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Daily 14 Channel

  • #1
  • First Post: Jan 29, 2015 10:56pm Jan 29, 2015 10:56pm
I just wanted to share a simple little approach that has been working well for me. I think this is a solid method, especially for newcomers as there isn't much to it and it can be effective quite often.


Daily 14 Channel

- 14 SMA applied to high
- 14 SMA applied to low
- 200 EMA (applied to close) for trend direction


When a daily candle closes outside of the channel in the direction of the trend shown from the 200 EMA, open a trade. Simple as that. I recommend daily candles, as the signals tend to be more reliable (more price action = more certainty). I suppose this can be done on lower time frames, but I prefer the daily. The only situation I tend to avoid is when price is trading around the 200 EMA or the 200 EMA is relatively flat. In those cases I tend to stay on the sideline until a clear trend emerges.

For a stop loss, I use a combination of ATR and S/R levels. I would say that my average stop is somewhere around 150 - 175 pips. My TP is usually in the 200 pip range with my stop moved to break-even after 100 pips gained... Honestly, there are a hundred ways to manage a trade once you're in (as we all know)... Do what works best for you in that regard.

Happy trading everyone
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  • #2
  • Jan 29, 2015 11:49pm Jan 29, 2015 11:49pm
Sounds simple. But it sounds like a method of scalp.
I found almost all methods we use nowadays are scalp.
Does it mean only scalp can work well?
However, the live spreads are high most time. How to make sure the method can work well?
Besides, the history data is limited to a short period from most brokers. Or the history data from some broker isn't same as the brokers we are using.
Finally, so frustrated as all my strategies can't work well so far.
So eager to have a teacher and so eager to learn more.
  • #3
  • Jan 30, 2015 8:21am Jan 30, 2015 8:21am
Quoting jollydragon
Sounds simple. But it sounds like a method of scalp. I found almost all methods we use nowadays are scalp. Does it mean only scalp can work well? However, the live spreads are high most time. How to make sure the method can work well? Besides, the history data is limited to a short period from most brokers. Or the history data from some broker isn't same as the brokers we are using. Finally, so frustrated as all my strategies can't work well so far. So eager to have a teacher and so eager to learn more.
No this isn't scalping. We're trading the daily timeframe and looking for 200 pip moves. Scalping would be trading the one-minute timeframe and looking for 5 pip moves.
  • #4
  • Jan 30, 2015 8:22am Jan 30, 2015 8:22am
which pairs do you trade this system?

You only use Daily for entry? or will go lower for entry?
  • #5
  • Jan 30, 2015 9:18am Jan 30, 2015 9:18am
Nico I use 20 ema ,50 ema and 200 ema , I just start it , But u use bit othe method , please carry on , Seems interesting , T 12
  • #6
  • Jan 30, 2015 10:28am Jan 30, 2015 10:28am
Quoting Lhole
which pairs do you trade this system? You only use Daily for entry? or will go lower for entry?
I've traded most USD crosses, EUR/GBP, EUR/JPY, GBP/JPY, EUR/AUD, GBP/AUD thus far. Still staying away from anything CHF related.

I only enter off daily timeframe. No lower. Too much noise on lower timeframes. Plus... Trading daily charts teaches you to be patient -- an invaluable trait to have in our little endeavor
  • #7
  • Jan 30, 2015 10:53am Jan 30, 2015 10:53am
Barring any major pullback in the next few hours, looks like we'll have a signal on GBP/USD. Conditions are not ideal though. I'm not thrilled with opening a position on Friday, not to mention shorting near 1.50 psychological support level. But we'll see how it goes.
  • #8
  • Jan 30, 2015 1:01pm Jan 30, 2015 1:01pm
Great, thank you! This afternoon I built a "quick and dirty" EA. After the first back test I got 15.000 Eur 12 trades since 2014.01.01, EURUSD, 1 Lot, profit factor 9.5, drawdown 8%.

I think more tests are neccessary because last year's move was a "litte bit bearish".
  • #9
  • Jan 30, 2015 2:45pm Jan 30, 2015 2:45pm
Quoting IAmRetep
Great, thank you! This afternoon I built a "quick and dirty" EA. After the first back test I got 15.000 Eur 12 trades since 2014.01.01, EURUSD, 1 Lot, profit factor 9.5, drawdown 8%. I think more tests are neccessary because last year's move was a "litte bit bearish".
Cool. Let me know how it goes for you.

