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4H 5EMA System

  • #2,961
  • Feb 3, 2009 12:00pm Feb 3, 2009 12:00pm
Quoting pmn100
The daily system seemed to drastically out perform the 4H system for January. Is this typical for other months? Which of the two systems has proven the better over a back tested period?

Thanks
My backtesting suggests that the 4 hr timeframe out performs the daily but there will be months when the market favours one timeframe over the other.
My back test showed an average of 550/month for 2008 though this was skewed by big figures from August onwards when markets started to get really volatile. Backtesting on 4 hr suggests 600+ / month.
I am prepared to give up a hundred or so pips a month so I don't have to get up at 4am!
When the EA is finished we will be able to obtain some definitive results.
You don't have to be right, just don't be too wrong
  • #2,962
  • Feb 3, 2009 1:08pm Feb 3, 2009 1:08pm
Quoting El Dee
31/12/09 Buy +336
12/01/09 Sell +367
16/01/09 Buy -43
18/01/09 Sell +758
26/01/09 Buy +228
29/01/09 Sell -264
30/01/09 Buy -238
02/02/09 Sell Open
Total excluding open sell: +1144
El Dee,

Thank you for the information and for your written summary of the methods.

Anthony
  • #2,963
  • Edited 1:35pm Feb 3, 2009 1:19pm | Edited 1:35pm
Just want to say....... I admire all who have embraced this method,
who have helped explain and clarify the rules and who been so cordial
in sharing, explaining and coaching.

I have have been on the 'loose' in the forex world for 5 years and
found myself questioning why I keep coming back repeatedly when
the results were more 'losers' than winners. Must be the competitive
nature in me that says.... 'just one more inning, hole, quarter, round,
or trade and I'll always come out on top.'

Still try to understand and adhere to these rules.

This system works even when rules are 'loosely' followed.

Never a 'loser' in life.

Dr. D.
  • #2,964
  • Feb 3, 2009 1:31pm Feb 3, 2009 1:31pm
I wish someone, anyone would 'loosen' their tongue and
comment on 'their' trades even if it seems redundant.

I see we have closed another candle /bar and it made a new
high without retracting and triggering a reverse candle and
sell-stop trade.

I assume that we can then move the S/L up again to below the
most recent closed candle (-5 pips) and also move the sell-stop
up to match.

Still long from 1.4252 (~+160 pips)
S/L moved up to 1.4313
pending sell-stop order repositioned to 1.4313 with its contingent S/L @ 1.4453

Is this what others see?

Dr. D.
  • #2,965
  • Feb 3, 2009 1:47pm Feb 3, 2009 1:47pm
Quoting fourxtrader
I wish someone, anyone would 'loosen' their tongue and
comment on 'their' trades even if it seems redundant.

I see we have closed another candle /bar and it made a new
high without retracting and triggering a reverse candle and
sell-stop trade.

I assume that we can then move the S/L up again to below the
[i][color=blue]most recent closed candle (-5 pips) and also move the sell-stop...
The last closed bar (closed at 7pm GMT) was a setup bar to go short therefore the stop loss for the long and reverse sell entry are placed 5 pips below it, as you have mentioned.

If a higher high is made by the current open bar, the stop loss and sell entry orders will move 5 pips below it when it closes at 11pm GMT as this will be the latest setup bar for short, if not they stay put.
Regards
  • #2,966
  • Feb 3, 2009 1:49pm Feb 3, 2009 1:49pm
Quoting El Dee
My backtesting suggests that the 4 hr timeframe out performs the daily but there will be months when the market favours one timeframe over the other.
My back test showed an average of 550/month for 2008 though this was skewed by big figures from August onwards when markets started to get really volatile. Backtesting on 4 hr suggests 600+ / month.
I am prepared to give up a hundred or so pips a month so I don't have to get up at 4am!
When the EA is finished we will be able to obtain some definitive results.
And even with the 4H method, I'm happy to give up 100 winks of sleep
just to free me from feeling the need to be tethered to the PC 24/5.

