4H 5EMA System

Eh this system doesn't use a set stop loss and therefore the risk obviously changes. This system seems to always turn profit eventually, so by trading 1 lot per 20K you're just leaving yourself plenty of "buffer" room for any drawdown. If you're worried about it just do a calculation of your account size and stop loss distance vs. risk percent you allow, and then figure out how many microlots it would be and trade that.

Yeah 1 standard lot per 20K in your account is plunty. AS Ive said before the worst drawdown ive seen if you would have started on the worst possable day was 600 pips. That a 6K drawdown on a 20K account which to some is a lot but for me thats safe enough.

-Sterling

What was the highest consistent number of losses recorded in your back testing, including total pip count?

I dont have the # of trades in a row that were losers I just remember the highest pip drawdown was like 576 so I just say 600. That was the worst in 2 years.

-Sterling

Sorry Ive been slacking a bit on the charts, I was getting burned out a bit. Here is the chart that brings us current. We are up +595 for the month and have a short going right now that is well in profit.

Trade #16 +298 pips

Trade #17 -118 pips

Trade #18 -141 pips

Trade #19 -39 pips

Trade #20 +26 pips

Trade #21 pending short position

Good month going so far hopefully it end up the same. We are well in profit on the short and as I said have a closed total pip count for the month of +595. Hope you guys are making some money.

-Sterling

Long position was stopped out at 1.4943 (-157 pips). The Sell Stop triggered and we are now short from 1.4943, SL is 1.5255 which is 8 pips above the high of the Setup Bar (arrowed). The Reversal Bar closed about 15 mins ago and a Buy Stop is now in place at 1.5255, SL is 1.4911, being 5 pips below the low of the Reversal Bar.

Do you have a pip count for the 8H for this month. Im scalping right now and dont have time to go back.

-Sterling

The narrow ranges of recent times have wreaked havoc with the 8hr so far this month. The pip count is -977 at this point, not including the current sell trade which is positive at the moment.

Hi stersuhr

I followed this thread at the beginning, but after not being able to follow the 4hr regime given to time constraints I gave up your system.

Recently however I have begun to use the same system with the same rules in a daily chart. I must say it is working great! so far. It is giving me consistently profitable trades and of course I only need to be at my computer once a day.

The purpose of my message is to give you a big thanks for sharing your system that has no doubt taken a lot of your time and hard work to devise.

Once again thanks, I will continue to trial this system and I am hoping that I will be trading live soon.

Cheers
Ezzy

Thanks for starting

It does actually look pretty good on Daily, might test it myself.

Vipe,

Unfortunately I don't have the time to look at the computer every 4hrs, that's why I am looking at the daily.

It's been good to me so far.

Hey Sterling & everyone

To me its laughable the way those of you who talk about changing the rules to try and improve your pip count. I was taught to never let a winner become a loser. I stick to that rule. However that does not apply to a purely mechanical system. Mechanics are the only thing that apply here.

When I first started reading this thread almost a month ago what mostly interested me was the simplicity, the fact your in on all the big moves, and the fact that most of the traders out there watch the 4hr chart. I dont post much because I dont follow the rules to a tee. However I do NOT have a set # of pips to take profit either. What I do use are other methods fo support and resistance. And yes it has worked out well.

Now having said that I should direct you to my last post that says the purpose of this system.

The purpose of the system is to take the human element out of your trades. To keep you in profit while you learn the markets. If you think you can change a rule and make it more profitable you are wrong. The only thing that can make it more profitable is you. At the same time you could easily kill all your profits also. And then you are not trading the system.

So if you can use other means of support and resistance to make it more profitable for you thats great. Just realise you are not gonna make a rule that fits that scenario because you cant. We all know that support and resistance changes. No rule can adjust for that change.

Im sure Im just 1 of many that read this thread that appreciate all the effort Sterling has put into this. This is the best mechanical system I have seen. It has drawdowns as all trend following systems do. The good thing is that you are in for all the big moves. Which is what makes it profitable.

Also Sterling has done the research that shows that the most profitable pair is the G/U. I thaught that was clear in the rules. DONT trade this system on other pairs. WHY?
Because other pairs have more of what kills a trend following system. Consolidation/distribution.

What kind of bonehead breaks that rule and then has the balls to post his losers on the thread? What a dope.

Anyway I hope this clears up anything on the changing of the rules crap.

I do agree that they could be reworded to make them clearer.

Sterling, you have been great about answering all the questions that arise. But for new comers clarity on the rules would be a plus and may ease your load a bit.

Good trading all

Chad

Do you have any performance details for say a month or two? That would be very helpful

Bone in the head or head in the bone? That is the question.

I just think this is a very good system. And I also think that with some added filters, ie do we trend or not trend, can work on other stuff as well. I am researching. I am thinking about simple stuff. 200ema OR rsi OR adx OR whatever.

The whatever indicator is the best I think.

2.) Example: A proper long setup bar forms and you place your buy stop and stop loss. The next bar makes a lower low and then triggers the buy stop, in that order...where does the stop go now? The stop would go 5 pips below the low of the reversal bar. Essentially the reversal bar is also the setup bar. This is a very rare case but it does happen, and thus we need a rule for it. This happens because we do not watch the market 24/7 only a brief glance every 4 hours once you understand the system.

Hi Sterling and everyone,

I am referring to the above rule. But what happens in the opposite scenario, that is, a proper long set up bar forms and you place your buy stop and stop loss. Buy is triggered first then stop lost is triggered all in the same bar. In the above situation, it is the stop is hit and followed by the triggering of the buy. Do we go the opposite direction once we are stopped out (after the buy has been initated first) or do we wait for the next valid set up. I would think that we do a sell which is in the opposite direction cos the general rules say that we have to go the opposite direction when we are stopped out. The only difference here is that we are stopped out in the same bar as the bar which initially triggered our buy trade. Kindly clarify thanks.

Anyway tell about the whatever in case you came across it

"2.) If you get stopped out you then reverse the trade. If you are long and get stopped out you enter short when you get stopped out. So not only do you have your stop in the market but you also have your order to change the direction of the trade should you get stopped out. Only put a trade to go the other direction in the market after a proper reversal bar closes."

Hi guys,
1 more doubt to clarify regarding the above rule. We put a trade to go the other direction only after a proper reversal bar closes because we dont want this trade to trigger even before the initial buy and stop loss? Is this correct or is there any other reason? Thanks for all your help!

Hi Piptrees - If you're stopped out before the reversal bar closes you must wait for a new setup bar - not go straight back in.

And yes again - the market can go further down before it goes up so the orders could be trigerred in the wrong order.

I've not seen any reason other than this, and that we only look at the chart every 4 hours but if the market has moved that far up and down in one period it could suggest instability / whipsaws which we don't want to be in!

A quick question to anyone that will help. Please take a look at the attached chart and let me know if I would use bar #1 for my setup bar or bar # 2? Keep in-mind that this would be the first trade. The reason I ask is bar #2 is lower than bar #1.

TimeFreedom