75 pips plus daily using 1 min chart (not scalping)

Here is the ADR indie that you requested
Q

The M5 chart uses a 20-period RSI.

Hi,

Another question about the RSI: does the rsi in the 5m tf have to be above/below 55 & 45 or do you use the EMA5 of this rsi for this signal?

Thanks

Yes, safest trades above/below 55 & 45. EMA 5 smooths out the RSI. You can use either.
Q

Hi,

@JazzmanQ2: thanks for the reply

Another question: Is it necessary for the price to be near support or resistance levels in order to take the trade? While backtesting I noticed some possibly good trades (all signals where present) but price was not near any of the pivot levels or the high/low of the day.

I take profit when the fast macd moves back under/above the bb lines. Is this the best way to do it?

Thanks!

Bad thing that the ForexFactory moderators are moving this thread around so the people don't find it.
It seems to be a very good system so in my opinion it belongs in the "trading systems forum" where Romex himself first posted it.
Then for some reason they moved it to the commercial forum and now they have again moved it to the journal forum.
Not strange at all that Romex don't bother posting anymore in forums nobody reads his posts anyway.
If they let it stay in the systems forum where it belongs it would probably have been a very active thread where people could learn something.

Now it is dead...

Arctic4x

I have the same oppinion on this..

@Romex: maybe you should reopen a new thread? Hopefully they won't move it this time.

I also think it's a very good strategy. I have taken numerous trades (live, small lots) and every single one has been positive. So Romex,thank you for the strategy and there's a few of us hope to see you back soon.

Maybe we can discuss the strategy further until romex is back.
What kind of take profit and stoploss rules do you use to trade this strategy?

How do you use s/r levels for entry? I've noticed good possible entry's while price was not around any of the mentioned levels. However, I sometimes had to close trades with less than 20 pips profit.

Thx

Hello all I am going to answer all the questions in a moment, but before I do that I would like to talk about some something that concerns me quite a bit, as I myself have been a victim.

Here in North America when someone wants to promote or sell a product then it is a very common strategy to do the following. First give a brief description of the product then produce some pretty pictures or documents to demonstrate how good the product is and then release it to the Public. Here I am talking about Trading Systems specifically. Most traders at one time or another have tried many systems and usually given up and gone onto something new. In my mind, it is NOT that the system is bad, it is because the System Creator has NOT put in the effort to really educate the reader. There,s a lot more I can say about the subject, but I am sure you get the point.

I have intentionally NOT posted charts, because I would not advocate even trying the system in DEMO, UNLESS you have a thorough grasp of what the System is all all about.

In this system I first say that I use 1 min charts, then I tell you its silly to trade the 1 min charts for 25 plus pips trades and that you should be looking at higher time frames. I mention I only use 1 indicator and then say that I use both RSI and MACD BB, and EMAs. So am I trying to confuse you? You bet that I am. The confusion is intentional. Until you recognize the confusion then only are you going to really understand the message. I have asked interested readers to do only do 2 things. 1. See what happens at support and resistance and understand the BBMACD tool thoroughly. I do not consider EMAs as a tool and in actual fact do not use the RSI at all. Now let me tell you the actual charts that I do use. No kidding anymore.

On any given pair (EUR/USD for example) draw two charts. A 1 min chart containing a 20 EMA and a 100 EMA lines. and a MACD BB set at 38, 120, 20 11. Just below that open a 5 min chart, hide(shrink) the candle information, and have a MACDBB section visible only, settings same as in the 1 min chart. Side by side have the same windows visible for another pair. So on a given window, you should have 4 charts showing. Of course you still have the pivot points and round numbers showing on the 1 min chart.

Now lets deal with some questions asked. Someone asked what the arrows show on the charts. The arrows are alert signals showing when price goes above or below the 20 EMA. Here is an an explanation of the 20 EMA. The 20 EMA is the very the place where momentum trades usually start, on any time frame. The 100 EMA represents the 20 EMA on a 5 min chart. To understand momentum trades do a FF search on " 5 min.MOMO trade" and just read the first few posts. Before I settled on the present system I used that system on 3 different pairs on a 1 min chart, but I got so many signals that it became more of a hindrance then a help and do not use it anymore Now I use the EMAs more for information. For long trades 20 EMA must be above 100 EMA and for short trades, 20 EMA must be below the 100 EMA- thats it for the EMAs.

