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A "new" simple system based on MA

  • #221
  • Apr 29, 2011 6:02am Apr 29, 2011 6:02am
Hi,

Sorry for late answer, I was not available during a week ! As every trend trading system, it can lead to bad results during ranging periods. To avoid that I think you have to wait for a trend established and not for playing the begining one. You also have to check on higher TF. And also always put a tight stop loss ! Eventhough iti is a good system, please keep in mind there will be losses.

Secondly, if you want to play momentum trades, let your profits run because if it is the begining of the trend, then it will last so you have to maximize your profits because there will be more false than true signals.

Dont forget a trend is changing only once a time, whereas a trend established will pullback many times....so you will get a higher wining percentage when you trend a pullback, and you will get a bad winning percentage when you trade the begining of a new trend. So to get a positive equity, you MUST let your profits run when you trade a new trend, to get a high R/R ratio to tackle with the problem of bad winning percentage.

That's why I am waiting for a perfect setup : trend established and a good pullback which allow you a tight stop and a high leverage to get more pips in few minutes !!!!

Quoting Bom-Bom
Hi Hmaoui...,my weakness sometimes guess the trend wrongly.
I see the MAs spreading...but later when I thought it was a pullback, suddenly it become changing a trend. How to avoid things like this?
  • #222
  • Apr 29, 2011 6:07am Apr 29, 2011 6:07am
I really thank you for your efforts to try to set up an EA ! That's a very appreciable initiative ! I dont understand if it is my rules that are not clear (I guess I trade it for a long time now so maybe I am not clear enough to "newbies") or is it your EA which is not following the rules ? I can pm you with more clear rules to help you to code it as it is a demand of a lot of members !

Quoting magft
I have had a go at creating a EA for MT4 based on Steve Hopwoods Generic EA that has a cut down version of MPTM built in.

I have used 3 EMAs 12, 30 and 60 and used Stochs and DMI to help trade entry. I have also added trade closure criteria but mainly rely on jumping stop.

I have been forward testing it today and it is making false entries that cancel out any profit. In its current form it is NOT safe to trade live and needs much more testing to iron out bugs.

Please feel free to test and let me know your thoughts on criteria for entry and exit.

I...
  • #223
  • Apr 29, 2011 8:33am Apr 29, 2011 8:33am
On the 1h Chart, we can see a resistance at 1.4870/1.4880. Eur/usd is correcting right now. The PP is near 1.4830 and that is also the level of the 30EMA on 1 hour TF basis. DMI is positive and Stochastics are about to go under 50 level. It means there might be an opportunity to go long. But I wait for the perfect setup and I am looking a better entry on 5 mn TF.
  • #224
  • Apr 29, 2011 8:40am Apr 29, 2011 8:40am
...I am waiting for the price to retrace to this level and I am looking for a positive signal....except if it goes further ! I am very careful coz it broke the 144 EMA on 5mn TF
  • #225
  • Apr 29, 2011 8:50am Apr 29, 2011 8:50am
...waiting for a perfect setup
  • #226
  • May 1, 2011 3:57pm May 1, 2011 3:57pm
Hamoui, i've not had any time to look at the EA to check the rules for entry and exit. I'm away next week now but if you could collate your rules for entry and exit I will review the current setup and adjust accordingly.

Currently, for long trade entry:

Last close price is greater than all 3 EMAs (12,30,60)
12 crosses over 30, 60 sloping upwards
Stoch over 50
DMI+ greater than DMI-

for short trade entry:

Last close price is less than all 3 EMAs (12,30,60)
12 crosses over 30, 60 sloping downwards
Stoch under 50
DMI+ less than DMI-

for long exit:

12 EMA sloping downwards
30 EMA sloping downwards
Stoch under 50
DMI+ less than DMI-

for short exit:

12 EMA sloping downwards
30 EMA sloping downwards
Stoch over 50
DMI+ greater than DMI-

I currently cannot pm as I have been a long time lurker but not posted until recently.

Mike
  • #227
  • May 2, 2011 9:00am May 2, 2011 9:00am
For long entry, candles have to close above all three ema's (Ok) then we wait for a pullback on one of the three EMA (most of time it is 12EMA) with a Stoch under 50 and DMI+ greater than DMI-. The pullback on one of the EMA has to correspond with a Stochastic under 50. If the pullback is on the 30 or 60EMA, I prefer to get a Stochastic in oversold territory with DMI+ > DMI-.

For exits I use SL / Pivot levels / or the channel formed by the 30/60EMA is I want to let my profits run. You can mix it : for example if the price going your way, you can exit half of your position at the first target (Pivot level) and let the rest running until it crosses under the channel, placing your SL at B/E.

