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Best Trading System (Only Momentum)

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  • #1
  • First Post: Apr 20, 2013 6:20am Apr 20, 2013 6:20am

MOMENTUM PRICE SYSTEM


Hi I'm using the price momentum trading system since last six month and earning from it consistently. It is very easy system and one of the successful indicator which i am using. The only Momentum Indicator. I got this idea from somewhere then mold it from time to time by keep changing and testing. I am sharing my trading system as below.

Inserted Code
[table]
[tr][td]Chart:[/td][td]Candle Stick[/td][/tr]
[tr][td]TimeFrame:[/td][td] 4HR - DAILY[/td][/tr]
[tr][td]Momentum Indicator:[/td][td]28 Candle bars[/td][/tr]
[/table]

SHORT ENTRY:
Prices are usually move in the direction of momentum but if momentum leads price and then begins to decline while price is moving up then there is possibility that at some point in the future market will place a top and prices move down.

1. Draw divergence line on Price bar as well as momentum Indicator. (for best result use 8-28 candle bars divergence).
2. Mark Highest Price in divergence line as C
3. Mark Lowest value of Momentum in divergence Line as F.

ENTRY POINT
When Point F penetrated enter into trade on close of the bar with two Lots.

STOPLOSS:
When price hits at price C exit all trades.

TAKE PROFIT:
TP1: Difference between Point C and Entry Price. (Exit one lot and raise stop loss to Break Even).
TP2: 2 time of TP1 (at this point use trailing Stop of 50% of the Profit after close of ever candle lower;
TP3: Four Time of TP1. (When Price reach TP3 then use Stop loss of 75 % of Profit untill stoploss hit)


LONG ENTRY:
Same as if the prices are moving down in the direction of momentum and then momentum is going up while price is declining then there is possibility that market will place a bottom in near future and price will go up.

http://charts.mql5.com/1/377/usdchf-...t-oracle-2.png

http://charts.mql5.com/1/377/usdchf-...t-oracle-2.png

1. Draw divergence line on Price bar as well as momentum Indicator. (for best result use 8-28 candle bars divergence).
2. Mark Lowest Price in divergence line as C
3. Mark Highest value of Momentum in divergence Line as F.

ENTRY POINT
When Point F penetrated enter into trade on close of the bar with two Lots.

STOPLOSS:
When price hits at price C exit all trades.

TAKE PROFIT:
TP1: Difference between Point C and Entry Price. (Exit one lot and raise stop loss to Break Even).
TP2: 2 time of TP1 (at this point use trailing Stop of 50% of the Profit after close of ever candle Higher;
TP3: Four Time of TP1. (When Price reach TP3 then use Stop loss of 75 % of Profit until stop loss hit).

I will give the chart and example of trades in next post to understand this momentum system better. In my past experiments this is the best money management with two lots one for TP1 and other for trailing. Any improved money management with better risk /reward will be most welcomed.

muhiuddin
  • #2
  • Apr 20, 2013 8:10pm Apr 20, 2013 8:10pm
Quoting muhiuddin
MOMENTUM PRICE SYSTEM Hi I'm using the price momentum trading system since last six month and earning from it consistently. It is very easy system and one of the successful indicator which i am using. The only Momentum Indicator. I got this idea from somewhere then mold it from time to time by keep changing and testing. I am sharing my trading system as below. Chart:Candle Stick TimeFrame: 4HR - DAILY Momentum Indicator:28 Candle bars SHORT ENTRY: Prices are usually move in the direction of momentum but if momentum leads price and then begins to...

you say use 8 bars or 28 bars on divergence line, but in your example it is over 28 bars . and why did you not use 8 bars in your chart example ? why did you decide to finish drawing the divergence at B and not earlier, as there was a bounce back up earlier although a small one.


have you tried using this on lower tf ?
  • #3
  • Apr 21, 2013 1:17am Apr 21, 2013 1:17am
whatfx you are right but it is valid too. i just give this chart for clarity to understand. You can Change Point A to for candles forward. In my experiment i used 5-50 candles divergence but only between 8-28 bar has given me optimum result. I will give you my examples of trade more clearly on this strategy.