Now support and resistance.Someone pointed out that often a profitable trade may start from another level that does not coincide with our support and resistance lines, that is absolutely true. Now i will tell you that I do NOT use support and resistance for ENTRY, I use it only for EXIT. I set a hot key to enter every trade with 1 click. The Stop Loss is set at 20 pips( and that includes the spread), The take profit is set at 50 pips. Now I will take any profit ABOVE 25 PIPs profit, if price hits a Support and Resistance level. This brings sanity to the system, and prevents guesswork and remorse. Remember I am only looking for three 25Pip plus trades. The 50 pip target sometimes gets a hit when there is extreme momentum, such as a news releases. I have absolutely no regrets on taking my 30 pip profit only to see that price has gone up a further 50 pips. I dont even think of creating exceptions and filters for such situations.

Regardless what system you use, if you are constantly on the right side of a trade you cannot fail to be successful. Here is what I do, to constantly stay in the right direction. As long as price is not above R2 or below S2, my long trades will be when price is above the daily pivot, and short trades when it is below THE DAILY PIVOT. I would highly recommend that you do a Google or FF search on Pivot point trading, to give you an insight on what direction you should trade. By the way if price hits S3 or R3, is the only time I will trade against the macd bb.

Talking about the MACD BB, only take MACD BB signals on the 1 min if the 5Min MACD is going or about to go in the same direction. The important point to take note of, is to trade the MACD only when there is an obvious angle to the slope of the MACD BB.

Bye for now

Romex

I have the indicators set up on the 1m and 5m charts for E/U.

For a Long entry:
Price is above daily pivot
20ema crosses above 100ema
BBMacd is blue on both TFs with at least one sloping up

Is this right?

Nice to have you back, and so the journey continues..........

Hi Romex,

nice to hear you.
thank you for the new information, very informative!
Btw, I believe there is a small error in your last post. The standard deviation for the MACD BB should be 1.1, not 11 I assume?

@BJ1: I think the answer you are looking for is mentioned in post #32 but now fast macdbb = macdbb in 1m tf and the slow macdbb = macdbb in the 5m tf.

You are absolutely correct, but even without looking at the charts, let me point out a couple of things, that will give you added percentage in your favour.

First make sure that you are trading when the market is active. In quiet markets indicators in general don't work very well. Secondly, and this just my personal opinion, I will only take the trade if GBP/USD is also indicating an up move.

Also thank you for pointing out that the MACDBB settings are in error in my previous setting. 1.1 is the figure to use and not 11.

@Romex: for a long trade, do you also enter when the fast (1m) macd is sloping upwards but has not yet crossed the upper band (while all other signals are present)? Or are the rules still the same as mentioned in post #32?

Thx

Today, something came up on the charts, that I should have mentioned earlier.
This deals with a very important topic that will ensure that you are on the right side of a trade. It concerns taking trades when you are close to the hi and lo of the day.

Within the time frame that I trade, there are individual sessions that you need to take note off. First the European session open time - 03.00 EST. The UK open time 04.00 or 04.30 when UK news announcements are generally made. The US open time at 07.00 and/or 08.30 when US News announcements are made and finally 10.00 and/or 10.30 when the US market alone is open.

Now it is nearly always a tendency during these times and at the start of that session to want to go in the opposite direction where prices were heading just previous to that new session. Two things usually happen. Either you will see a clear reversal or it will consolidate awhile and continue on with the previous trend. So at the start of any of these sessions keep a very watchful eye on what price is telling you. As indicators themselves are usually lagging, and the MACD even more so; and you may be entering into a trend which is in its last legs, soon to reverse. SO AT THE START OF THE EUROPEAN and US OPEN if you are close to a hi or a lo of the day, and you want to trade in the same direction as the HI or low don't unless you see for sure that a reversal is very unlikely. This observation is extremely important. Now I should point out that reversals are more the normal then trend continuations.The most annoying thing about these entries is not the fact that you will be down 20 pips; but the fact that you may have lost the opportunity to gain a good number of pips in the opposite direction.

Today, both for EUR/USD and GBP/USD, the BBs were lined up correctly and both were above the daily pivots. If you took a long trade in the UP direction you would be soon counting your losses. EUR/USD reversed for over a 100 pips and GBP/USD reversed for over 60 pips. Both pairs were very close to the highs of the day and a major S/R at the 3.00 am Start time

Now I will point out that that I did not take these reversals, simply because price was going in the wrong direction with respect to the pivot, although all the other indicators were pointing beautifully in the direction of the reversal. I have no regrets about not taking the reversal trades. Soon after the British open the EUR/USD did go below the pivots and the BBs had got even better, so I took the trade and manually exited at the next S/R after 25 pips for a 40 pip profit. Now all this time as EUR/USD had bypassed the pivot, GBP/USD, although did go down did not really crossover the pivot and when it reversed, just prior to the US open I took the long trade made a frther 50 pip profit and was done for the day.

So please keep this topic very close to your chest, this happens just about every day, do not rely entirely on indicators solely. If you follow the system and still show a loss do not start creating filters and adding all sorts of indicators. That will solve one problem but create a lot more. Please ask when these losses occur. There is usally a valid explanation, which has got not got nothing to do with the system and usually is is an intangible that you were not aware of.