For a scalper often using 5 and 15 min charts to then make the conversion
to 4 H charts only is a blessing. I'm amazed at the consistent results.
I believe!!!!!

Dr. D.
  • #2,967
  • Edited 9:17pm Feb 3, 2009 9:09pm | Edited 9:17pm
Since nobody has comment, let's do it (I was busy all day).
Keep in mind that all is analysed at the close of the candle (action taken at the close of...).

See below:
Quoting fourxtrader
HERE GOES:

A - A new long set-up candle forms - a buy-stop is entered 5 pips + the spread above the high of candle A as soon as it closes and a S/L 5 pips below its low
[color=blue][i]B - A valid reverse candle forms triggering a long trade off of the high of A. The S/L simultaneously is placed below candle A. Candle B doesn't not constitute a valid set-up candle since it's high and low each penetrate the high and low 5 EMA lines by more than 5 pips at each end. [color=red]A reverse pending...
Some comments:

First of all, you might notice below that I use two different terms: reversal bar and reverse order:
Reversal bar - the bar that triggers a trade after a setup bar;
Reverse order - the order we place to reverse the trade if we get stopped out (without propper setup).

Sometimes you forget to put a pending reverse order, when the reversal bar closes;
Sometimes you don't place the SL for the pending reverse order; when you place it, you miss the bar where it should depend on;

Observation:
A rule says you don't reverse a reverse trade, meaning that when you get stopped out and reverse (without setup), you don't place another pending reverse order;
But M stopped a short and entered a long - in this case, because M is a setup to a short, at its close we place a pending sell stop. If M wouldn't be above ema by 5 pips, we wouldn't.

EDIT:
I spent over 1h correcting your description inside the "quote", but when I saved the post, all was gone!!
I guess quotes can't be bigger than x.
Maybe I'll try again tomorrow... but anyway, read what I said above and below the quote, I had a lot to correct (some wrong actions, and you forgot some actions to take).
  • #2,968
  • Feb 4, 2009 9:03am Feb 4, 2009 9:03am
Here goes the new correction:

quote fourxtrader:


A - A new long set-up candle forms - a buy-stop is entered 5 pips + the spread above the high of candle A as soon as it closes and a S/L 5 pips below its low
B - A valid reverse candle forms triggering a long trade off of the high of A. The S/L simultaneously is placed below candle A. A pending reverse sell stop is placed below A, with its SL above B. Candle B doesn't not constitute a valid set-up candle since it's high and low each penetrate the high and low 5 EMA lines by more than 5 pips at each end.
C - A new short set-up candle forms. The S/L for the long trade is moved to the lower end of candle C - 5 pips. The pending sell-top order is moved to the same position and a pending S/L for that same order is positioned 5 pips + the spread above the high of candle C.
D - A new short set-up candle forms at the close of candle D and the pending sell-stops and pending S/L's for the sell trade are moved up to the appropriate levels based on the parameters of candle D. So also is the S/L for the continuing long trade moved up to 5 pips below the low of candle D.
E - E candle triggers the reverse sell-stop short trade positioned off of the low of D candle and hits the S/L to close the trade. E candle is a short setup bar, so we place pending sell stop below it, with SL above it.
F - Failed reversal bar, nothing changes.
G - a new set-up candle with higher high - sell stop order moved 5 pips below the low of candle G and its SL above it - no current trade
H - a new set-up candle with higher high - sell stop order moved 5 pips below the low of candle H - S/L pending above its high (no buy stop!)- no current trade
I - candle I becomes a valid reverse candle and triggers a short trade. The S/L remaining above high of candle H with a pending buy-stop order, and its SL below I.
J - no new highs or new lows - short trade continues
K - same - short trade continues based on the sell-stop order off of the low of candle H
L - short trade continues with higher highs approaching the S/L and pending buy-stop order
M - short set-up candle forms with rising price action that triggers S/L on short trade that was initiated in candle I and simultaneously fills buy-stop order from candle H - S/L that was pending for the buy-stop order established below low of candle I is moved up to below the low of candle M which is now a new short set-up candle, along with a pending sell stop, which SL is above M.
N - a new short set-up candle with higher high - long trade continues - S/L and pending sell stop moved up to below the low of candle N; SL for pending sell above N.
O - a new short set-up candle with higher high - long trade continues - S/L moved up again - pending sell-stop order moved with the S/L below candle O; SL for pending sell above O.
P - failed reverse candle - long trade continues - S/L remains below the low of candle O
Q - valid reverse candle triggers the S/L of the previous long trade (from candle M) and a sell-stop order placed below candle O - short trade starts - S/L on the short trade is kept above the set-up candle (candle O), along with a pending buy stop, which SL goes below Q.
R - a new long set-up candle is created as the sell trade continues - S/L and buy-stop pending order moved above the high of candle R; SL for pending buy goes below R.
S - short trade continues - candle S forms a new long set-up candle - S/L is moved to above candle S with the pending buy-stop order; SL for pending buy goes below S.
T - triggers the S/L above candle S and fills buy-stop order and with a lower low forms a new S/L position for the new long trade, where we also put a pending sell stop, which SL is above T.
U - long trade continues as candle U forms a new short set-up candle - S/L in long trade placed below the low of candle U along with the pending sell-stop order; SL for pending sell above U.
V - candle V forms a valid reverse candle triggering the sell-stop order - S/L stays above high of U, along with a pending buy stop, which SL goes below V.
W - short trade continues with no new low or new high
X - short trade continues with candle X forming a new long set-up penetrating the lower 5 EMA - S/L of the short trade moved down to above the high of candle X along with the pending buy-stop order; SL for pending buy below X.
Y - short trade continues with a new low off candle Y and a new long set-up - S/L and pending buy-stop moved down to the high of candle Y; SL for pending buy moved down below Y.
Z - candle Z forms a valid reverse candle triggering the S/L in the short trade and filling the buy-stop order - new long trade initiated - S/L for this long trade is kept below the low of candle Y along with a pending sell-stop order, which SL goes above Z.

The next 3 candles (1, 2, 3) form new short set-up candles as the long trade continues - the S/L is raised with each of these candles along with a pending sell-stop order positioned just below the low of each of the rising candles. SL for pending buy is moved up above each of those candles.
(...)

Dr. D.
  • #2,969
  • Feb 4, 2009 10:19am Feb 4, 2009 10:19am
Anyone care to give the status and parameters of their past
2 or 3 trades including the current from the alpari charts.

I don't dare remark and mislead until I've studied Toni's corrections
thoroughly.

Dr. D.
  • #2,970
  • Feb 4, 2009 10:56am Feb 4, 2009 10:56am
No worries. Keep it up. It tells u where u make mistakes and others may b looking at the same way u r and they need to b corrected. U will get it keep up the hard work.


Quoting fourxtrader
Anyone care to give the status and parameters of their past
2 or 3 trades including the current from the alpari charts.

I don't dare remark and mislead until I've studied Toni's corrections
thoroughly.

Dr. D.
  • #2,971
  • Feb 4, 2009 11:25am Feb 4, 2009 11:25am
Quoting jtmoore007
No worries. Keep it up. It tells u where u make mistakes and others may b looking at the same way u r and they need to b corrected. U will get it keep up the hard work.
Thank you for the encouragement. I will persevere.

My question remains....

Who's willing to give a current trade status according
to the charts and rules?

Why not mention the last several trade parameters?

I'll post a chart with labels.

Thanks,

Dr. D.
  • #2,972
  • Feb 4, 2009 11:30am Feb 4, 2009 11:30am
Quoting fourxtrader
Thank you for the encouragement. I will persevere.

My question remains....

