Simple Sma-based strategy | Forex Factory

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Simple Sma-based strategy

  • #1
  • First Post: Edited Aug 12, 2013 7:48am Aug 9, 2013 8:31pm | Edited Aug 12, 2013 7:48am
Pairs: Any pair (I trade EU, GU, AU, EJ, GJ, UCAD, UCHF, EC and also XU and Oil)
Time Frame: Any TF

Using only 5 simple moving averages

Sma_30 (Close)
Sma_60 (Close)
Sma_200 (Close)
Sma_300 (Close)
Sma_400 (Close)

For Long:
If
10-11 consecutive bars' Low (or more) are above Sma_30
and
Sma_30 is above Sma_60
and
Sma_60 is above Sma_200
and
Sma_200 is above Sma_400
(not using sma_300 in this condition) – then wait for price to close below Sma_60 (Close<Sma_60).

If price closed below Sma_60 (Close<Sma_60) - Open first Buy Market Order on next bar.
LotSize 0.1 Lot.
TP1: in pips (parameter).

If price did not reach TP and price equal or less than Sma_200 - Open second Buy Market Order on next bar.
LotSize 0.1 Lot.
TP2: in percentage according the first buy order price (i.e "100" means 100% of direction to first entry, so it will be in the first entry price). If TP2 reached - Close previous order too.

If price did not reach TP and price equal or less than Sma_300 - Open 3rd Buy Market Order on next bar.
LotSize 0.3 Lot.
TP3: in percentage according the first buy order price (i.e "100" means 100% of direction to first entry, so it will be in the first entry price). If TP3 reached - Close previous orders too.

If price did not reach TP and price equal or less than Sma_400 - Open 4thd Buy Market Order on next bar.
LotSize 0.6 Lot.
TP4: in percentage according the first buy order price (i.e "100" means 100% of direction to first entry, so it will be in the first entry price). If TP4 reached - Close previous orders too.

SL has 2 options:
SL1 in pips.
Or
SL2 in pips below Sma_400 when entering first Buy order. i.e if SL2=30, SL will be placed 30 pips below Sma_400 at first Buy entry and this SL will be common to all 4 Buy orders.

Be aware that after entering 2nd trade you don't need to reach a far TP to be in profit. Not to mention that in 3rd trade and 4th trade it is even a smaller target you need. See post 33 here: http://www.forexfactory.com/showthread.php?p=6884242#post6884242

Examples will be shown next...

Edit - Aug 10, 2013: Do not upload EA results without uploading the EA itself and its backtest track history. I can't test it and see if EA works exactly by the rules.

Edit - Aug 11, 2013:
1tip:
If Sma_400 is too far (and so is the SL) you can -
a. skip 1st entry
or
b. skip the whole trade
  • #2
  • Aug 9, 2013 8:38pm Aug 9, 2013 8:38pm
Attached Image (click to enlarge)
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  • #3
  • Aug 9, 2013 8:41pm Aug 9, 2013 8:41pm
Attached Image (click to enlarge)
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  • #4
  • Aug 9, 2013 8:45pm Aug 9, 2013 8:45pm
Now in 1 minute TF
Attached Image (click to enlarge)
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  • #5
  • Aug 9, 2013 8:51pm Aug 9, 2013 8:51pm
Attached Image (click to enlarge)
Click to Enlarge Name: eurusdm5-5sma.png Size: 42 KB
  • #6
  • Aug 9, 2013 9:17pm Aug 9, 2013 9:17pm
Here is example for Short.
All consecutive High's are below Sma_30.
Look what happens when price goes up to 4th entry level (Sma_400).
We don't need price to go back all the way and even not half way to 1st entry price since our lot size is getting bigger from second trade to 3rd and 4th trade.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpym15-5sma.png Size: 44 KB
  • #7
  • Aug 10, 2013 12:28am Aug 10, 2013 12:28am
any need for minimum distance between MAs?
  • #8
  • Aug 10, 2013 2:03am Aug 10, 2013 2:03am
Quoting pickers
any need for minimum distance between MAs?
No.
  • #9
  • Aug 10, 2013 2:43am Aug 10, 2013 2:43am
can you please explain more for TP and SL with the chart.....
  • #10
  • Aug 10, 2013 3:36am Aug 10, 2013 3:36am
It depends on TF and pair volatility.

TP for 1st entry:
Approx 15-30 pips in EU,GU,AU,EJ for 1-30 minutes.
30+ pips in EU,GU,AU,EJ for higher TF.

TP for other entries: between 30%-50% in the direction of 1st entry.

SL:
Approx 50-100 pips in EU,GU,AU,EJ for 1-30 minutes. 100+ pips for higher TF.
Or:
30-50 Pips behind Sma_400 in EU,GU,AU,EJ for 1-30 minutes. 50-80 pips for higher TF.
  • #11
  • Aug 10, 2013 4:09am Aug 10, 2013 4:09am
Stoploss example
Attached Image (click to enlarge)
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  • #12
  • Aug 10, 2013 4:21am Aug 10, 2013 4:21am
This strategy has more than 90% winners.
  • #13
  • Aug 10, 2013 6:33am Aug 10, 2013 6:33am
Fisrt of all, thanks for the strategy smilee89. Let's see if I understand more or less the philosophy of this....
You are just waiting for a good trend (looking at the correct placing of the sma) and then you look for retracements to enter positions in the direction of the trend. The idea of scaling your entries is to try to reach at least BE when the retracement is big and if this fails yo have the last stop when the trend has changed.... more or less?
I have a few questions.... which is your biggest DD with these strategy? For the TP have you tried something like 2xATR or 3xATR? As you said you can use this startegy in any TF, but which TF do you usually trade? And the last question, this strategy is simple enough to make an EA and do some backtest, have you tried that? If the answer is yes, which are the results?
  • #14
  • Aug 10, 2013 7:42am Aug 10, 2013 7:42am
Pretty much how I trade, EA use you have to learn when trend changes are likely this is a news / market opening pain so hard to teach an EA.


