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Attachments: Simple 7 Strategy
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Simple 7 Strategy

  • #41
  • May 12, 2012 9:35am May 12, 2012 9:35am
Quoting henryduncan1
Thanks akatom2u to share simple trading strategy with us. As you said that these can be used in any timframe but I am interested to know the best timeframe for it.
Henry, I used to be a long time trader using the 4h charts and such, however sometimes the retracements could be 50-80+ pips. I just think it wiser to take profits when you have them and wait to enter the trades near the ends of retracements (of course nobody knows the EXCACT end of a retracement).
My favourite time period for Simple 7 is 15m, I can and have used 1h. 15m works great because you can see directional changes in the market alot faster than 1h, 1d charts (less lost to retracements or even market reversals). Less than 15m can be misleading about the actual trend of the market and very often does not lead to 10-20 pips ema crosses.
I believe the Simple 7 strategy is great for entering trades. As for exiting you have to use your own trading abilities. If you look in the last week of my trades posted, one of the trades was for about 46 pips, that was one where I manually moved the SL a few times and then set a trailing stop loss for the close.
I can tell you the simple 7 strategy has a very high rate of success leading you into a profitable trade, if you are able to exit in profit is up to you. During my time as a trader I have learned many ways to manage trades and use several methods depending on the circumstances to manage trades. When I am not able to watch the trade, I set for example 10-20 pips TP and 10-20 pips SL and go to work for the day.
I hope this helps, many pips to you traders, be blessed! :nerd:
  • #42
  • May 12, 2012 9:41am May 12, 2012 9:41am
MA crossovers of this simplicity are unlikely to be profitable over the long term. Has anyone back tested this. If you do you are likely to be unpleasantly surprised. Can you say "whipsaw".
  • #43
  • May 12, 2012 9:59am May 12, 2012 9:59am
Quoting Winston Reed
MA crossovers of this simplicity are unlikely to be profitable over the long term. Has anyone back tested this. If you do you are likely to be unpleasantly surprised. Can you say "whipsaw".
This is the second time in two days I have heard backtesting... Backtest without an exit, of course that will not work.... lol. I never had much confidence in backtesting live strategies anyway, you eleminate a huge part of the equation when you do backtests on live trading strategies.

My thread is not long, please read it before posting cautionary comments like this one, it is not relavent to the thread.
  • #44
  • May 12, 2012 10:14am May 12, 2012 10:14am
Quoting akatom2u
This is the second time in two days I have heard backtesting... Backtest without an exit, of course that will not work.... lol. I never had much confidence in backtesting live strategies anyway, you eleminate a huge part of the equation when you do backtests on live trading strategies.

My thread is not long, please read it before posting cautionary comments like this one, it is not relavent to the thread.
I did read it all. My view is unchanged. MA crossovers look sexy but fail to take into account the basics of price action. Long above and short below is too simplistic. I have used MA crossovers in conjunction with MACD and Bollinger bands and had some intermittent success but abandoned them as they really negate true price action. Anyway I truly wish you luck and since I am curious will follow the thread. Would like to see more chart posts with your trades. Recently you posted some results which look good but for a short period of time. Anxious to see longer term results.
  • #45
  • May 12, 2012 11:14am May 12, 2012 11:14am
OK I made a EU chart with the 7/50 emas and looked at 15M time period. Certainly there are some moves that are impressive and pips add up but the whipsaws quickly eat into the profits. The 7 ema often erratically moves back and forth over the 50 ema which is common with crossover systems. Ok here are some criteria:

1. Don't enter when 50 ema is flat - no problem but often the 7 ema takes off from a flat 50 ema for quite a few pips so this criteria is questionable. It takes a while for the 50 ema to show direction. By that time the move may already be over.

2. Once the 7 ema crosses the 50 ema wait for a retest when the 50 ema is definitely trending - This works sometimes but where is the exit? Exit when a 15M candle closes above the 7ema or when the 7 ema gets near or touches the 50 ema. Yes some pips but again in the long run the pips will go negative - I guarantee it.

The above are common problems with all crossover systems. Choose your poison 5/13 cross, 10/100 cross, etc. etc. They are all the same. Perhaps one can find an edge with a crossover but additional entry/exit criteria are needed.

Backtesting is a valid tool. Define your criteria for entry and exit then backtest. If it doesn't work what makes you think it will work going forward?

