Amazing Crossover System - 100+ pips per day!
**I got the main concept for this system on another site. While I have made one important change, I must stress that the heart of this system was created by someone else! We must give credit where credit is due!**
This system is incredibly simple yet unbelievably effective. If you properly follow the system, I strongly believe that you can easily gain 100+ pips per day with very few losing trades!
5 EMA -- YELLOW
10 EMA -- RED
RSI (10 - Apply to Median Price: HL/2) -- One level at 50.
1 Hour Only (very important!)
Zoom in quite a bit on your chart so that the candlesticks and EMA's are very large. I use Alpari and this translates into the penultimate (one just previous of the highest) magnification.
Virtually any pair seems to work as this is strictly technical analysis.
I recommend sticking to the main currencies and avoiding cross currencies (just my preference).
WHEN TO ENTER A TRADE
Enter LONG when the Yellow EMA crosses the Red EMA from underneath.
RSI must be approaching 50 from the BOTTOM and cross 50 to warrant entry.
Enter SHORT when the Yellow EMA crosses the Red EMA from the top.
RSI must be approaching 50 from the TOP and cross 50 to warrant entry.
I've attached a picture which demonstrates all these conditions.
WHEN TO EXIT
This depends on your trading plan (everybody should have a plan) and money management rules.
Just by glancing at some recent data, the average hourly trend seems to extend beyond 100 pips before reversing.
I recommend setting a T/P between 50 - 100 pips.
S/L should provide plenty of cushion. Most trades will be winners in the long-term, but I'm uncertain of an exact win-lose ratio. Experimentation will yield the best results. I'd start with a S/L of 100 pips.
Remember to always protect your capital. Once the trade moves in your favor by 20 pips, I'd set your S/L to break even. After 40 pips, set your S/L to 20 pips profit, etc.
Of course, you could omit any initial S/L and trade with a smaller contract size to provide plenty of margin, and THEN once the trade moves in your favor set a break even S/L, but that's RISKY (but maybe you are a daredevil )!
Always move your S/L after you are in profit so that you break even.
Aim for 50 - 100 pips per trade.
ONLY USE THE 1 HOUR CHART! DO NOT GO LOWER!
Make sure both the EMA's cross AND the RSI is crossing 50 in the direction of your trade.
When you get both of these signals, you can enter a trade with confidence because these are VERY STRONG SIGNALS. It is incredibly effective at catching the trend for 100+ pips!
I will try my best to test this system and post the results continuously for everyone.
This post is for academic and entertainment purposes only. Forex trading carries the potential for substantial gains and substantial losses. Any potential losses suffered through Forex using the information in this post is unfortunate, but cannot in any way, shape or form be used against the contributor. I cannot be held liable for any losses suffered on your part in the market. Thank you.
Last edited by ForexPhantom; 03-04-2009 at 08:43 PM.
Sometimes when we look at our charts, we seem to have this GUT FEELING about where the price is headed.
Maybe your indicators are not quite giving you the signal to enter just yet, but it seems DESTINED to happen very soon.
It is during times like these where you bend the rules of your system a little bit.
I'm going to post a picture below which just developed on the USD/JPY 1 Hour chart.
It shows you exactly why doing this is WRONG WRONG WRONG!
Take a look and remember: Wait for BOTH SIGNALS!
Possible Trade Settings Up
Possible Trade forming on the EUR/USD.
TF = 1 HOUR
If RSI crosses into < 50, SELL with T/P = 50 pips.
I wanted to discuss a recurring pattern I have noticed with many Moving Average Systems. Let's call them "repulsions".
Repulsions occur when one smaller moving average attempts to cross a larger moving average, but is rejected in the process (see picture below).
When repulsions occur, we can view them on our RSI indicator, also. They form a sort of "V" symbol.
This action warrants an entry in the appropriate direction. Granted, this entry is a little more risky, so I'd wait for the next candle to close before entering.
Repulsions can be your signal the current trend will last for a long time. You can generally bank a good number of pips simply by watching for the "V" symbol on your RSI.
I find this pattern holds up best on the standard currencies.
Last edited by ForexPhantom; 03-05-2009 at 12:45 AM.
I have to say that this is a simple system and it does work well. Trading should be as simple as something like that.
But how do you handle the whipsaws shown in the attachment? What I suggest is maybe you can add one more indicator e.g pivot. So when the price is only 50 to 80 pips away from the pivot, then we do not take in the trading signal.