Honestly though, I don't see much of a need for an EA. You only need to check your charts once a day and the system doesn't produce a high volume of signals. Not on the daily at least. Now, if you plan on trading 4hr or lower then I can understand an EA. But be prepared to be faked out more often if you do.
  • #10
  • Jan 30, 2015 3:25pm Jan 30, 2015 3:25pm
Quoting Nico1359
Barring any major pullback in the next few hours, looks like we'll have a signal on GBP/USD. Conditions are not ideal though. I'm not thrilled with opening a position on Friday, not to mention shorting near 1.50 psychological support level. But we'll see how it goes.
Well, the pullback did happen. Not much of a surprise being the last Friday of the month. Probably for the best though -- I don't like trading on Friday anyway!

Pairs I'm looking at for next week: USD/JPY and GBP/USD
  • #11
  • Feb 1, 2015 9:37am Feb 1, 2015 9:37am
The usd/jpy channel and 200ema looks awfully flat but could make a big break after the weekend is over. Ours to watch. p.
  • #12
  • Feb 1, 2015 9:50am Feb 1, 2015 9:50am
Quoting piprac
The usd/jpy channel and 200ema looks awfully flat but could make a big break after the weekend is over. Ours to watch. p.
Agreed the 200 EMA is pretty flat, but I think the fact that it is so tightly consolidated at the moment warrants it getting a look.
  • #13
  • Feb 1, 2015 10:55am Feb 1, 2015 10:55am
HI
Thanks for your amazing trading...
plz can you explain the function of 200 EMA in bit detail its confusing.

thanks again
  • #14
  • Feb 1, 2015 8:28pm Feb 1, 2015 8:28pm
Quoting wajiappricot
HI Thanks for your amazing trading... plz can you explain the function of 200 EMA in bit detail its confusing. thanks again
The "200" means 200 periods so if you are using a daily chart it means 200 days; an hourly chart is 200 hours. It is just a way of seeing the overall trend in a single continuous line. Nothing fancy but a visual line that shows the overall trend. Some traders feel it isn't necessary as one should be able to determine a trend without a "line.' I like it, however. Hope that helps.
  • #15
  • Feb 2, 2015 1:58am Feb 2, 2015 1:58am
Quoting piprac
{quote} The "200" means 200 periods so if you are using a daily chart it means 200 days; an hourly chart is 200 hours. It is just a way of seeing the overall trend in a single continuous line. Nothing fancy but a visual line that shows the overall trend. Some traders feel it isn't necessary as one should be able to determine a trend without a "line.' I like it, however. Hope that helps.

Yes this is pretty much the gist of it. Its purpose is two-fold for my approach: First, to show the overall trend and second, to show where we ought to be cautious, i.e. when the price is trading in that zone.
  • #16
  • Feb 2, 2015 12:46pm Feb 2, 2015 12:46pm
First trade this morning with this method sold gbp/jpy at 177.01
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  • #17
  • Feb 2, 2015 1:34pm Feb 2, 2015 1:34pm
Quoting raylin
First trade this morning with this method sold gbp/jpy at 177.01 {image}
A couple issues I have with this trade: 1. Looks like you took it while the daily candle is still forming. It might be working for you now, but I would advise against that in the future. Only take trades after a daily candle has closed and only when that candle closes outside of the channel (the prior candle did not in this case).. 2. The 200 EMA is perfectly flat. It might work out, but I would avoid these kind of setups in the future. Look for high probability trades -- ones where price is trading away from the 200 EMA. Have patience
  • #18
  • Feb 2, 2015 1:58pm Feb 2, 2015 1:58pm
Just a thought... If you're only taking high-probability trades (and you should be) then you're probably only going to have 5-7 trades a month. Some months even less.
  • #19
  • Feb 2, 2015 4:19pm Feb 2, 2015 4:19pm
Yes Nico you are correct. Too close to the 200ema unfortunately the end of day is at a inconvenient time for me
  • #20
  • Feb 2, 2015 5:07pm Feb 2, 2015 5:07pm
Took the trade on GBP/USD just a little while ago. The day closed about 15 pips under the bottom channel line. I got in at 1.5039... Only concern here is possible support around the 1.5000 level. Might have to ride out some drawdown. We'll see.
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