So why so cynical? Been trading for 4 years now and I've seen and done it all. Overly simplistic EMA crossover systems lure many newbies in only to blow their account or get depressed as the system racks up losses.

If ema crossovers as simplistic as this one worked so well then everyone would be doing it. Just think logically about it!

The fact that this thread started in 2010 and in 2012 only has a few pages speaks for itself. Just look at the successful threads in FF. None of them are this simplistic.

OK I'm done ranting. Just hate to see newbies sucked into losing system.
  • #46
  • May 12, 2012 11:41am May 12, 2012 11:41am
Perhaps some kind of filters need to be employed... Cross overs may not be tradable directly... "meaning when it happen"... using it with price action may be a powerful tool.

Think it this way when the cross over do happen don't pull the trigger yet... confirmed it via other tools such as support/resistance in the higher time frame, directional bias(via fundamentals/technicals/sentimental) and so on.

I trade the 15M using some kind of filters such as the simple 7 strategy but as a "ringer" than I look to my other parameters before I enter a trade. I do not usually post cause I trade full time and i happen to chance upon this thread to see how many people are trading in the 15M... I am not interested to teach or start a thread... but certainly the cross overs has it's place in Fx trading. One has to search to get the best combination that suit his style of trading to earn a living in the Fx market.
  • #47
  • May 13, 2012 7:39am May 13, 2012 7:39am
Agreed. Using only the crossover as a signal is destined for failure. Using it as the initial setup followed by another signal such as bounce from a s/r line or supply/demand area. Take a look at a chart with these 2MAs and a 200 EMA. Interesting.
  • #48
  • May 13, 2012 7:53am May 13, 2012 7:53am
Here is a possible tweak to make the system work better. The red MA is a 200 ema, blue 50 ema and white 7 ema. The 200 ema is trnding down so one would only take shorts when the 7 ema crosses the 50 ema to the downside. Exit when price comes back to the 50 ema.
Attached Image (click to enlarge)
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  • #49
  • May 13, 2012 8:01am May 13, 2012 8:01am
Quoting Winston Reed
Here is a possible tweak to make the system work better. The red MA is a 200 ema, blue 50 ema and white 7 ema. The 200 ema is trnding down so one would only take shorts when the 7 ema crosses the 50 ema to the downside. Exit when price comes back to the 50 ema.
I agree that the 50ma is a better "get out" than the 7ma; a little more room to breathe but might cause some anxiety for some.
  • #50
  • May 13, 2012 11:53am May 13, 2012 11:53am
Added a MACD as an additional filter. In general when MACD is below zero one considers shorts and when above zero consider longs. Also careful analysis can be given to MACD spikes above the zero line in a downtrend and spikes below the zero in an uptrend as retracements. Hey I may play with this on demo. Any thoughts anyone?
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  • #51
  • Edited 1:30am May 14, 2012 1:27am | Edited 1:30am
As long as you have done some testing "backward and forward testing", and the result is satisfactory you are ready to go... small lots at first than load-up. You must be comfortable... my 2cts worth... Good Luck

