A "new" simple system based on MA

Dear Midnightrun,

Thank you for your question. You are right when you say that our subconscious can tell us things. But I think it is really dangerous to trade with your subconscious, because it is a part of emotions. And it is clearly what we have to avoid as a successful trader ! Of course, it sometimes happened me to feel a trade, and the most dangerous is when you are right !!! Why ? Because you can think that you feel the markets and that you can be guided by your emotions. When you see that happened, please stop trading. As a "professional" trader you have to be the most objective you can. So subconscious is not something useful in trading in my opinion. To fight this bias I advise to repaet yourself everyday before sleeping that you dont know anything about what will do the market in the future and that your job is to play probability and not certainty. Repeat it every night and you will change your mind after months. So you will master your emotions and trade objectively, based on analysis and on your system.

Thank you Hmaoui,
MACD and DMI - what do you give more weight? Or are they of equal importance to you?
Thank you.

Sorry I forgot to answer this question ! For me DMI or MACD are the same. As I told earlier on this thread, you can use each of them : the most important is to really master the indicator you use. The interpretation of DMI and MACD are the same : it gives us a trend confirmation. The advantage of the MACD is that it can gives you some important information through divergences. On the other hand, I think that DMI gives us less false signals. Personnally, I can use both, it depends on my style of trading.

Sorry I forgot to answer this question ! For me DMI or MACD are the same. As I told earlier on this thread, you can use each of them : the most important is to really master the indicator you use. The interpretation of DMI and MACD are the same : it gives us a trend confirmation. The advantage of the MACD is that it can gives you some important information through divergences. On the other hand, I think that DMI gives us less false signals. Personnally, I can use both, it depends on my style of trading.

Here is a 4h chart analysis.

Thanks Hmaoui.

Hi ! I want to give you an analysis on €/$ :

Weekly : The trend is clearly bearish with EMAs going south and DMI clearly bearish too ! We have a resistance near 1,2750 and 2 major supports @1,2280 and 1,2040 (these are zones of course).

Daily : The trend is bearish too -> EMAs are going south. DMI is negative but not very high (under 30). It is normal because of a RN support (1,2400). Stochastics are heading up but are under the neutral zone. So tit is bearish but there is a pause in the trend.

4h : Trend is bearish but we can see that we made a higher low whereas stochastics were oversold -> this is a little hidden divergence. So the trend is bearish but we have to be careful. 1,2470 is an intermediaten resistance. We can see that DMI is flat indicating there is no trend. The candle which is forming right now is a bullish candle. With the trend line we can see that we have a triangle. So we wait for a breakout (@close of the candle).

1h : There is not any clear trend right now. DMI is a litlle bit positive but Stochastics are oversold.

=> Conclusion : The trend was bearish but it seems to make a pause. If we focus on the probabilities, we know that we have more chance to see the trend continue but it can reverse too. We have to wait for a clear signal as a break of the trend lines (triangle) to enter the market getting our timing on a ST chart (15mn/5mn). If we break 1,2470 we can test again the 1,25 level but to become bullish we have to get a B/O of this level. If we cant break upward, then the support is 1,2400 and 1,2370. If 1,2370 is broken then we can test the next weekly supports (1,2280/1,2040). If we break 1,25 then we can test 1,2740/1,28 and in case of a B/O of this level we can go to 1,30.

Knowing this, you can day trade safely with big levels and a context in mind. So you can reduce the risks, taking profits at the right moment etc...If you trade the long term charts, you know what you have to wait for !

Hello ! So to continue on the analysis I did yesterday : As you can see on the charts attached, there was a double top at 1,25 level soo the trend did not manage to change. 1,25 was a strong resistance and price were rejected. So the next support was 1,2470 (intermediate) and then 1,24. Knowing this, you should have taken some day trades based on the 5 min chart for example or even 1min (look at the charts attached). On the long term, the break of the triangle is aborted so it is a selling signal.

Indicators give us the confirmation needed, EMAs are going south....you should have done about 30 pips very safely and very fast ! Multiply by the your lot size and you can easily make your money for the day !

€/$ was flat. This was not the market to trade ! 1,24 is a support where we have buy orders. But 1,25 is a strong resistance right now. DMI confirms this scenario and EMAs too as it is one on each other. But remember volatility is moving in cycles : after low volatility there will be high volatility which can give us a good move (next week?).

Just right now we have a break of 1,25 level ! Unfortunately I missed it. But I am a little bit careful because it the end of the week. So I prefer to wait for Monday. If the week close above 1,25 it is a good signal to look at long for monday. We'll see. On the long term, I prefer to wait for a nice pullback to get a good R/R ratio and to avoid an over-weekend position : it increases your risk for nothing !

Ok. So it is the end of the week (in Europe). I tired to post many charts to help everyone here to better understand the system and how to use it. I hope you appreciate ! For the next week I would like you to post YOUR charts and ask your questions. If you dont want to share youranalysis, your trades, your questions and so on, I dont see how this thread could be useful...It's up to you ! I like FF, I like sharing ideas with other traders so please be involved in it if you are satisfied...And if you are disappointed by this system, please feel free to share your doubts ! I will do my best to answer you.

Okay I decided to give this TS a try, Do we have a new downtrend on 1h GJ?

http://i.imgur.com/yNyOs9P.png?1

Youshould have to be careful because o fS1 daily support, and support level. Maybe for a trade on shorter tf with a nice pullback.

Hi Hmaoui,
A question on execution. Do you market in your orders or limit in? On my size now it doesn't matter but I am wondering when you get to larger sizes if market orders are poor. Thanks

Yes it is a good question. It depends what TF you trade ! Usually, when I do day trading I enter with market orders because the time to prepare your order it can go up or down enough to keep you out of the market. But on higher TF you can enter with limit orders.

Hello. Here is a perfect setup (A+ trade). I did not take it because it was during the night. But you can make day trade on this basis (short of course).

Thanks Hmaoui,
I went long on the GBP/USD this morning based on your system for 10 pips. I need to hold longer because I saw a resistance level higher but did not hold for that.

Hi Hmaoui,
I was rereading your November 11 analysis of the EUR/USD. How do you determine your support and resistance levels? You give several number levels and I am unclear how you determined them? Is it visual or is there a calculation you do? Thanks, love this thread!

Hi Wracinti ! Nice to see that you are involved. Unfortunately, it is not the case of the majority here. I am wondering if I close this thread....
To answer your question, the support/resistance levels are not calculated. Some traders use Fib levels but I dont. I prefer to use stochastics or RSI to determine these levels. Of course it is visual but nothing hard to see !

The method is simple : you visually determine the S/R levels and you confirm with the oscillator. It often corresponds to an overbought/oversold level. Check with the last pics and you will find the same levels than me.

P.S. : Sorry for the very late answer but I dont want to waste my time on FF if there is not any feedback. I prefer tu use my time for the end of my classroom which will be finished the 30th of january.

Hi Hmaoui,
Thanks for the reply. Understood about FF. Question, if you close the thread is there a way to contact you, or better yet, get in a class of yours?