A very simple EMA/CCI system

Hello to everyone, I would like to share my system with you. Maybe someone will benefit from it.

I believe that this will appeal to newbies more than experienced traders as experienced traders tend to trade higher time frames and this uses a 5 min chart.

The benefits of this system are its simplicity and the ability to use tight stop losses.

The basics of the system are quite easy to grasp. Some elements of its use are a little more advanced such as reading candles/price action. I would suggest anyone who doesn't know candlestick reversal patterns should read a good book on candlestick trading before they use this system.

Ok, the system...

On a 5 minute candlestick chart put a 288 ema and a commodity channel index with a period of 10.

I use 288 periods for the ema as there are 12 candles per hour for 24 hours which gives you an idea of the trend over the last 24 hours.

I recommend using a cci with an alert (google it or look on this very forum) so that you don't have to keep watching the chart.

The signals...

Only take signals when price approaches the 288ema. If the price fails to cross over or crosses but quickly turns back the other way it will start to move away from the ema and the cci will cross the zero level.

Enter a trade in the direction of the cross and place a 20 pip stop loss.

Exit the trade when the cci crosses the zero level in the opposite direction.

That's it!

You will find there will be periods when you are stopped out a few times in a row but quite often you will catch a big move of between 50 and 200 pips with no stress.

I have been trading this method on GBP/USD and EUR/GBP with some success for a little while now.

As this is such a simple system maybe someone could create an EA for it? I don't have too much trouble trading this manually due to using the cci with alert.

I look forward to receiving some feedback regarding this system, any advice or help would be appreciated.

If you have any questions please ask.

Point 1 is the price bouncing off the 288ema and the ema is trending downwards. The cci cross over at 1.4375 and the next candle - my entry point opens a little higher, with the spread I opened at 1.43785.

Point 2 shows the dot produced at the end of the candle on the cci alert I use.

Point 3 shows price moving upwards against the trend.

Point 4 is the cci giving the exit signal at 1.4218.

This was a nice trade for 160 pips.

Notice that the price consolidates for a long period after this move. DO NOT try to enter the market straight after a big move like that, you WILL lose money.

Much better to wait until the price approaches the 288ema again and look for another sell signal after that.

As you can see, later the same day another good trade signal was given which I entered for another profit.

Also, if you don't wish to watch your charts all day just put a ema crossover alert on the chart. That way you will know when price is reaching the ema.

Use a 1 period ema crossing a 250ema(experiment with your choice, 270 could be better, depends how much notice of a possible signal you would like). This will alert you slightly before price reaches the 288 ema so you can watch the chart for a signal.

Thanx hel13rock for sharing your strategy..

could you put your template in thread ?

Hi wedwed, you need a template for 2 indicators? lol

To be honest you are better to find the cci alert and ema crossover on this site and just apply them to a blank screen as if I post my template you may not have the same indicators in your system and it won't work.

If I can find the indicators on the site I will link to them from the thread.

An EA wouldn't be able to detect that ranging period...

Any EA coded for this system outright would get killed on whipsaw.

Hi Ronald, thanks for your input.

I guess that's always the way with EA's. Even the most simple systems need a certain amount of discretion.

Maybe that's why even the best EA's lose money in the long term no matter how well they backtest? Unless anyone knows of a consistently profitable EA?

There are plenty of EAs which are consistently profitable. They just aren't completely autonomous.

Meaning they all require some sort of intervention by the user?

Thinking back to your previous post, would it be possible to create a "set and forget" EA for this system where you could pull the trigger manually and then let the EA close the trade once the cci crosses over zero and a candle closes?

That might make life a little easier.

I mentioned in my introduction that this is a good system for newbies due to the low stop loss. That being the case I feel I should give some guidance on money/risk management.

Another thing I should mention is that although I state that a 20 pip stop loss should be used this will rarely be hit as you will get an alert from the cci cross before the trade goes that far down. I estimate that my average loss from this system is only 5 to 10 pips but you should bear in mind there can be some days that you have a long series of small losses before you catch a big move. Just keep in mind the fact that you WILL be there at the start of some nice big moves.

My money management is to only risk 1% of my bank on any 1 trade. That way I can take a series of small losses before I find a good winner. Remember that the 1% loss is based on losing 20 pips and as stated above you will often not lose that but I like the extra margin for safety.

I can only calculate this in British Pounds and pence as that's the currency my account is in. If you have a micro account 1 pip works out to about 7 pence.

If you have a bank of £2000 you can easily work out that each trade should risk no more than £20. Dividing the risk amount per trade by the number of pips risked gives me a risk per pip of £1.
Dividing the risk per pip by the pip size means I should use about 1.4 micro lots to give me £1 per pip risking 20 pips means a max risk per trade of £20.

I hope this is clear enough. I would recommend that you use a smaller amount in percentage terms as your account grows. Whatever system you use will face losing days and it's best not to risk too much per trade.

An exit-only EA is possible if that's what you're asking

thanks hel13rock for sharing...it looks good.

Yes Ronald mate, exit EA would be useful here, some runners would last over 20bars and we could set EA to properly close the trade. Thank you in advance..

Cheeres

great simple system

Hello hel13rock,
For I hr timeframe what ema and cci figures will you use?

Thanks

i see the author of this thread only uses it on 5 minutes like me made around 600pips last month trading the GBPUSD and EURGBP prs on 5 min t/f
Regards

hi hel13rock,
i am a newbie.apart frm the 288 ema and period 10 cci that you mentioned, what are the settings;
1) Apply to ..'Close'? ( for both ema and cci)
2) Are there Fix Max and Fix Min for cci?
Thx hel13rock.x