mikelee
  • #52
  • Edited 1:30pm May 14, 2012 1:16pm | Edited 1:30pm
This trade didn't follow the rules of taking a trade on the MA crossover. Notice the white ema crossed the 50 ema and the 200 ema to the upside signaling a long trade. But notice the grey rectangle denoting a supply zone. So for me PA moved up to the supply zone triggering shorts out of the zone to the downside. The 50 ema did not cross the 200 ema. The 7 ema cross only denoted a pullback. If one would have taken a long upon the 7ema crossing the 50 ema a loss likely would have been incurred. So proper interpretation of emas in the context of overall price action is important. Also in this case G/U is downtrending in this time frame. I have close half position and moved other half to break even.
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  • #53
  • May 15, 2012 5:47am May 15, 2012 5:47am
As in previous post left second half run. This is it.
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  • #54
  • May 16, 2012 7:05pm May 16, 2012 7:05pm
Quoting Winston Reed
This trade didn't follow the rules of taking a trade on the MA crossover. Notice the white ema crossed the 50 ema and the 200 ema to the upside signaling a long trade. But notice the grey rectangle denoting a supply zone. So for me PA moved up to the supply zone triggering shorts out of the zone to the downside. The 50 ema did not cross the 200 ema. The 7 ema cross only denoted a pullback. If one would have taken a long upon the 7ema crossing the 50 ema a loss likely would have been incurred. So proper interpretation of emas in the context of overall...
If I would have taken that 7/50 long trade I would not have loss, how many pips upwards did that price go!
  • #55
  • May 16, 2012 8:27pm May 16, 2012 8:27pm
Quoting akatom2u
If I would have taken that 7/50 long trade I would not have loss, how many pips upwards did that price go!
Perhaps. But what is the exit strategy? The trend being down as denoted by the 200 ema if one waited for the 7 ema to cross back below the 50ema would have been the better trade. Need tighter criteria for entry and exit. Anyway price action according to supply and demand really defines the entries and exits. The MAs are quite lagging and likely to get one into moves just as they end.
  • #56
  • Edited 8:53pm May 17, 2012 8:49pm | Edited 8:53pm
Quoting Winston Reed
Perhaps. But what is the exit strategy? The trend being down as denoted by the 200 ema if one waited for the 7 ema to cross back below the 50ema would have been the better trade. Need tighter criteria for entry and exit. Anyway price action according to supply and demand really defines the entries and exits. The MAs are quite lagging and likely to get one into moves just as they end.
You seem to get my strategy at times and then you do not sometimes, It seems you have forgotten what you read earlier in my thread. We would not have entered the long because the 50ema was in a downtrend. Yes, as you just said, the trade would have been the sell and it would have resulted in many pips downward into profit. Also as stated in previous posts I would have placed a stop loss order somewhere in profit after achieving profit and then perhaps even moved that into more profit later. The whole point of this strategy is to get you into profit, not showing you when or how to close trades. I saw your suggestions earlier about MACD and looking for an exit indicator, I like to see you working on your exit strategy. I prefer the Awesome Oscillator as far as oscillators go. I might have suggested earlier that I use the RSI as a filter to enter and exit. Often I just let my SL work or set a trailing stop loss to close a trade. I hope you apply the Simple 7 strategy like I have described to enter trades for at least a few days. I gained 66 pips this week, very part time using Simple 7 as part (most)of my entry triggers and this is Thursday. Many pips to you and may your exits be profitable!
P.S I cannot see your chart well enough to see the price or the timeframes... maybe its my little computy...(Nevermind I zoomed the pic and saw the price and timeframe.)
  • #57
  • Edited 7:45pm May 19, 2012 6:34pm | Edited 7:45pm
66 pips counted on this account, 52 pips on a AUD/NZD trade on another account and 13 pips using my cellphone account on the EUR/USD for this week.
Attached Image (click to enlarge)
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  • #58
  • May 19, 2012 8:07pm May 19, 2012 8:07pm
This last week was a great example for me when the E/U decided it had had enough of selling and was convergent awhile and even had the buyers moving the market upwards some. Because I work on the 15m charts, my risk of loss was my standard 20 pip stop loss even if a serious market reversal was apearing.
I also entered a AUD/NZD trade and had no reason to exit it until the end of the week so I made about 52 pips on it alone.(about 2 days)


Read more: http://forums.babypips.com/free-fore...#ixzz1vNKzg6a1
  • #59
  • May 19, 2012 10:05pm May 19, 2012 10:05pm
I currently use (15m chart) the RSI with a 20 period setting on the 5m, 15m and 1h timeframes as a premium filter (buy above 55 and sell below 45). When the Simple 7 cross is ready, wait for the 3 RSIs to correlate or at least the 5m and 15m. Consider an exit when the 5m or 15m RSI crosses the 50 level.
Quoting leodlaure
Hi Tom,


It certainly looks like a simple strategy. Im keen to try and hopefully make back the money i have lost all this while..

hope this doesnt sound dumb but do you trade during news/ announcements? if not, any any time buffer to avoid before and after news?

can you elaborate more on the RSI(7)? do you wait till it hits and 30% or 70%? I was running through the charts and it didnt give a proper buy / sell signal when either EMAs cross..

Thanks for reply..cheers!
  • #60
  • May 20, 2012 4:26pm May 20, 2012 4:26pm
Quoting akatom2u
66 pips counted on this account, 52 pips on a AUD/NZD trade on another account and 13 pips using my cellphone account on the EUR/USD for this week.
Nice Trades
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