Hi Brenzaj, Thanks for sharing your exceptional insights into trend trading. You mentioned you use the 5/12 ema cross. Is there a reason for these numbers; such as they work better than others? It just seems to me a 6/12 cross or a 5/10 would be more logical.
Thanks also to Micardo for this informative thread.
I have taken Micardo's advice and tightened by stop loss from 250 to 200. However, this is just an emergency stop in case the price runs against my position when I am not watching. My real stop loss is mental; and usually a trend break of...
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5/12 EMA is not better than 5/10 or 6/12 and neither is the other way round.
Using a shorter EMA cross in your system trades getting into the trend early risking getting more whipsaws.
If your trading system is robust, it should not matter if the MA you use differ slightly.
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Joined Nov 2008
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Status: b/e since 2007
|861 Posts
An ema cross is often best seen as a signal to look for a good entry rather than a signal to enter per see. You will often get a pull back to the ema zone soon after a cross and that is where the better entry is made.
Thanks to all for the clarifications on using the 5/10 ema.
I am a newbie to this trend trading. I have read entire books on trend trading and come away not knowing when to get in and when to get out. So for the benefit of other newbie's, let me just say IMHO my ideal entry is a bounce off of the trend line and my ideal exit is a break of the trend line. http://cdn.forexfactory.com/images/icons/icon7.gif
Hi Ushra, I am not familiar with the broker fxdialogue. I am in the US trading live with IBFX on a mini account. When I opened my account about 3 years ago they gave me 200:1 leverage. Last year the US Government regulators reduced all US leverage to 100:1, then they again reduced it to 50:1. This low leverage makes some forex strategies unprofitable. So my recommendation is to not use a US broker. However, regulators have pressured European brokers to not accept accounts from American citizens. Last I heard, Americans can still open a 200:1 leverage account in Australia.
If fxdialogue gives at least 100:1 leverage and good spreads, and is in a major Western country, I would say go for it! http://cdn.forexfactory.com/images/icons/icon7.gif
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Joined Sep 2006
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Status: Trend Follower
|349 Posts
It seems as though everybody is extremely interested in the moving average cross over which is fine if you are experienced and you know how to use it properly. However it isn't fine if you are new and you are planning on just trading the cross over without paying attention to the price action.
Brenzaj42 obviously knows what he is doing and is trading profitably but I am sure from reading his posts he doesn't rely solely on the cross over. He looks at a number of different factors before he enters.
I know that relying on a cross over is great for new traders because it takes the responsibility from them, but ultimately this approach can result in a disaster and I caution you all against it.
My advice would be to trade based off of price action primarily using the moving averages as confirmation if anything.
Support and Resistance for me is the most important as you know that these are levels that traders have reacted to in the past and hence will probably do again.
Brenaj42 this is nothing against your system in the slightest and I am happy that you are contributing, I just want to make sure that new traders don't trade crosses blindly... I hope you understand.
Guys I hope you all take this in the right way, it really isn't negative, I am just trying to help and provide you with lessons I have learnt from experience.
All I am trying to say is learn the basics first and then add the fancy stuff around it.
Micardo, I agree completely. I just got done reading the previous posts and I felt things were going sideways. You are right, people are always looking for an easy way out. Again, didn't mean to hijack the thread. I just posted one thing and it kind of snowballed. I just love the fact that someone else rides long term trends without a bunch of indicators so I jumped in. Maybe its time for me to start my own thread which of course you can jump in anytime.
It seems as though everybody is extremely interested in the moving average cross over which is fine if you are experienced and you know how to use it properly. However it isn't fine if you are new and you are planning on just trading the cross over without paying attention to the price action.
Brenzaj42 obviously knows what he is doing and is trading profitably but I am sure from reading his posts he doesn't rely solely on the cross over. He looks at a number of different factors before he enters.
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Joined Sep 2006
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Status: Trend Follower
|349 Posts
Hey Brenaj42,
No not at all... I really appreciate your input and I think it is extremely useful to have more than one experienced voice on the thread and an alternative approach. I was just saying that I think people should focus on the basics first and then add other things to it.