trend changes are a pain.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #15
  • Aug 10, 2013 9:24am Aug 10, 2013 9:24am
Quoting smilee89
Stoploss example {image}

thanks smilee89.. stoploss understand from chart , but for TP still confuse. can you shown in chart..
  • #16
  • Aug 10, 2013 10:50am Aug 10, 2013 10:50am
Quoting tradefish
Fisrt of all, thanks for the strategy smilee89. Let's see if I understand more or less the philosophy of this.... You are just waiting for a good trend (looking at the correct placing of the sma) and then you look for retracements to enter positions in the direction of the trend. The idea of scaling your entries is to try to reach at least BE when the retracement is big and if this fails yo have the last stop when the trend has changed.... more or less? I have a few questions.... which is your biggest DD with these strategy? For the TP have you...
Hi

I have tried backtesting this strategy with an EA from 2013-01-01 to 2013-06-01 with 99% model quality on the 5 min TF. It uses the parameters as per post 1, with stops below the SMA_400 and TP 30. Most of the pairs have been losing money over this period. The losers simply outweigh the winners by to much. The EA can be winning for months, but a short loosing streak will wipe all the profits and then some. Perhaps it takes a bit more finesse than just trading it mechanically to trade this profitably. As far as i can tell it follows the rules pretty much without failure. It seems to have the most trouble when the SMA's are close together and flat.

example GU test:
Attached Image (click to enlarge)
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I'm not saying the strategy doesn't work, it's just that i didn't get very good results when backtesting it mechanically as a response to tradefish's post.

Best regards and happy pips
Zerrox
  • #17
  • Aug 10, 2013 10:56am Aug 10, 2013 10:56am
Quoting tradefish
Fisrt of all, thanks for the strategy smilee89. Let's see if I understand more or less the philosophy of this.... You are just waiting for a good trend (looking at the correct placing of the sma) and then you look for retracements to enter positions in the direction of the trend. The idea of scaling your entries is to try to reach at least BE when the retracement is big and if this fails yo have the last stop when the trend has changed.... more or less? I have a few questions.... which is your biggest DD with these strategy? For the TP have you...
The idea is not "scaling in" Per Se.
The idea is to divide the trade to 4 parts.
Instead of taking the trade with the whole LotSize in the 1st entry, I divide the entry to 4 steps (1-Close<Sma_60,2- Price=Sma_200,3-Sma_300 and 4-Sma_400).
Only when I take all 4 entries, I actually use the whole lotsize.
The idea is to catch the trade in any case, sometimes in a small size and sometimes in a bigger size.

Biggest DD is 6% but it is very rare and time to recover is very quick (10-20 trades).
I wish to improve my TP, and using ATR is good idea which I already thought about but did not try it.
I trade mostly the 5 minutes in a volatile pairs and 15-30 minutes for other pairs.

It is very simple to code it to an expert-advisor and everyone is welcome to do it and can contact me in a private message.
  • #18
  • Aug 10, 2013 10:58am Aug 10, 2013 10:58am
1. whenever a system claims "any timeframe", it'll 95% indicate its joking nature

2. there's an apparent scenario the price reversing and going thru all SMAs which you did not address. this scenario is not rare, and proved by the backtests above by the other member.
  • #19
  • Aug 10, 2013 10:59am Aug 10, 2013 10:59am
Quoting Zerrox
{quote} Hi I have tried backtesting this strategy with an EA from 2013-01-01 to 2013-06-01 with 99% model quality on the 5 min TF. It uses the parameters as per post 1, with stops below the SMA_400 and TP 30. Most of the pairs have been losing money over this period. The losers simply outweigh the winners by to much. The EA can be winning for months, but a short loosing streak will wipe all the profits and then some. Perhaps it takes a bit more finesse than just trading it mechanically to trade this profitably. As far as i can tell it follows the...
Please send the track records and EA and I will check it if you want.
  • #20
  • Aug 10, 2013 11:09am Aug 10, 2013 11:09am
Quoting smilee89
Pairs: Any pair (I trade EU, GU, AU, EJ, GJ, UCAD, UCHF, EC and also XU and Oil) Time Frame: Any TF Using only 5 simple moving averages Sma_30 (Close) Sma_60 (Close) Sma_200 (Close) Sma_300 (Close) Sma_400 (Close) For Long: If 10 consecutive bars' Low (or more) > Sma_30 >Sma_60>Sma_200>Sma_400 (not using sma_300 in this condition) – than wait to price close below Sma_60 (Close<Sma_60). If price closed below Sma_60 (Close<Sma_60) - Open first Buy Market Order on next bar. LotSize 0.1 Lot. TP1: in pips (parameter). If price did not reach TP and price...
Hi
I think you are too much involved with MA's.I use scaling in and out as well and to me its the key to success in Forex.
Consider that 80% forex is NOT trending instead most of times what you think its a trend is in fact price is within a channel.Once you see this in bigger TF then everything starts making sense.

Richard Donchian father of trend following (one of my heroes) repeatedly placed orders every break of the channel hoping that 1 trade will make up all his mini losses and he was correct.He made millions at age 65!!
He was "hunting" for that illusive major trend which roughly happens 20-10% of times.Problem with this is that you need large account to withstand big drawdowns when price retraces or trade with smaller lots.
I focus on None trending pairs.
So having understanding of this then you start seeing that MA's are in way giving you an illusion of Trend when in fact 80% price is within a channel.
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