The Hubris System

I mentioned in my other thread about daily heiken ashi trading that I was looking into trading shorter timeframes. This system is the result of what I have been doing. It is different from the other system quite significantly but still uses Heiken Ashi as I believe they give a clearer picture of the market movement. This is still somewhat a work in progress as I haven't done extensive forward testing but let's just say it looks good. If you want to trade it start small until we get definite strike rate, etc numbers.

There are lots of threads about trading eurusd 1 min charts and they all more or less say the same thing, trade in the direction of the 1 hour/15 min and take lots of small wins rather than trying to hit a home run. This is merely my take on it and, I believe, a simplification of what is already here but not a simplification too far. It's nice and simple but works.

The basic system is to wait for a trend to develop on the 15 min chart in the same direction as the hourly. Once you have a trend in place then you go to the 1 min chart and buy/sell in the same direction taking 10 pip gains. The system consists of 2 moving averages and heiken ashi candles, that's it. It is an ma cross system of sorts but filters out which crosses you take rather than trying to trade every cross.

The setup... a 15 min eurusd chart with a 100 sma close, a 10 sma close and heiken ashi candles. I also add the candle time and a ma cross alert (all provided below) so you don't have to sit and watch.

Next add exactly the same to a 1 min chart but I also add a tick value indicator that I have modified myself and an EA that automatically places a stop loss and a take profit.

I watch these 2 charts side by side (in Metatrader go to 'Window' and 'Tile Vertically') so that you can get a picture of what is happening on both at the same time. What I am watching is the Heiken Ashi candles trending up and down. In a nice smooth down trend (the perfect world) you will see 10 red - 5 green - 10 red - 5 green, the price is zigzagging down the chart. Of course this doesn't always happen in real life but just be sure to look for a smooth trend on the 15 min chart. For a downtrend you want to see the 10 sma below the 100 sma and the gap between the two widening. See picture 1 below.

When the price closes below the 10 sma on the 15 minute chart then that is the signal to start watching the 1 min chart for shorts. On the 1 min chart I am watching the price action again waiting for nice smooth ups and downs. When I see a nice smooth pullback of green heiken ashi candles moving up (I like to see at least 4 or 5) then I am looking to sell the continuation of the downtrend. The signal to enter a trade is when the price closes below the 10 sma on the 1 min chart. Enter at the market as soon as the candle closes. The EA takes care of the stop and take profit. Then I watch the trade unfold. It can take a few minutes for the action to unfold but you have a good chance of your take profit being hit within 4 or 5 mins. If the trade does not go the desired direction and a green ha candle forms then I will exit the trade as soon as the top of that candle is breached to the upside. In this way it means it is unusual for your full stop loss to be hit, usually you can be out for 4 to 6 pips. See chart below for examples.

I recommend limiting the number of trades you take per day. It is better to take 1 or 2, or maybe up to 5 per day but wait for the best signals than to sit there all day and take every signal. I find that the first 1 or 2 trades after the 15 min signal are usually the best.

OPTIONAL: As we are using Heiken Ashi candles and you can experience some quite long runs even on 1 min charts it is an option that you may want to trail your stop rather than take profit at +10 pips. I would use the same method as above, when a green ha candle forms then watch like a hawk for the top to be taken out, if this happens then close straight away. Or just trail your stop a couple of candles behind the current one.

I have described all of this as a downtrend, obviously for an uptrend you just reverse this.

I have done my best to describe the system in words, there are charts below that may help to describe things better. It is possible that I have missed out some of the ideas I had when I started writing this but I will add them to this first post and post them in the thread if they come back to me. I believe I have got the basic system down pretty comprehensively.

Any further questions then of course ask. Also I'd like to say a big thank you to the people, whoever you are, who coded or otherwise supplied the indicators and the EA.

The EA and the tick value indicator in the next post.

Here are the other indicators and the EA. The EA is an auto stop and tp but also you can trail the stop or move the stop to break even or lock in profit when your trade reaches a certain level in profit. I don't tend to use that function and just exit according to the above criteria if things aren't going my way. Play around with it and see what works best for you. Don't forget to add an extra 0 if you use a 5 digit broker. By the way, if you set the sl to 10 and the tp to 10 it place these levels at exactly that amount away from your entry price and it accounts for the spread, pretty neat.

The other two indicators attached are the tick value indie that I have modified a little with the help of a few good people from the forum. Hayseedfx was one and there were a few others, thank you to them.