I guess as long as everyone understands support and resistance and price action, then the moving averages can add a little confirmation on the correct direction.
Please continue to contribute here if you want, this thread is not about my approach, it is about trend following and as long as an approach encompasses this philosophy we are good to go!
Thanks again for all of your input and please do not dissapear from the thread, it seems there are a lot of people here that value your input :-)
In addition to parallel and inverse analysis, the individual currencies can be extracted, and their strengths compared relative to each other. After nosing through all of my charts and, after pawing my way through my spreadsheet for the period from 11/30/10 to 12/31/10 I get the following average movements:
(Assuming I have not made any math errors).
CHF +463
AUD +310
NZD +228
CAD +99
EUR -98
JPY -179
GBP -340
USD -372
Hurray for the USA. It looks like we are winning the currency war, to see who can drive their currencies the lowest; in order to boost exports. http://cdn.forexfactory.com/images/icons/icon7.gif
I have a problem with setting a stop loss over a high or under a low. Although it seems a logical position for a stop, it seems to me I always get stopped out, and then the price heads back the way I had traded. Maybe I am just paranoid; but my theory is the brokers use a robot I call Pacman. Pacman's job is to make money for its master, the broker. So Pacman looks at all of the stop losses, and all of the take profits. Pacman says to himself, if I go up stop-gunning those stop losses, that will wipe out the take profits down below; so that I can drop the price. So Pacman goes up and gobbles up my stop loss, then reverses. These stop-gunning exercises leave a spike on the chart at the tops and at the bottoms. http://cdn.forexfactory.com/images/icons/icon8.gif
I have a problem with setting a stop loss over a high or under a low. Although it seems a logical position for a stop, it seems to me I always get stopped out, and then the price heads back the way I had traded. Maybe I am just paranoid; but my theory is the brokers use a robot I call Pacman. Pacman's job is to make money for its master, the broker. So Pacman looks at all of the stop losses, and all of the take profits. Pacman says to himself, if I go up stop-gunning those stop losses, that will wipe out the take profits down below; so that I can...
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Lol :-) Maybe just a little paranoid.
No I don't think this is the case. If Pacman did exist he/she would have to have some deep pockets to move the markets just to take out your stops and remember once the market gets up to the high for example, pacman would then have to sell out of all of his/her positions maybe for a loss... so whats the point?
Maybe your broker can manipulate the price by a pips or so but not by enough to stop you out on purpose.
What I do is place my stop a few pips sometimes 5-10 pips beyond the high or low, just for comfort.
Having said all of that, I do know what you mean though, it does really feel like the markets are out to get you. I think I said earlier on a post that I have been through times where I was sure the market was wiaiting for me to play my hand just so it could fade me :-).
But I think you probably just got a little unlucky. Keep plugging away and taking your entries as in the end it will pay off for you if you are trading an approach with a positive expectancy, which many trend following systems do have.
Remember all we are doing is paying the market for information. If we are stopped out, so be it, the next time price is at a level we want to trade we will again pay the market to tell us which direction it is going to go.
Have fun and let me know if I can be of anymore help.
I think what Jerrycollie meant was that 'FXBroker' your friendly broker has a system whereby he makes your chart go spike! Not the whole world's charts.
I have seen threads about spikes and experienced the strange move on X MT4 but not on Y MT4.
brenzaj42 i would like to learn more about how you trade as it applies to the type of trading i am looking to try, due to my current job which requires me to work days and nights, which sucks, anyway i look forward to working with you, pm me when you can! thanks
Hi Micardo, Thanks for your reassurance; but I am still paranoid.
Hi Pheddy, Yes, that is what I meant. My broker's Pacman does not have to buy anything. It just says the price is now 20 pips higher and you and everyone else are stopped out. Then the price immediately drops, hopefully before Pacman can get scalped. I cannot prove stop hunting; but I suppose there is someway to test the theory. I the mean time, I like to trade with mental stops. http://cdn.forexfactory.com/images/icons/icon7.gif
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Joined Sep 2006
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Status: Trend Follower
|349 Posts
Hi Everyone,
I know it is bank holiday today so no one is trading and neither was I. However I I had a set up on the EURGBP identified on my chart which I was looking to take tomorrow if the signal was there.
