MA Crossover-based system - Squiggles

SQUIGGLES

Hello everyone! I'd like to show you a trading method that I have been using.


About me:
I have been trading FX the last two years, the three years previous to that,
FX was trading me...I’m sure you know what I mean.

Anyhow, this method derives from the MA crossover systems with the significant difference that the signal is generated by the price line (Line Graph Chart) crossing instead of the moving averages.

The idea is to get very early entries with minimal risk and make it as simple as possible and liberate yourself from candle analysis, no need to worry about dojis, marabozus and so forth.
We will be using the Line Chart and two moving averages along with daily pivots for market context.

It is very simple but it does need to be practiced as you will be using your visual / spatial abilities to determine the quality of the trades.

In other words it is NOT set and forget, it’s more like scalping and if you’ve done any of that before you will find this easy.

This is basically an Early Entry Method as opposed to a trading system, traders are encouraged to utilize these rudimentary but effective entries to develop their own strategies.


PROS

The price is your indicator.
Easy to grasp concept
Minimal stop loss required
Numerous signals across all pairs
Excellent Average Win to Average Loss ratios

CONS

Many scratch trades (though losses are minimal)
Strike rate may be low
You must practice eyeballing the set ups.
You may miss the candles...like they took a toy out of your playbox...
Not everyone will be able to do it ...like any other method / system.

SET UP

Line Chart (default Lime Green)
ALMA_v1 Moving average (set at 8 periods, default is 9)
T3 Clean Moving average (set at 13 periods) Thanks to MLaden.
Daily Pivots for market context, bounces. (any kind, regular pivs no fibo’s etc.)
ATR last 10 periods (reference, TP, etc.)

NOTHING ELSE
We use two especially responsive AND smooth MA’s to get very early entries you may check how these differ from EMA’s, SMA’s if you like.
If you are interested in knowing more about the ALMA MA, I attach a PDF doc for background.

There really isn’t much more to add, it is very visual and discretionary, practice, practice, practice.

What it looks like:

The MA's:
+Pivots
+ATR indy

For the sake of convention let's keep the Line Price lime green and the ALMA yellow with the T3 an easy on the eyes blue.

ENTRIES:

Signal is generated when the green price line crosses the yellow ALMA.
This represents the most aggressive entry, if you would like you can wait a bit until it crosses also the blue T3 and or when the MA's get in the right order.
Mind the slope or angle of the MA's in favor of the trade and your levels also, which goes without saying.

As the trade develops....




You'll get some scratch trades...kill 'em quick.
Notice the whipsaw before the trade entry...minimal losses but as you get better you would have seen the MA's have no favorable slope.

Notice above the blue T3 stepping over the ALMA to get on correct side for short position, also always eyeballing the angle and as it develops the amplitude or space between the 2 MA's.

OK, these may not be so pretty, but as you can easily see, quite profitable.




As you can see it is simple, all you need is some practice on it.
You can trade the H1 with a 20 pip NOMINAL SL, which you never need to have it hit.

EXITS

Discretionary, the only hard rule would be when the price crosses back over the yellow ALMA.
Mostly I will close when the pullback looks like a tick or check mark, you can always re-enter if it bounces on the yellow in the original direction. Check the slope and levels, of course.




Here you see a really nice trade with a minimal SL.

And here in D1....very juicy...I don't think it needs more explanation...

Good Luck!

Keep your eyes on the price line.



In D1 particularly I would hold off entry until the Price Line clears the blue T3, for confirmation, though I admit I have not traded this TF much.

Do the 4 indicators go in "Experts" > "Indicators"? mt4 of course.

I hope you plan on sharing more about the system. Looks good so far.

Hmm... looks nice, however I've got a few questions if you won't mind:

1) What's the usual SL you set?
2) Do you re-entry on reverse if you get whip-sawed and your SL is hit?
3) Is this tradeable on all timeframes, or do you prefer 1H+? If so, is there any particular you think this method works best with?
4) Also, how long do you usually stay in trade? Hours / Days...?

Thanks for sharing this, I am a huge fan of moving average systems. Going to start paper trading a bit.

I can't get the indicators to load in "Custom Indicators" on my mt4 platform - anybody else having issues? I can get them into the Experts > Indicator folder, and see them listed there, but when I open my trading platform they aren't in the "Custom Indicator" sections. Any help is greatly appreciated. p.

I really like the looks of the Alma ma. Works rather nicely with my template. Pardon the candlesticks...Thanks and looking forward to new developments.

Hi Endless, thanks for your interest. To answer your questions:

1. This is basically a scalping method, which means you should be ready to kill the trade at anytime.
The blue T3 MA is your trailing / initial stop, but obviously as stated, if the price doubles back OVER the yellow ALMA, you close.
Generally it is dependent on TF and as an example:
On 15M TF I will use a script to execute and I set a 15 pip NOMINAL SL, which means for this method that if you find yourself down 10 pips you are in the wrong entry and you kill it.
On H1 20 pips SL is just fine, and on D1 start with 30-40 pip SL and move it to BE ASAP.

2. Firstly, your SL should hardly ever get hit, you're scalping, do not trade at news times and do not just leave an H1 trade open and walk away unless you have already moved SL to BE or positive.
To consider re-entry you must be in a good looking trade, that is the MA's show good amplitude and slope, the price has gone positive and it pulls back to the yellow ALMA WITHOUT piercing or crossing it.
you do not do re-entries when the MA's are laying atop each other and you see the price create many small peaks, which I call fangs, more on this later.

3. I do not recommend lower TF than M15, which was my initial choice, but I am finding the higher the TF the easier it can be to see the good set ups, which you may have already seen, so yes, H4, D1 are workable.
As to the pairs, all can work, but obviously stick to the most volatile times for the pair, you don't need to get too fancy, E/U, G/U, A/U, E/J.....etc.

4. I have modest goals to me 80-100 pips a week is just fine, I find I can trade this no more than 3 or 4 hours
a day and I will be on my numbers before the week is over, I typically do not trade on Fridays.
On the M15 I rarely stay in more than 3 periods, (45 min.) which describes the length of the usual
impulsive move.
On the H1 you should have 20 to 30 pips by the start of the third hour, you would only stay longer if you are up say, +60, in which case you tighten the stop and go see what your wife is yelling about...

Hope this helps, this is hands-on, demo it and see, it is also intensive you can learn more in a week of this than a month in many other methods.

@JoeyD

Glad you like it it is a very special moving average, thanks to M. Lagarde.
I used to use it in the TMS TDI sys also, but the whole panel like you have is way TMI for me.

You're right, Geo...The funny thing is I hardly look at those two bottom indicators any longer. Old habits....but your system is super-visual. Thanks again.

Thanks a lot for response.

So far +15 pips on demo from today's testing. I have been looking a bit back in to the history and stumbled on to this situation (see attachment).


Would you enter the trade at the circled spots?
- The price is crossing the faster MA, however the slower MA is still 'negative' - would you wait until the slope of the slower MA is 'positive' as well or just fire away when the price closes crossing the faster MA?

Looking forward to test this next week. =)

@Endless:

As I stated, the most aggressive entry is just after it crosses the yellow ALMA, but if you would like to wait a bit and let it cross the blue T3 is your call...this is discretionary, the way you see the MA's turning and promising amplitude will help your decision-making process.
BUT: close the trade if it steps back onto the yellow.

geosanuy, do you open a trade asap you see the cross or wait for bar close (line close in this case) ?

An indicator for a trailing stop based on the blue line would be nice.