The tick value modified 1 gives you more information. This would be useful if you wanted to trade anything other than eurusd. It displays the tick value, the spread, the pip size to trade at x pounds per pip (not sure if or how it works for dollars but try it out, although I believe it is easier to calculate dollars because 1 lot is always 10 bucks so 2 bucks a pip is 0.2, in gbp it is not so straightforward) and the lot size you should use to risk x % of your account on x number of pips. All of these are definable in the inputs section.

The tick value modified 2 is a slimmed down version if you know the rest of the info already.

The x and y coordinated can be changed which is useful for when you are tiling the charts. I like to use tvm2 and put it in the bottom right corner of my 1 min chart.

A little bit about position sizing while we are here. I recommend using 1 micro lot or a demo account until you have traded this for a few days and feel comfortable taking the trades correctly and that you can be profitable doing so. After that then a sensible amount would be 1 or 2% of your account. If you are using 2% of your account then you only need 2 succesful trades a day to bag 4% which is a respectable gain per day. I seriously recommend having a cutoff point for losing trades during the day. I like to keep going until I have either 2 winning trades in a row or 2 losing trades in a row. This stops me from keeping going until the red mist has me fully in it's grasp. Use your common sense and what works for you with this.

Incidentally, I am happy to trade live with newer traders via skype (screen sharing) as and when I am free to trade if anyone is interested?

Hm.. I can't find the EA in attaches.

It's called Mauro Trailing mq4

I've had a look through some other pairs and found that this would work nicely with eurusd, gbpusd, audusd and usdjpy although the moves on usdjpy tend to be smaller so you might have to adjust the sl and tp. I'll look into this as time goes on. The first three do tend to trade in the same direction but sometimes one is smoother than the other. The only concern is the extra spread on the other pairs. I am looking into moving to an ECN broker really soon so the spread will not be an issue whatever pair I trade.

I don't want this to be a 'live trading' thread with me calling out trades but I will post setups and trades as I trade them so you can follow along. Money where the mouth is.

can u share the template. dont understand which parametrs i need to use on MA Crossover indicator.

Ok, here. The settings are 1 for the first MA price. 0 to denote sma. 10 for the second MA price. 0 to denote sma.

I take the 2 ma alert off the charts that I am not using so if I am watching 1 hour waiting for a cross I will just have the alert on that then put it on the 15 until a cross and then reapply it to the 1 min.

Audusd looks nicest today so I'll be trading that.

2 trades in quick succession there. -7 and +10 so a small profit so far. I'll post charts later. I'm looking for a nice pullback now before I take the next trade.

Next trade -5. Eurusd and gbpusd are pulling back nicely on the 15 min so if either of those signals downwards again today I will switch to one of those.

Another nice +10 so +8 pips for the day so far. Now I've had a few trades on AudUsd I'm going to leave that pair for a while and wait for the next 15 min pullback. Eurusd looks really interesting right now. Here are some pics more or less 'as it happened' so far.

Here is what I am seeing on eurusd.

Pulling back a bit too far now. I'm going to wait for a clear 15 min cross before I trade again now.

Gbpusd looks interesting but it's not a very clear pullback. I think I'll pass on this one.

xxxusd all pulling back on the hourly now so I'm waiting for a turn on the hourly and then I'll move back to the 15 min.

Not bad today +8 pips. Might call it a day there.

I'm on holiday for two weeks now so won't be trading. Hopefully someone is finding this interesting/useful? See you when I get back.

Have you ever tried the one hour and 15 minute charts for trend status and then, when appropriate, make the trade entry off the 5 minute chart?
Would like your comments, as this system seems to be just what I wanted. Good luck on this and keep the ideas coming.
Thanks !
66trader66

Yes, over the last few weeks I have tried all sorts of stuff but I find the 1 min entries the best. I can't think of any reason why 5 mins wouldn't work. I suppose it's down to what works for you. Why not trade every day for the next two weeks using 5 min for entries and post the results here. I am away on holiday so it won't bother me and it may help some other traders?

Hugh, I will try this to ascertain what results the 5 min charts get vs. the one minute, but I have a question. When we are determining a Trend, do we look at the 100 SMA or the 10 SMA on the various charts? Or both? There are times when the 100 SMA and the ten SMA on the same chart contradict each other. There are times when it is extremely easy to recognize a trend and other times questionable. Maybe, if you have the time, you could explain this in more detail. Thanks,
66trader66