Now it is just after 09.00 EST GBP/USD is well above S2 and all the indicators are lined up to go even higher, nevertheless I have just taken a reverse trade at mid pivot above S2,as GBP/USD has gone over the ADR for the day, let's see what happens

Good luck

Romex

Hi,

I've added a graph with a failed setup as an attachment; it shows a situation I encountered while backtesting.

Price is above the pivot line (not shown) and the dashed line around 1.443 is a pivot mid level. Price goes down first and goes back up just after being stopped out and hits the psych level 1.4450 mark later on; This would have been my initial take profit level for the stopped out trade (not shown on the chart).

Now, I wonder if it wouldn't be better to place stop loss limits just below support/resistance levels instead of using a fixed 20 pip to avoid situations like this? This allows for short term retracements of the 5m trend. In the example the slower macd is still above the second bb while the stopout happens. Wouldn't it sometimes be better to stay in the trade even if we're more than 20 pips down, depending on the situation?

btw, I did not check to see if gps/usd was also going up, this might have avoided the bad trade.

Thx!

Hi Romex,

Take a look at the snap shot of my screen. Would this be a correct set up?

Thanks in advance

Kurt

.

I am glad you asked the question and I will give you the answer. It may sound very long winded but bear with me because it is highly instructive.

Firstly I want to again point out a very common problem, here at FF. People start backing testing a new system, then come across a situation where all the indicators line up, as the system warrants, but for some reason the reader does get the expected profit. The tendency is to start tinkering with the suggested settings to cater for this situation. As I said before it may solve the problem for that situation but it will cause more problems in the future, until you finally discard the system and move on to the next system, only to find exactly the same problem. As mentioned before you must be aware of all the tangibles to be a successful trader, and that is the answer you should be searching for. But enough of the lecturing and let me give you the answer.

The one thing I have on all my charts is the ADR for each currency pair that I am trading. IN FF search for "daily Range PeterE.mq4" download the indicator and attach it to your charts. It shows the Average Daily Range as text and you can re position it wherever you want.

Now the ADR for both EUR/USD and GBP/USD is nearly always over a 100 pips. now at the time you took the trade the pip movement was only 50 pips for EUR/USD for the whole of the Japanese session and the European session. This is an extremly small movement for EUR/USD This should warn you that something is going on. Either the market is not moving at all,or otherwise or there is something all traders are waiting for.

Now indicators do not work well on extremely slow dates. In fact I read a post here in FF, that I have never forgotten. The person claims that he was informed by a very experienced trader, that one should never enter the trading arena till there has been at least one 30 pip plus movement on that pair. Guess what no 30 pip movements on EUR/USD for the whole of the Japanese and European sessionst. SO ADR and the slow market should tell you NOT to trade, even though the indicators all line up, so here are two intangibles that that give you the answer.

There is another answer for the 1st of June for the slow trade and you should be asking is there some news announcement that everyone is waiting for. A quick glance at the FF calender shows that Geitner, the Treasury Secretary,was to make an announcement at 10.00 EST. Perhaps what he says may make the market move. Sure enough that is exactly what happened on June 1st, and Eur/USD dropped by close to 150 points and your awareness of the intangibles would have warned you of this possibility.

A third answer is YES you should have have looked at GBP/USD and see what it was doing. Go back to the 1 June charts and notice that price was going down all day on GBP/USD, also you had several 30 pip plus movements on that day for gbp/usd. Those so called Gurus that recommend trading one pair only, till you become an expert on it, unwillingly or otherwise do a great disservice to the Forum readers. I am here to tell you that trading one pair only, without considering at least one other positive or negative correlating pair is dumb.

So these are the answers to your Question. I apologize in advance if this post seems to be harsh and critical. I do not intend to offend you in any way. But you did ask a question and a good question it was. You deserve a proper answer, and a one liner would not do the job.

Romex

Hi Kurt:

Excellent charts and that's the way I set up charts.

I do add a couple of extras that you may want to consider adding

1. Add the ADR indicator. See an earlier posting by me to see where you can get it. Often, like in the charts you posted, you will have a choice of which currency to trade and the ADR can help you with your decision process.

2. Add vertical session lines at key periods during your trading day, this will keep you alert during key times when the action takes place. For examples big trends often start with a head fake especially prior or just after news announcements. In the past I have been carried away by these head fakes and taken a trade just because of some impulsive move on the charts. In hindsight if I was aware that the spike may be caused by a news announcement I would have been more careful with my entry. So adding vertical lines at red news announcements may give you a warning to a possible head fake and keep you more alert in such situations

Good luck

Romex