Who's willing to give a current trade status according
to the charts and rules?

Why not mention the last several trade parameters?

I'll post a chart with labels.

Thanks,

Dr. D.
I'm on top of that... give me 10 min to finish.
  • #2,973
  • Feb 4, 2009 11:35am Feb 4, 2009 11:35am
Finally , I had gone through all 198 pages. Phew, it took me days. I would like to thanks all people who had contributed towards this thread and a special thanks to Sterling for his selfless sharing about the system.

I am confident about the system and had started trading it since few days ago.

1 question though, I am using gft and the broker has a candle closing time at GMT 00:00,4,8,12,16,20 . Anyone in the room is sharing the same broker time?
As far as I am concern, the different in timing does not bring much negative towards my trading.

Besides that, how has the daily method been doing lately? I think I have the 4hEMA method inside out but still a bit unclear about the daily one. I will need to go through the document made by El Dee thoroughly (thanks EL Dee for the great work).

I assume everyone who trades the daily system all follow the rules done by EL Dee and Howard, right? I did notice Denver dude is trading with a different rules with sl=tp.

Wish that this method will bring wealth to all and happy trading
Sean.
Discipline is PRIMARY, Method is Secondary.....
  • #2,974
  • Edited 3:32pm Feb 4, 2009 11:57am | Edited 3:32pm
A – Being in a short trade, this bar qualifies as a setup to a long.
SL and buy stop moved down to 1.4199;
SL for pending buy at 1.4085.

B – Has triggered the SL and entered the long.
Made a lower low, so SL moved down to 1.4066;
Place reverse sell stop at that same level, with a SL at the high of this reversal bar, which is 1.4268.

C – Short setup bar:
SL on current buy and sell stop moved up to 1.4238;
SL on pending sell at 1.4401.

D – Reversal bar that trigger the sell.
Pending buy stop placed along with the sell’s SL, at 1.4401;
SL for pending buy at the recent lowest low, which is 1.4221.
Nothing changes on the next bar.

E – Long setup bar:
SL on current sell and buy stop moved down to 1.4298;
SL on pending buy at 1.4196.

F – New setup bar:
SL on current sell and buy stop moved down to 1.4276;
SL on pending buy at 1.4180.

G – Reversal bar that triggers the buy.
The bar is a valid short setup bar, so:
Pending sell stop placed along with the buy’s SL, at 1.4204;
SL for pending sell at 1.4352.

H to I – Successive new setup bars, so:
Buy’s SL and pending sell stop moved to the low of each bar;
SL for pending sell moved to the high of each bar.

J – Reversal bar that trigger the sell.
Pending buy stop placed along with the sell’s SL, at 1.4550;
SL for pending buy at the recent lowest low, which is 1.4355.

K – Doesn’t pierce the ema by 5 pips, so nothing changes, except:
SL for pending buy moved at the recent lowest low, which is 1.4315.

L – Long setup bar:
SL on current sell and buy stop moved down to 1.4351;
SL on pending buy at 1.4179.

M - New setup bar:
SL on current sell and buy stop moved down to 1.4252;
SL on pending buy at 1.4046.

N – Reversal bar that triggers the buy.
Pending sell stop placed along with the buy’s SL, at 1.4046;
SL for pending sell at the recent highest high, which is 1.4304.
Nothing changes until O.

O – Short setup bar:
SL on current buy and sell stop moved up to 1.4172;
SL on pending sell at 1.4354.

P and Q – Successive new setup bars, so:
Buy’s SL and pending sell stop moved to the low of each bar;
SL for pending sell moved to the high of each bar.

R – Reversal bar that trigger the sell.
Pending buy stop placed along with the sell’s SL, at 1.4491;
SL for pending buy at the recent lowest low, which is 1.4355.
Nothing changes until S, except one adjustment in the SL for pending buy, 2 bars after R, to the recent low of 1.4318.