I start my career as a scalper and when i have found this strategy, my focus was 30 minute chart frame. It work on it too but not got impressive result.

As swing traders and trend traders mostly used higher chart frame so it work well with higher time frame.
  • #4
  • Apr 21, 2013 2:08am Apr 21, 2013 2:08am
Good read Muhiuddin.
I also like to use momentum trades, but i am using price action breakout from support resistance with combine of moving averages taught by Richard Donchian.
  • #5
  • Apr 21, 2013 4:23am Apr 21, 2013 4:23am
Hello. In your example your system triggers a buy right into an obvious resistance; this after a big up move. Wouldn't it be safer to wait for a pullback?
No greed. No fear. Just maths.
  • #6
  • Apr 21, 2013 5:23am Apr 21, 2013 5:23am
Quoting muhiuddin
whatfx you are right but it is valid too. i just give this chart for clarity to understand. You can Change Point A to for candles forward. In my experiment i used 5-50 candles divergence but only between 8-28 bar has given me optimum result. I will give you my examples of trade more clearly on this strategy. I start my career as a scalper and when i have found this strategy, my focus was 30 minute chart frame. It work on it too but not got impressive result. As swing traders and trend traders mostly used higher chart frame so it work well with higher...

hi

the issue most people will have is where to draw the divergence lines. on the bars you could have drawn the divergence line not to point B but a bit earlier on the last swing low. what made you want to draw to point B and not earlier , for clarity ? if you had drawn the divergence line to earlier swing low, then the momentum divergence wont signal entry will it ? say if you had drawn it to the last swing low before point B, can you show us where the divergence on momentum would be and where your entry would be ?

a quick backtest on gu and eu has shown not many signals on h4 timeframe. you will be lucky to get one signal a week, and that too might not go your way.
  • #7
  • Apr 21, 2013 7:15am Apr 21, 2013 7:15am
Quote
Hello. In your example your system triggers a buy right into an obvious resistance; this after a big up move. Wouldn't it be safer to wait for a pullback?

Buy only trigger when resistance of momentum at Point F break (at the end of candle). Waiting for pullback is a good idea to better risk reward ration. you can use it but only after once point F penetrated.
  • #8
  • Apr 21, 2013 7:35am Apr 21, 2013 7:35am
Quote
the issue most people will have is where to draw the divergence lines. on the bars you could have drawn the divergence line not to point B but a bit earlier on the last swing low.

yes we can draw divergence line a bit earlier on last swing but in this case we have to set point A a bit later (after four candles at current Point A) to draw a good line. The best practice of divergence is line draw touching lower low of price bar and in momentum line touch higher low. As other indicators, momentum also lagging but the trigger only valid that if point F break. Alternatively StopLoss if Point D break on momentum you can exit positions.

This also valid
http://charts.mql5.com/1/380/usdchf-...ket-oracle.png

This system generate less signal because of 4hr-daily timeframe but the beauty of this system is that it work on all type of currencies with normal spread and crude oil as well. I did not tested on gold/silver.
  • #9
  • Apr 21, 2013 7:47pm Apr 21, 2013 7:47pm
Quoting muhiuddin
{quote} yes we can draw divergence line a bit earlier on last swing but in this case we have to set point A a bit later (after four candles at current Point A) to draw a good line. The best practice of divergence is line draw touching lower low of price bar and in momentum line touch higher low. As other indicators, momentum also lagging but the trigger only valid that if point F break. Alternatively StopLoss if Point D break on momentum you can exit positions. This also valid {image} This system generate less signal because of 4hr-daily timeframe...
from A to B divergence on momentum at that point there would be no F formed, so how would you know where to enter as there would be no F at that point, F only forms a few hours after. so where would you enter at the point B , without F having formed or surpassed ?
  • #10
  • Apr 22, 2013 12:02am Apr 22, 2013 12:02am
Quote
from A to B divergence on momentum at that point there would be no F formed, so how would you know where to enter as there would be no F at that point, F only forms a few hours after. so where would you enter at the point B , without F having formed or surpassed ?