From my experience, I believe setting 20 pips to breakeven after it has moved in your direction may not be enough some times as the price movement may be very volatile. I suggest 30 - 35 pips to shift to breakeven after the trade has moved to your direction.
You mentioned that you have a S/L of 100 pips. Maybe you can consider a good risk to reward ratio of at least 1:2, and therefore reduce the S/L. Money management is real important in any trading system.
Let me know what you think. Thanks.
Originally Posted by Dandan
I don't want to speak for ForexPhantom, but I'd like to offer my two cents on your thoughts about those whipsaws...
The first one is on Friday a few hours before things shut down for the weekend. Trading the H1 chart on Fridays can be dangerous for any system.
The second whipsaw corresponds to the EU interest rate decision at 12:45 GMT. That is a major release and no system can keep you out of that bad trade. However, after things settle down, a sell signal occurs on the very next candle that would have netted you around 100 pips.
I think the system looks pretty good with some other rules applied to keep you out of those whipsaws you pointed out.
Dan, I am with you.
Originally Posted by Dandan
The first thing I thought about when seeing this system was just that, adding some of the pivots, Barrys Support and previous day hi/low/close to try and understand where the price is headed.
Take for instance the current EU move. We had and EMA Cross around 7am GMT, then the RSI at the close of the 8am, which happened to be right at the daily pivot point...Now If you look, the price went straight to the S1, passed a little bit and is currently reversing back.
By using the "well known targets" as guides to your TP Sure it wasnt 100 pips, but it would have been 90. You could then use these as your profit taking and S/L areas.
The system itself is still easy, but by adding a little more market logic to try and understand where to T/P people would not feel like they are shooting in the dark for Profit and Loss.
Originally Posted by johnskates
I have to agree with John about those whipsaws. Trading during the News is always a very VOLATILE experience, as well as trading on Friday!
The beauty of this system is in its simplicity. It is deceptively simple, yet the signals are strong. I don't think whipsaws should pose much of a problem during normal trading times.
BUT, if pivot points help you out, by all means USE THEM! I personally don't know much about pivot points, so I'm sort of lacking on any discussion about them.
I did add one other indicator, which I'll describe in my next post.
Thanks for your interest in the system!!
50 pips overnight...could have been more!
Last night was a great night to be using this system.
Unfortunately, all the action happened while I was sleeping!
But, I had been lucky enough to take a slight risk that paid off big time.
In an earlier post, I posted a picture of a possible trade setting up on the EUR/USD. The EMA's were close to crossing and the RSI was descending and hovering around the 50 Line.
I set a SELL STOP order at 1.2585. This was around 20 - 25 pips lower than the current price at the time (not sure exactly, but around there).
I figured that if the price went down that much, the lines WOULD have crossed and the RSI WOULD have crossed below 50.
In short, I was right! My SELL STOP was executed while I was counting sheep. My T/P was hit for 50 pips even. I had used a S/L of 100, too.
Below, I'll post the pictures of how it all went down. You'll notice that in the second picture I have added the MACD indicator.
Here are the settings I use:
MACD SMA: 4
I've noticed that this indicator only works about 75% of the time. Sometimes it's late! Sometimes it does not agree with the RSI.
I think it's only very accurate if it crosses from the top of the indicator bar to the bottom (with a big downward slope). It can provide justification though if both the EMA's and RSI are showing a trade setup.
The MACD settings may need to be tweaked.
PICTURE 1 shows the possible setup approaching.
PICTURE 2 shows what actually happened.
The rest of the pictures will show you trades that all took place overnight that we all missed! We had literally a handful of viable trades.
Perhaps the best time to trade is during the night, after midnight?
Anyways, I'll describe in another post a possible way to benefit from this.
Starting Balance: 1,000
Current Balance: 1,050
Equity Increase: 5%
Pips Gained: 50
Not bad for one night's worth of sleep!
Another trade we missed
This trade occurred earlier this morning and would have bagged you some serious pips had you spotted it.
All the stars lined up on this one, as the EMA's crossed, RSI crossed and MACD crossed...all in-sync.
Total movement in pips was 100+ downwards on the EUR/JPY at about 8:45 this morning.
Last edited by ForexPhantom; 03-05-2009 at 12:48 PM.
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