EMA/RSI Trend Spotter system | Forex Factory

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EMA/RSI Trend Spotter system

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  • #1
  • First Post: Jun 24, 2010 9:39pm Jun 24, 2010 9:39pm
I found this indicator a while back and starting messing around with it, and it appears to be very profitable. I was hoping that an EA could be programmed (I believe it would be relatively easy for a good programmer).

This indicator combines and EMA cross with RSI and there seems to be some merit here. When the proper conditions have been met, and arrow will point up for long and an arrow pointing down for a short (Enter at COB).

In order to make it it a trading system, I attach the 110 and 100 ema to the chart and use it as a trailing stop. If price retraces to that point it will close out. Sometimes it will break you even or you will have a very small loss (10-15 pips for example), but often times it will catch a big move and even when it retraces you will get alot of pips (depending on the timeframe - 1000-2000 on daily charts, all the way down to the M5 charts - 20-100 pips).

There is no TP as the trailing stop will take you out of the trade. If you are comfortable with a certain R:R then you can take profit at that point. Many times you will keep more profit that way, but you will miss the HUGE moves if you do it that way.

SL can be at the previous swing low, Or, A maximum you are willing to risk. For instance, on the M5 TF my max stop is 30 pips.

Let me know what you guys think, and if you have any suggestions to improve. Also, being such a simple mechanical system, I think and EA would be great to help out in catching the moves (I like to trade the smaller TF). If anyone can help with this, that would be great. If I need to clarify more, just ask!

P.S. Settings for the indicator from top to bottom 100, 110, 50
Attached Image (click to enlarge)
Click to Enlarge Name: example 1.gif Size: 18 KB
Attached File(s)
File Type: mq4 EMA_Cross_RSI_Trend_Spotter.mq4   5 KB | 4,946 downloads
  • #2
  • Jun 24, 2010 10:02pm Jun 24, 2010 10:02pm
Heres A bigger move. These happen often. Also, the Indicator does not repaint, so if you look back over your charts, they don't lie! It works on all pairs as well, not just EUR/USD. More volatile pairs might need larger stops, but have potential for larger gains!
Attached Image (click to enlarge)
Click to Enlarge Name: example 2.gif Size: 14 KB
  • #3
  • Jun 24, 2010 10:11pm Jun 24, 2010 10:11pm
Just to show you how it works on higher TF's and other pairs, here is an example of an AUD/USD trade (H1)
Attached Image (click to enlarge)
Click to Enlarge Name: example 3.gif Size: 18 KB
  • #4
  • Jun 24, 2010 10:25pm Jun 24, 2010 10:25pm
Signals look too good to be true, so more than likely another repainting indicator.
  • #5
  • Jun 24, 2010 10:37pm Jun 24, 2010 10:37pm
Quoting eagle4x
Signals look too good to be true, so more than likely another repainting indicator.
I doesn't repaint. All it is doing is plotting the point where the 100, and 110 EMA crossed and where 50 RSI is above or below centerline at that point. There is nothing to repaint. Put the EMA's and the RSI on your chart and see for yourself.
Attached Image (click to enlarge)
Click to Enlarge Name: example 4.gif Size: 11 KB
  • #6
  • Jun 24, 2010 10:42pm Jun 24, 2010 10:42pm
Quoting techfan1128
I found this indicator a while back and starting messing around with it, and it appears to be very profitable. I was hoping that an EA could be programmed (I believe it would be relatively easy for a good programmer).

This indicator combines and EMA cross with RSI and there seems to be some merit here. When the proper conditions have been met, and arrow will point up for long and an arrow pointing down for a short (Enter at COB).

In order to make it it a trading system, I attach the 110 and 100 ema to the chart and use it as a trailing stop....
can u pls post your template and more entry/exit charts? thanks
  • #7
  • Jun 24, 2010 10:45pm Jun 24, 2010 10:45pm
Quoting eagle4x
Signals look too good to be true, so more than likely another repainting indicator.

Here's another example of how the indicator plots its Signals
Attached Image (click to enlarge)
Click to Enlarge Name: example 5.gif Size: 12 KB
  • #8
  • Jun 24, 2010 11:07pm Jun 24, 2010 11:07pm
Quoting techfan1128
I found this indicator a while back and starting messing around with it, and it appears to be very profitable. I was hoping that an EA could be programmed (I believe it would be relatively easy for a good programmer).

This indicator combines and EMA cross with RSI and there seems to be some merit here. When the proper conditions have been met, and arrow will point up for long and an arrow pointing down for a short (Enter at COB).

In order to make it it a trading system, I attach the 110 and 100 ema to the chart and use it as a trailing...
It seems like it takes a day or two to get a signal on the 5 min. chart.
Does this seem right?
  • #9
  • Jun 24, 2010 11:13pm Jun 24, 2010 11:13pm
Quoting fxking
can u pls post your template and more entry/exit charts? thanks

Per your request I have attached the template and another trade setup.

Once again, if we have any coders here, this is a perfect system for an EA as there can be alot of screen looking on the lower TF's
Attached Image (click to enlarge)
Click to Enlarge Name: example 6.gif Size: 15 KB
Attached File(s)
File Type: tpl # simple ma cross with rsi.tpl   2 KB | 1,599 downloads
  • #10
  • Jun 24, 2010 11:17pm Jun 24, 2010 11:17pm
Quoting finally
It seems like it takes a day or two to get a signal on the 5 min. chart.
Does this seem right?
If you look back over your charts, it differs in market conditions. It seems to average 1 or 2 per day on each currency pair. keep in mind you can trade this on multiple pairs, so you will have alot of opportunities.