Point F is the High value of momentum between divergence line. Trigger only call after divergence identified and then wait for Point F to be penetrated after candle close. If F is not penetrated there will not be buy trigger. In the above example divergence identified 10-14 April but buy trigger at 17th April when point of resistance (F) at momentum break.
  • #11
  • Apr 22, 2013 4:36am Apr 22, 2013 4:36am
SELL EXAMPLE

In the following chart, we identified divergence. We sell two lots on Break of Point F below at (1.6211) with Stop Loss of 1.6305. On 1.6117 TP1 is hit and we exit one lot and move our stop loss of remaining lot at break even(162.11). On 5th October our second lot stop hit and we gain overall 94 pip profit.

http://charts.mql5.com/1/385/gbpusd-...ket-oracle.png

muhiuddin
  • #12
  • Apr 22, 2013 5:11am Apr 22, 2013 5:11am
BUY EXAMPLE

In the following chart we identified buy setup (divergence) and we buy 2 Lots @ 0.9718. On 0.9806 we exit on lot with profit of 88 pips and raise our stop loss to Break Even(0.9718). After TP2 hit, we raise stop loss to 50% on close of every candle above until we stopped out @ 0.9878 with on 7th December with 160 pips. Total we earned 248 pips on this trade.

http://charts.mql5.com/1/385/usdcad-...ket-oracle.png

muhiuddin
  • #13
  • Apr 22, 2013 9:46am Apr 22, 2013 9:46am
Thanks muhiuddin!

Maybe this indi can help:

Attached File(s)
File Type: mq4 Momentum Divergence2_mtf+alerts.mq4   13 KB | 5,234 downloads
  • #14
  • Apr 22, 2013 12:29pm Apr 22, 2013 12:29pm
Quoting muhiuddin
BUY EXAMPLE In the following chart we identified buy setup (divergence) and we buy 2 Lots @ 0.9718. On 0.9806 we exit on lot with profit of 88 pips and raise our stop loss to Break Even(0.9718). After TP2 hit, we raise stop loss to 50% on close of every candle above until we stopped out @ 0.9878 with on 7th December with 160 pips. Total we earned 248 pips on this trade. {image} muhiuddin

best to show some live examples. what trades do you forming at the moment ?
  • #15
  • Apr 22, 2013 7:35pm Apr 22, 2013 7:35pm
Kfx Thanks for indicator its really helpful to identify divergence

Muhiuddin
  • #16
  • Apr 22, 2013 7:47pm Apr 22, 2013 7:47pm
Quote
best to show some live examples. what trades do you forming at the moment ?

Post one and post eight charts are example of live trades.
  • #17
  • Apr 23, 2013 8:00am Apr 23, 2013 8:00am
muhi uddin

post some live signals happening now
  • #18
  • Apr 23, 2013 8:27am Apr 23, 2013 8:27am
Quote
post some live signals happening now

See chart on my post No. 1 and Post No. 8. It is USDCHF 4 Hour Live Current Chart. Trade Signal generated on 17th April @ 0.9326 and at the moment TP1 hit @ 0.9387 where we exit one lot and we raise our stop loss of remaining one lot @ BreakEven (0.9326). Now price are moving towards TP2. I am posting same chart again with updated candles.

http://charts.mql5.com/1/396/usdchf-...ket-oracle.png

muhiuddin
  • #19
  • Apr 23, 2013 1:51pm Apr 23, 2013 1:51pm
Quoting muhiuddin
{quote} See chart on my post No. 1 and Post No. 8. It is USDCHF 4 Hour Live Current Chart. Trade Signal generated on 17th April @ 0.9326 and at the moment TP1 hit @ 0.9387 where we exit one lot and we raise our stop loss of remaining one lot @ BreakEven (0.9326). Now price are moving towards TP2. I am posting same chart again with updated candles. {image} muhiuddin

good.

what i meant is any pending signs on other pairs that are to be watched.
  • #20
  • Apr 24, 2013 7:36am Apr 24, 2013 7:36am
Quote
what i meant is any pending signs on other pairs that are to be watched.

i am posting a chart for to be watched carefully. divergence is confirming on daily chart and not yet confirmed but keeping eye. as if set up confirmed then we have to trigger on break below of momentum.

http://charts.mql5.com/1/404/gbpchf-...ket-oracle.png


muhiuddin
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