Reverse for short entries. Hope to be clear enough. Feel free to ask me for more details if necessary.

Quoting magft
Hamoui, i've not had any time to look at the EA to check the rules for entry and exit. I'm away next week now but if you could collate your rules for entry and exit I will review the current setup and adjust accordingly.

Currently, for long trade entry:

Last close price is greater than all 3 EMAs (12,30,60)
12 crosses over 30, 60 sloping upwards
Stoch over 50
DMI+ greater than DMI-

for short trade entry:

Last close price is less than all 3 EMAs (12,30,60)
12 crosses over 30, 60 sloping downwards
Stoch under 50
DMI+ less than DMI-

for long...
  • #228
  • May 2, 2011 9:06am May 2, 2011 9:06am
As additional filter to get best results, trade only during London or NY session, you will get better signals as the big money is in the game.

Also, I would like to try to filter out with PP. Trade only long signals when price is opening above the PP, and only short signals when it is opening under PP. I think it should be interesting to backtest and furthertest this idea....

What do you think about it ?
  • #229
  • May 2, 2011 2:39pm May 2, 2011 2:39pm
Quoting hmaoui
For long entry, candles have to close above all three ema's (Ok) then we wait for a pullback on one of the three EMA (most of time it is 12EMA) with a Stoch under 50 and DMI+ greater than DMI-. The pullback on one of the EMA has to correspond with a Stochastic under 50. If the pullback is on the 30 or 60EMA, I prefer to get a Stochastic in oversold territory with DMI+ > DMI-.

For exits I use SL / Pivot levels / or the channel formed by the 30/60EMA is I want to let my profits run. You can mix it : for example if the price going your way, you can...
hmaoui

Once all this criteria >>>>
""" For long entry, candles have to close above all three ema's (Ok) then we wait for a pullback on one of the three EMA (most of time it is 12EMA) with a Stoch under 50 and DMI+ greater than DMI-. The pullback on one of the EMA has to correspond with a Stochastic under 50. If the pullback is on the 30 or 60EMA, I prefer to get a Stochastic in oversold territory with DMI+ > DMI-. """" HAS BEEN MET...

What does the entry candle have to do before you place you buy order??? Does it have turn back up?? Do you enter at the high??
What specically is the entry candle doing at the time of entry?? Is the entry candle bouncing off one of the MA's, then closing up ?? Are you going long on a down candle???

Thanks
  • #230
  • May 2, 2011 3:13pm May 2, 2011 3:13pm
I always wait for the candle close. On lower TF, I dont care about the candle pattern as it does not have a real strong signification....but if you trade on higher TF, it is really safer if there is a candle pattern such as hammer etc... On 1mn or 5mn TF I can go long even if the candle is closing down. We "dont care" about the candles on these low TF we place a very tight SL. On higher TF, you may wait for a confirmation such as a bullish/bearish candle or a Stochastic cross. I am trading this system on 1 an 5 mn.

Quoting TraderinSD
hmaoui

Once all this criteria >>>>
"""...
  • #231
  • May 3, 2011 6:47am May 3, 2011 6:47am
Quoting hmaoui
If the pullback is on the 30 or 60EMA, I prefer to get a Stochastic in oversold territory with DMI+ > DMI-.
Hi hmaoui, if we're in long trend, when we see PA pullback to EMA12, and stochastic under 50, DMA+ > DMA-, sure we will take Long position very soon.

but sometime after we took that long position, the price keep pullback until 30 and 60 EMA territory, even below 60 EMA. For this happen, what do you do with your first Long position?
  • #232
  • May 3, 2011 8:31am May 3, 2011 8:31am
Hello,

To answer your question, we never know where price will go ! In a strong trend, the pullback is often on the 12EMA, but it can go to the 30 or 60 EMA. To avoid that we have a tight SL, and we will always respect it !!! But what could happen is that price is pulling back to the Channel and then bounce off....or not. So we dont take any risk, we accept our losses. But it can test the channel and then going up again, that's why I can enter again, especially if price is in a strong trend and then test the Channel with DMI+>DMI-, and STO on oversold territory.

Be careful at what I am writing : DMI+>DMI-, and Sto in oversold territory. Here, confirmation is important coz it could be also a trend reversal. But usually, when it is a trend reversal, and not only a weakness, DMI+<DMI-....So you see that you can re-enter at a new support but you have to follow the rules.