Also, look for a ranging area, it is pretty solid even in those spots. You will get some false signals, but for the most part you will have small losses. Often times you will get no signals during choppy conditions.

Keep in mind, when you are getting a signal, most of the time the market is breaking out and you stand to gain 20-80, even 100 pips with a 20-30 pip SL
  • #11
  • Jun 24, 2010 11:21pm Jun 24, 2010 11:21pm
BTW, if you want more signals, just adjust the settings. Play with different EMA's. Your default settings are 5, 12, 21 I believe. You will get more signals, but more losses as well
  • #12
  • Jun 25, 2010 12:39am Jun 25, 2010 12:39am
Here's another example. This trade was stopped out for 190 pips profit about 10 hours ago
Attached Image (click to enlarge)
Click to Enlarge Name: example 7.gif Size: 16 KB
  • #13
  • Jun 25, 2010 12:43am Jun 25, 2010 12:43am
Hi, the arrows on the screen are not a representation of all signals. I have observed that the arrows disappear if the relevant EMA's cross back over each other shortly after a signal arrow is generated - and are hence fake signals. As far as I can tell, this indi would need to be coded so that arrows remain on the screen to ascertain true performance.
  • #14
  • Jun 25, 2010 12:55am Jun 25, 2010 12:55am
Just took this trade on USD/CHF. Seeing that we are in a range on the M5 charts, I don't expect much from it. My SL is 15 and I am moving it to BE at 10 pips. Lets see what happens
Attached Image (click to enlarge)
Click to Enlarge Name: example 8.gif Size: 13 KB
  • #15
  • Jun 25, 2010 12:59am Jun 25, 2010 12:59am
Quoting jswin
Hi, the arrows on the screen are not a representation of all signals. I have observed that the arrows disappear if the relevant EMA's cross back over each other shortly after a signal arrow is generated - and are hence fake signals. As far as I can tell, this indi would need to be coded so that arrows remain on the screen to ascertain true performance.
I am not much the coder, and I know if you reload the charts, some of the arrows go away. If you have a strategy tester, try running it on that, they dont disappear in real time.

-If there is a coder in the room and you can make this indi better, I'm all for it. Once again, I would love to have an EA that follows these rules
  • #16
  • Jun 25, 2010 5:59am Jun 25, 2010 5:59am
Hi friends

this indicator not working... Repainted

ciao.
  • #17
  • Jun 25, 2010 7:42am Jun 25, 2010 7:42am
You have the fundamentals to a basic system here but there are major issues with the indicator itself.

I suggest that you step back and analyse your strategy first.

My understanding of the strategy:

long: Ema crossed up and RSI > 50
short: Ema crossed down and RSI < 50

This strategy can be found in numerous threads here and only the emas selected ever change.

An addition to the strategy might be:

Long: Higher timeframe RSI > 50 (for H4 trading use D1, for M15 use H1)
current timeframe RSI crosses 50
Emas are crossed up

Short is reverse.

Now you are using a higher timeframe momentum to select direction of trade and waiting for trigger on lower timeframe. The lower timeframe will ebb and flow and this will give you multiple opportunities to get into the trade.

In this case you are using RSI for momentum but it could be Stoc or DTosc or whatever.

Secondly, the indicator itself does reference (i-1). any reference to i-1 is looking in the future and painting a bar in the past. i+1 is the past and i is NOW from that bar's perspective.

Also the indicator does not wait for bar close for a signal and on lower timeframes this can cause a lot of false signals as RSI jumps around and the emas cross and uncross.

My suggestion:

Develop your strategy. Forget about the indicator for a moment. If you want to follow an ema RSI strategy (which i do by the way) then use different indicators for different purposes. trying to encode multiple purposes into one indicator can lead to minor errors which can be huge.
  • #18
  • Jun 25, 2010 7:56am Jun 25, 2010 7:56am
here is an example of EMA RSI.
Attached Image (click to enlarge)
Click to Enlarge Name: 2010-06-25_EMA_RSI_example.png Size: 95 KB
  • #19
  • Jun 25, 2010 8:06am Jun 25, 2010 8:06am
Quoting porfirio
Hi friends

this indicator not working... Repainted

ciao.
You're right. This indi looks one bar ahead so it can repaint up to two bars (including the current one). Pretty much enough to get rid of a false signal arrow...
  • #20
  • Jun 25, 2010 8:10am Jun 25, 2010 8:10am
Just happen to see this post. I have done extensive statistical studies using RSI and have found that overbought and oversold are myths. Certainly one can find instances of what appears to be such character but there is no scientific data that supports it. Further an MA or EMA at any position as a signal in combination with RSI will not give the trader anymore than a 50% chance to go long or short.

One possibility for RSI signals are divergences if a trader has statistical data as to when a divergence might occur. For example there were a combination of over 60 divergences on the EURUSD hourly chart from May 4th forward. How and what kind of divergences were statistically significant? That can be determined using an algorithm; which I have done. The second would be to look at Cardwellian Reversals (Andrew Cardwell) and learn the exact same information, there were 57 in the same time period of 3:1 to Reward to Risk Ratio.

With this kind of data one can find the edges in the market if timed up with momentum created by the market itself (a desire for risk or an aversion to it).
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