S – This bar triggers a reverse trade without proper setup, triggering the buy stop.
We are not supposed to reverse such a trade (rule “do not reverse a reverse trade”), but this applies only until we get a new setup, which is S itself, so:
SL for the current buy along with a pending sell stop at 1.4344;
SL for the pending sell at 11.4519.

I have a 5 digit broker (I’ve rounded values to 4), so maybe there’s some difference to normal 4 digit broker.
Attached Image (click to enlarge)
Click to Enlarge Name: mt2.gif Size: 32 KB
  • #2,975
  • Feb 4, 2009 12:12pm Feb 4, 2009 12:12pm
Just wanted to welcome you, Dabestone

I'm sorry not being qualified to answer your questions (different broker and not trading daily method), but I'm sure someone will soon.

Enjoy the thread!
  • #2,976
  • Feb 4, 2009 12:36pm Feb 4, 2009 12:36pm
Quoting tonirai
A – Being in a short trade, this bar qualifies as a setup to a long.
SL and buy stop moved down to 1.4199;
SL for pending buy at 1.4085.

B – Has triggered the SL and entered the long.
Made a lower low, so SL moved down to 1.4066;
[size=3][font=Times New Roman]Place reverse sell stop at that same level, with a SL at the high of...
Toni,

This current analysis will help greatly in the training.

Thank you for your efforts.

Dr. D.
  • #2,977
  • Feb 4, 2009 12:36pm Feb 4, 2009 12:36pm
Quoting tonirai
A – Being in a short trade, this bar qualifies as a setup to a long.
SL and buy stop moved down to 1.4199;
SL for pending buy at 1.4085.

B – Has triggered the SL and entered the long.
Made a lower low, so SL moved down to 1.4066;
[size=3][font=Times New Roman]Place reverse sell stop at that same level, with a SL at the high of...
As usual, very helpful.. Thanks Toni
Discipline is PRIMARY, Method is Secondary.....
  • #2,978
  • Feb 4, 2009 1:10pm Feb 4, 2009 1:10pm
Quoting Dabestone
As usual, very helpful.. Thanks Toni
Welcome Dabestone and well done for reading the whole thread - it becomes a bigger task eavery day but it will serve you well!
Daily was doing great in Jan - taken a pounding in the last few days but it looks as though the price broke through a line of resistance today which hopefully gives us some clear water now
To answer your question - I trade it exactly to the 'Daily' rules (i.e. incorporating a number of tweaks).
4 hr is generally accepted to be more profitable and you couldn't ask for a better mentor than Tonirai on that timeframe!
You don't have to be right, just don't be too wrong
  • #2,979
  • Feb 4, 2009 1:13pm Feb 4, 2009 1:13pm
Quoting tonirai
A – Being in a short trade, this bar qualifies as a setup to a long.
SL and buy stop moved down to 1.4199;
SL for pending buy at 1.4085.

B – Has triggered the SL and entered the long.
Made a lower low, so SL moved down to 1.4066;
[size=3][font=Times New Roman]Place reverse sell stop at that same level, with a SL at the high of...
Tonirai - Wow!
I'm in awe - I had a simple chart to analyse recently and I got that one wrong!
You don't have to be right, just don't be too wrong
  • #2,980
  • Feb 4, 2009 1:15pm Feb 4, 2009 1:15pm
Welcome aboard.

I did start with a broker with different candle start time for the H4 candle. I switched to Alpari so that my life as well as others who answer my questions will be easier. So, I'm not sure in what way trading this system with GFT will affect the performance.

Reg. Daily version:
I'm watching results from Eldee and Howard as well. So far, give or take a few hundred pips, both versions are doing good. I hope that both continue to do so .

If you can manage the trades with the tweaks that El dee has designed, then you should try that one.

The one I use has no such tweaks (so far) and if you like one without EMA or other tweaks, you can try this.

Or, you can try both and see what happens as both daily versions only need you to look at the charts for a few minutes at the end of the day.
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