Quoting Bom-Bom
Hi hmaoui, if we're in long trend, when we see PA pullback to EMA12, and stochastic under 50, DMA+ > DMA-, sure we will take Long position very soon.

but sometime after we took that long position, the price keep pullback until 30 and 60 EMA territory, even below 60 EMA. For this happen, what do you do with your first Long position?
  • #233
  • May 3, 2011 3:04pm May 3, 2011 3:04pm
...What you can see on this chart is that perfect setup worth it !
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: Chart 22j.jpg Size: 407 KB
  • #234
  • May 3, 2011 3:14pm May 3, 2011 3:14pm
Hope it is clear enough : Focus on perfects setup !
  • #235
  • Edited 5:01pm May 3, 2011 4:17pm | Edited 5:01pm
Quoting hmaoui
Hello,
especially if price is in a strong trend and then test the Channel with DMI+>DMI-, and STO on oversold territory.

Be careful at what I am writing : DMI+>DMI-, and Sto in oversold territory. Here, confirmation is important coz it could be also a trend reversal. But usually, when it is a trend reversal, and not only a weakness, DMI+<DMI-....So you see that you can re-enter at a new support but you have to follow the rules.
Thanks hmaoui, I think this is what I'm looking for.
I think if I'm already in a position, when DMI+>DMI- change to DMI+<DMI-, that is the time for me to get out.
BTW, in terms of GMT, do you trade this strategy from 7 am GMT to 3 pm GMT? (UK Open to EU close time)

BTW, there's a question at below chart. I think this is the time where I must accept the SL. And when do we need to change to 1 min chart, and when do we need to use 5 minute chart? Please confirm, Thanks.

Best Regards,
Bom-Bom
Attached Image (click to enlarge)
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  • #236
  • May 4, 2011 4:07am May 4, 2011 4:07am
Hello,

Yes you are right. If you take all entries you would have 2 success and 1 loss. About 37 pips of profit and 7 pips loss = 30 pips net profit.

No problem at all : we must accept winners AND losers.

P.S. : I opened an MT4 demo account with FXPro - Hope there will be a great EA developped and we will all profit of it.

Quoting Bom-Bom
Thanks hmaoui, I think this is what I'm looking for.
I think if I'm already in a position, when DMI+>DMI- change to DMI+<DMI-, that is the time for me to get out.
BTW, in terms of GMT, do you trade this strategy from 7 am GMT to 3 pm GMT? (UK Open to EU close time)

BTW, there's a question at below chart. I think this is the time where I must accept the SL. And when do we need to change to 1 min chart, and when do we need to use 5 minute chart? Please confirm, Thanks.

Best Regards,
Bom-Bom
  • #237
  • May 4, 2011 7:34am May 4, 2011 7:34am
If you trade the 1mn TF...lookt at your 5mn Chart and you will understand why it should be smart to wait for a pullback on 5 mn before entering long
  • #238
  • May 4, 2011 8:21am May 4, 2011 8:21am
Quoting hmaoui
P.S. : I opened an MT4 demo account with FXPro - Hope there will be a great EA developped and we will all profit of it.
Wow..great news! can't wait to see the EA

Quoting hmaoui
If you trade the 1mn TF...lookt at your 5mn Chart and you will understand why it should be smart to wait for a pullback on 5 mn before entering long
So..when we see the pullback on 5M, we'll change to M1 to find opportunity to enter?

Best Regards,
Bom-Bom
  • #239
  • May 5, 2011 9:23am May 5, 2011 9:23am
Hi, I'm following this thread with great interest since I'm still learning about forex so thanks to all
I'm testing the strategy on a metatrader4 platform and I'm having a lot of false signal. Looking closely at the charts posted by hmaoui I noticed some differences in the data.

In metatrader there is the ADX indicator (Average Directional Movement Index) and not the DMI (Directional Movement Indicator), I thought the +DI and -DI were the same but they seems to be different.

Look at the charts attached, the first is from hmaoui and the second is from my platform in the same moment (the difference of 3 hour in time is from the timezone of fxpro on cyprus). As you can see the +DI and -DI cross twice on my platform but are well separated on the hmaoui's chart. If you look back you'll notice other differences.
I see that also Bom-Bom is using metatrader with ADX, do you know if there is a different DMI indicator? The only parameters are the period (14) and "apply to" (close).
I'm a software developer so it's not a problem for me to make a new indicator if we have the correct calculation method...

The other difference is on the stochastic, if you look at the same 2 charts you'll see that mine (5,3,3) is very different from the hmaoui's one.
For what I know the stoch of mt is a full stoch and the slow stoch is a 3 period sma of %K. Again, I can make a new indicator for this...

any comments?
Attached Image(s) (click to enlarge)
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  • #240
  • May 5, 2011 3:28pm May 5, 2011 3:28pm
Hi Marco...

See the picture I attach.
there's no big difference.
Different Brokers, different Price. That will form different view of indicator. But if you look closely, there's no such big different. On your ADX @ MT4, just make the blue line disappear.
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