Unfortunately I missed it and we got an entry today. I thought I would show you it in any case as even though the entry wasn't perfect, the bounce area was exactly the kind of thing we look for.
The 4 hour chart is my directional chart where I derive my bias from and the 1 hour is my entry chart, where I look for the signal
This trade would have yielded you a rather simple 1:2 risk:reward which is typically what I like to go for as a minimum.
Hey Micardo, just my 2 cents but I have been in this trade since Dec 16 and I am looking to get out soon(next 100-150 pips). If the pair breaks .8650 tonight, which it is setting up to do, it should travel up for another couple days.
It is in a downward oscillation on the weekly chart so I am really looking to load up on the way back down but there still is plenty of upside left as I am sure you are aware of.
I know it is bank holiday today so no one is trading and neither was I. However I I had a set up on the EURGBP identified on my chart which I was looking to take tomorrow if the signal was there.
Unfortunately I missed it and we got an entry today. I thought I would show you it in any case as even though the entry wasn't perfect, the bounce area was exactly the kind of thing we look for.
The 4 hour chart is my directional chart where I derive my bias from and the 1 hour is my entry chart, where I look for the signal
Hello, all. As in the title, this is my first post on FF. It's harder to know when to enter here than on a NonFarmP. day, but here it is.
I want to make a comment on something I read often: that traders' MM's are going hunting for their stops. In fact, if they got into the habit of doing that, they would risk being arb'ed on the other end.
Here's what I mean. Here's a screen shot I just took: that's Interactive's EUR.USD book (they provide an ECN they call IdealPro for forex) on the left, and that's an Oanda Practice platform on the right. IB shows 34.5-35.0, and Oanda shows 34.3-35.5. Right where they should be: if a client bot their offer, they could (if they used IB; they don't) immediately lay if off for a half tick. Same on the other side, for 0.2.
[Oh, gee: newbie "Duh" moment. I don't know how to embed an image! If someone would deign to suffer my woeful ignorance and care to explain it, I'll post the screen shot. Sorry. Anyway, it shows what's described in the above, with offers of 4.37, 21.00 and 4.00 from 1.33350 to 1.33360.]
Now, say they move their market up to 38.0-39.2 (assuming they hold their spread) to pick off somebody's stop. If they're being watched by automated trading apps, they'd get hammered: The apps would compare the (say) IB book, which is showing over 28MM offered at or below 36.0, to the 38.0 Oanda bid, and act. One app, using their own API, could be ordered to start to sell into that bid until it hurt, whilst the IB API-driven app was buying into their offers two or more ticks below.
The arb would unwind when they moved back to the market, or the market moved to them. So they might have gotten a few ticks on a relatively small notional from the poor guy they picked off, but at the cost of a whole lot of ticks on a whole lot of size on the other end from the arb apps.
This scenario isn't rocket science, but it isn't science fiction, either. There are apps out there, some bank and sell-side, some hedge fund, some private, whose main purpose is to monitor and execute longer term, trend following trading logic. But that doesn't take all their clock cycles, and it's not hard to program the C++ or Java or .NET to get them to do these kind of things in their spare time.
Hello, all. As in the title, this is my first post on FF. It's harder to know when to enter here than on a NonFarmP. day, but here it is.
I want to make a comment on something I read often: that traders' MM's are going hunting for their stops. In fact, if they got into the habit of doing that, they would risk being arb'ed on the other end.
Here's what I mean. Here's a screen shot I just took: that's Interactive's EUR.USD book (they provide an ECN they call IdealPro for forex) on the left, and that's an Oanda Practice platform on the right....
Ignored
Hi Quant, to add the image, "edit" your post then scroll down to "manage attachments" browse for the image on your computer and add / upload it
Australian by choice 
