Max's Simple Ride the Wave System

Quoting Darryl

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Think of the 20 ema as equilibrium, or the balance line which is the point at which buyers and sellers AGREE on price. Remember we are dealing with energy both of the market and its traders. Energy ALWAYS seeks balance through the path of least resistance.
Think of the 20 ema as a magnet which attracts price (equilibrium). Outside forces greater than the power of the magnet ( buyers or sellers) pull prices away from the magnet. As price pulls away from the magnet, it takes the 20 ema with it but at a slower and lagging rate. The price reaches a...

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function run()
{
// Open a Daily chart 
BarPeriod = 1440; 

// Place 20 EMA
var EMA20 = EMA(series(priceClose()),20);

// LONG SIGNAL occurs when a complete candle CLOSES above the 20EMA 
 if(priceLow(1) > EMA20 

// Now you are looking for short candles (close is lower than open) 
and priceClose() < priceOpen()

// Always stay out of the market when price touches penetrates the 20EMA. 
and priceLow(0) > EMA20) 
{
// ENTRY. 1st option is to place a BUY ORDER either 
// half way up the short candle from the close to the high
Entry = 0.5*(priceHigh() - priceClose());

// STOPS. I tend to use the 2 candle low or 100pips, whichever is smaller.
Stop = max(LL(2),priceClose()-100*PIP);

// Consecutive short candles means multiple positions entered 
// but I cap it at 3 max per pair.
if(NumLongTotal < 3) 
enterLong(TrailingStop);
} 
}

//TRAILING STOPS. 
int TrailingStop(TRADE *tr)
{
// Do not adjust the stop until the trade is at break even or in profit. 
if(tr->fExitPrice > tr->fEntryPrice) 
{
// for a LONG position the stop is at the bottom of the 
// previous 2 candles where the #2 candle must be lower than the #1 previous. 
// This may be 3 or 4 or even 5 candles further back. Draw a horizontal line at the 
// low of the previous candle and look back and see if further back another candle is 
// lower, then use that 2nd low as your stop. 
var newStop = priceLow(1);
int i;
for(i=2; i<5; i++)
if(priceLow(i) < newStop) {
newStop = priceLow(i);
break;
}
tr->fStopLimit = max(tr->fStopLimit,newStop);
}
return 0;
}

Quoting jcl365

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Hi Max - very interesting thread. You have described your system very precisely, so it's a matter of 5 minutes to put it in code and backtest it in a simulator... but when I do that, I find that in the long run the system is losing money. It loses in all markets.

Can you check if I did something wrong in simulating your system, or if you used some additional rules that I had not considered? This is the code, with your description as comments (after the //):

[code]function run()
{
// Open a Daily chart
BarPeriod = 1440;

// Place 20 EMA...

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Quoting fondofallthi

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Enjoying the thread and I will be starting up my demo testing today. I will be using the candled high to set a pending order.
One thing I want to ask is if I look at the GBP/USD chart it appears that I would have set my order on the 18th and it would have enacted on the 19th. Is that correct?
The AUD/USD may have had pending orders from the 14th but none would have been enacted.
The EUR/USD would have caught me from the 15th?
USD/CHF would have caught me on the 15th?
AUD/NZD would have got me as well.
I am wondering if you suggest only starting...

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Quoting jcl365

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Hi Max - very interesting thread. You have described your system very precisely, so it's a matter of 5 minutes to put it in code and backtest it in a simulator... but when I do that, I find that in the long run the system is losing money. It loses in all markets.
Can you check if I did something wrong in simulating your system, or if you used some additional rules that I had not considered? This is the code, with your description as comments (after the //):
Does this look ok or have I forgotten some rules that would convert this losing system...

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Quoting marshalmax

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So, this system is simple:

1. Open a Daily chart – this is simply an attempt to create something that only requires a few minutes a day to review and action.

[size=3]2. [font=Calibri]Place 20 EMA – some sort of line in the sand. 20 days represents to me around a month of prior movement and therefore time for a change to occur. Short term trends changing regularly. It also means that on a longer term trend we may be able to make pips off a correction...

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Quoting marshalmax

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Thanks for your input but I dont think this system can be mechanised. There is too much "gut feel" in the entries and stops. The idea behind this thread is to introduce the concept and work with those interested in tightening the rules for a profitable system. During that process we all get the same head space and thought processes and thinking alike.
I am not surprised the attempt at automation resulted in a loss but I do feel the system will be good once the full rules are locked down - both in trending and ranging markets.

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Quoting marshalmax

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Some analysis of the bad trades:

Originally this system was the testing of a standard 6 and 21 MA crossover. I found a lot of the crosses were fake or would go a little way and reverse. I wanted to see price cross and get a confirmation and then ride that little wave as far as I could and get off for a new wave. Rather than wait for 6 to cross 21 which potentially is 2 weeks after the new trend begins and then try and pick up any remaining movement, often not occuring at all. So I removed the 6MA and reduced 21MA to 20. AND focussed more on...

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Quoting jcl365

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Hmm, as I started trading, experienced traders told me: never ever trade with "gut feel"!
Anyway some comments on "tightening the rules". I fully agree that this is the key to make this system profitable. However, I see no real attempts in this thread to fix the rules - that's why I posted the algorithm. Obviously you can only tighten the rules when you know if a rule is profitable or not. But how can you know that without testing it? Tweaking parameters due to the outcome of some single trades can not fix a trading system. You need the...

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Quoting stevegee58

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This is similar to the "Quick and Dirty EOD". Basically he waits for a daily bar to cross the 10 EMA and then waits for a dip to enter.

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Quoting marshalmax

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Surely we can get more than 50% accuracy with a risk reward ratio of more than 1:1?

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