that do and its much appreciated.

-Sterling
I'm the one who thanks you for this wonderfull thread!
Helping is the least we can do
  • #1,076
  • Nov 13, 2008 4:39pm Nov 13, 2008 4:39pm
Hey Tonirai,
Have a look at Sterlings post #2 on the first page of this thread
http://www.forexfactory.com/showpost.php?p=2259196&postcount=2

he posted a chart, trade number 7 on that chart has this very situation where we get stopped out the same bar before we get to place a reversal,
Sterling explains there that we then just sit out of the market completely until a new valid setup bar is made, which would only have to pass the EMA buy 5 pips. We do not place another reversal under the new low.

At post number #7 first page he explains what happened to the trade in the pic.
  • #1,077
  • Nov 13, 2008 5:02pm Nov 13, 2008 5:02pm
Quoting viperzz
Hey Tonirai,
Have a look at Sterlings post #2 on the first page of this thread
http://www.forexfactory.com/showpost.php?p=2259196&postcount=2

he posted a chart, trade number 7 on that chart has this very situation where we get stopped out the same bar before we get to place a reversal,
Sterling explains there that we then just sit out of the market completely until a new valid setup bar is made, which would only have to pass the EMA buy 5 pips. We do not place another reversal under the new low.

At post number #7 first page he explains...
OK, thanks a lot, I get it now... didn't memorize that special case. It is now
So in that case we would sit and wait for a new setup bar.

Sterling, maybe it's worth to post that rule in the additional rules?


edit/status:
New bar openned, so SL and reversal (sell stop) go to the previous bar's low, at 1.4552.
  • #1,078
  • Nov 13, 2008 5:23pm Nov 13, 2008 5:23pm
Quoting tonirai
OK, thanks a lot, I get it now... didn't memorize that special case. It is now
So in that case we would sit and wait for a new setup bar.

Sterling, maybe it's worth to post that rule in the additional rules?


edit/status:
New bar openned, so SL and reversal (sell stop) go to the previous bar's low, at 1.4552.
Sometimes it seems a shame to sit out of the reversal then if stop is hit before close, as you can miss a big move, but that is the rules and it seems it saves you more than often.


If the case of the current trade, where are you putting your SL on the reverse sell now, must be still above the original setup high? I'm not sure Sterling actually clarified this exactly- will see when he posts new chart soon. For now I'm leaving my stop and reverse on the original setup.
  • #1,079
  • Nov 13, 2008 5:44pm Nov 13, 2008 5:44pm
Quoting viperzz
Sometimes it seems a shame to sit out of the reversal then if stop is hit before close, as you can miss a big move, but that is the rules and it seems it saves you more than often.
Yes, indeed... but I don't know if it's that way because it saves you more than often, or simply because it was a requirement to made it a "look only once every 4 hours" system...

I think that is the kind of details that, if a proper EA will come out, could be evaluated, by making other versions of the EA with those little changes, and compare them.
(Because an EA exists to trade without human intervention, so the only reason to be out of a trade would be if it proves to be more profitable.)

Quoting viperzz
If the case of the current trade, where are you putting your SL on the reverse sell now, must be still above the original setup high? I'm not sure Sterling actually clarified this exactly- will see when he posts new chart soon. For now I'm leaving my stop and reverse on the original setup.
According to what I understood, it now goes to the high of the reversal bar (which activated our long) -> 1.4906.
I think I read that in the rules... will edit in a moment if I find it.



edit:
Initial stop placement, rule 3;
It isn't exactly for this case, but I think the reasonning is the same.
Sterling, confirm if that is so.
  • #1,080
  • Nov 13, 2008 6:39pm Nov 13, 2008 6:39pm
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...
Sterling, I would appreciate it if you could give an answer to my question above - I guess what I am asking is would an EA place a reverse stop order as soon as an order was triggered or would it wait for the candle to close?
You don't have to be right, just don't be too wrong
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