Trading With No Candles, MA crosses only

I opened up a 30 day demo account for the Metatrader platform. In this experiment I have made my screen all one color and I am going to trade off of the 10 and 21 Smoothed Moving Average Close only.

In my other accounts I use other methods, but I only want to see the results and reliability of MA crosses. So here are the rules so far...

1. The timeframes will be either 1 hr, 4 hr or the daily. I am going to school full time so I have to take what I can get.

2. Stop losses will be set at the top/bottom of the 10 MA.

3. Take profits still have to be determined, but right now I am thinking of 20 pips or 50 pips. Another possibility is to set the TP at the 55, 100 or 200 but I don't know yet.

4. I use the 200 MA for an indication of the direction of the trend, I don't believe too much in "counter-trend" and I will set my TP according to the direction of the 10/21 and 200. For example, if the 200 is trending up (price average increasing) and the 10/21 cross down, I probably will keep the TP small, and vice versa.

5. Too many people get trapped in the mindset in that they have a rigid TP level. I prefer to keep my pips, thank you very much.

6. I will post the trades on here and the results when I take the trade, time permitting.

7. Most trades will probably be on the 1 hr without regards to the 4 hr and daily.

8. I am not interested in anyone's negative comments. THIS IS AN EXPERIMENT TO SATISFY MY CURIOSITY.

9. My demo account has $5 million, but lot sizes will be limited to 1 lot per trade. I use leverage only to increase my margin "cushion", NOT TO INCREASE POSITION SIZES. To do otherwise is just foolish, and a fool and his money are soon parted.

10. I will probably only trade the aud/usd, eur/usd, gbp/usd and the aud/jpy, eur/jpy, and gbp/jpy pairs.

11. I will set this account up on myfxbook as soon as I can.

12. I may add rules

13. I don't know how to post screenshots, so if anyone knows how, please let me know.


A lot of people say MA's don't have predictive power, but I think they do. You only have to be patient and watch and wait for the setup. Another poster remarked that price goes too far from the 100 and 200 day MA's but I argue that price does eventually come back, hence the word "average". Markets overshoot all the time.

I have my 6 charts set up so I can view them all at the same time. Here are potential trades...

1 HR

All pairs are in the middle of a cross except gbp/jpy, which is close to closing. At 4:00 I will sell it if price closes at the cross.

4 HR

All pairs are in the middle of a cross, no trades yet.

Daily

The eur, gbp and aud /jpy crosses are all at a cross. Since most people consider 5pm EST the "close" I will take those trades at 5 pm.

The eur, gbp and aud /usd pairs are in the middle of a cross, and I will wait on those.

sold 1lot gbp/jpy @ 133.02, actually was 133.13 with their 11 pip spread on this pair. Holy Cow!! eleven pip spread????

stop at 133.50
take profit at 132.50

here's the link to the myfxbook page


http://www.myfxbook.com/members/sarc...-candles/45537

If you're going to trade purely based on MA crossovers, I can already tell you that you're going to make or lose money depending on whether you'll have more trending or ranging markets respectively during your testing period. A commonly accepted statistic is that markets tend to chop 70% of the time. You do the math...

While this might be fun to test on a demo, I'd be careful with real money.

Btw, if you would like to post screenshots, you just need to right click in a chart in MT4 and select "Save as Picture...".

The 3 /jpy pairs closed with a cross

aud/jpy sold at 76.09 with a stop at 78.02

eur/jpy sold at 109.39 with a stop at 112.38

gbp/jpy sold at 133.02 with a stop at 135.47

I will close TP when the 10 crosses back over the 21 and stops will be moved to break even at least when the trade is in decent profit.

It's interesting to note that by setting the stop at the top of the 10 MA there is a 200 pip difference in the StopLoss price from the hourly to the daily timeframe.

DHB,

you're right about the direction of the market, and I would never do this on real money. Just curious is all.

all four trades in the money at the moment.

nice, i'm up $1200 already, normally I would chicken out and take some money off the table but I will continue to follow the plan.

still not enough to move stops to breakeven though

Trade No. 1, gbp/jpy 1hr cross closed overnight for a 52 pip profit, and the other three trades are all up nicely.

The eur/usd is looking to cross tonight or in the next few days next week. the 10 ma for gbp/usd and aud/usd are pointing down as well.

One important note is that the gbp/usd broke important support overnight. It had previously bounced off this support about 6 times. Of course, in this experiment that isn't a factor like it would be in real life, but it is bearish.

Trades 2, 3, and 4 all went to +100 pips profit and the P/L was almost $3,000 when I logged on yesterday morning. Over the course of the day all three trades retraced, with the eur/jpy being the only trade still in the money.

So far...

1. using a MA cross looks good for entry, but not so good for exits (at least not yet.) These three trades are on the daily, so they will be open longer.

2. entering a short trade when price is already at a support level, it is to be expected that there will be a retracement early on. There may even be a complete reversal, which is why the rule is to close the trade when the 10 MA crosses back over the 21 MA. I am using the stop only in case of a big spike. This is also where DHB was correct about "chopping" markets.

3. just using MA"s there is NO way to tell where a support/resistance level is.

So the trades are still alive, and I will post when there are changes.

One setup I am watching is the eur/usd 10 is beginning to point down and is closing the distance towards the 21. If the average price keeps drifting lower then I expect a cross sometime towards the middle of next week.

I'm just thinking...

On exiting a trade, in order to maximize profits waiting for the 10 to cross back over the 21 seems to give back a significant portion of pips. I wonder if adding a 5 MA and using a 5/10 cross to exit will improve the win percentage. It seems like it should as it would be moving faster. I would think using a faster timeframe would help, maybe a 5/10 cross on a 15 or 30 min. chart. I will set this up on the next trade that is taken and see how it works out.

Also, since these trades were sold at major support levels two things can happen, price bounces and no money is made or a loss occurs. The second thing is price breaks through and then there would be a nice pip profit. As Kenny Rogers said in the Gambler, you gotta know when to hold 'em and know when to fold 'em.

I have added a 5 ma to the eur/usd and aud/jpy charts. The eur/usd is the most traded pair and the aud/jpy usually has good volatility and I will be looking at price action. I am not going to enter a trade based off of the 5 ma but I will monitor price levels for potential exit strategies.

On the eur/usd I also added a Generic MA Crossover EA, a big thank you to Ronald Raygun. However, I have no idea how to set it, or how to make it work, just an experiment within an experiment if you will. If the EA doesn't take the trades, then I will still do them manually.

Remember, a huge part of forex trading is the MOMENTUM of a run and the fact that markets overshoot and retrace continually. It is this momentum that add or subtract pips from your account, like at news releases. Because of this "noise" I think ma's are effective on the higher timeframes.

at the moment eur/jpy is up 120 pips, gbp/jpy is up 60 pips and aud/jpy is down 20 pips.

in real life I would probably move some stops to lock in profit in case of a big reversal spike. however, it looks like the reversal cross would be in positive territory I am not putting a stop on. I know, insane money management, but that's not what this experiment is about.

eur/usd is bumping up against 1.2680 serious support and the bearish cross is getting closer. if that support gives way then it looks like a trade there for sure. I get the info on support levels from another website.

this is interesting to watch. it doesn't require a lot of time and it is forcing me to wait for a set up instead of watching price action (candles) and thinking there may be a trade there.

the aud/usd 1hr just had a bullish cross, placed trade for one lot at .8975. This pair is nearing the top of it's range, so I would be surprised if it made pips.

well, I put the generic ma crossover ea on the aud/usd chart and in addition to selling the bearish cross, it also closed the previous buy order (trade no. 5) for a loss of 77pips

eur/jpy is up 173 pips
gbp/jpy is up 100 pips
aud/jpy is up 25 pips

not bad so far, 1 loser, 1 realized winner and 3 unrealized winners

I got to thinking that even though the eur/jpy, gbp/jpy, and aud/jpy trades were placed off the daily time frame then I either have to close them out when the ma's cross on the 1 hr, or miss out on trades until the daily crosses back over.

so, in the interest of taking more trades I have placed my stops at the 21 MA on each of the three pairs as I would be closing out if the 10 hit the 21 anyway. Currently the stops are set at 100 pips profit for eur/jpy, 50 pips profit for gbp/jpy and 6 pips for aud/jpy. these are all the 21 ma levels.

this is pretty cool, so far I am up...

192 pips on eur/jpy,
140 pips on gbp/jpy,
60 pips on aud/jpy,
and 18 pips on aud/usd

at one lot each and $10 a pip (approximately) the unrealized profit is $4600, AND it hasn't even been a week yet.

Still, thinking of potential exits though, the 5 MA hasn't proved useful yet, unless I use it on the 15 or 30 min. I will keep watching though.

only two things can happen overnight, either your trades go with you or the go against you. these four trades almost doubled overnight, of course this means a reversal for new york is more likely.

eur/jpy is up 300 pips and I moved the stop for +150 pips
gbp/jpy is up 300 pips and I moved the stop for +115 pips
aud/jpy is up 150 pips and I moved the stop for +60 pips
aud/usd is up 60 pips and I moved the stop to Break Even

all stops are set to the 21 MA on the hourly charts.

The unrealized profit is $9600, man I wish this were real, lol. but we will see what happens on the exits.

eur/usd 10/21 is very close to crossing on the daily timeframe, with the gbp/usd looking 2 maybe 3 days behind it. the aud/usd is beginning to point down as well. I will continue watching these three pairs and I will post as necessary.

well, price is moving like mad this morning and I am keeping the stops tight with the 21 ma as it moves down. I would think a nice retracement is in the works, however, there is no indication on the hourly with the 5, 10 or 21 ma looking to change. I will be watching closely to see what happens.

While it's nice to catch a nice break through support, I have to say I was hoping more for a range type conditions to really test the ma crossovers.