Ema Step System.

[Benjimang]

Cryten, just a question about your backtesting...

What time is the new candle stepping within each time zone? I trade with InterbankFX (MT4) which uses GMT timing. However, the new candle forms at 5:00pm. Other platforms might step at 00:00am or something, but still be using the GMT timezone. For example, I'm pretty sure FXCM (TradeStation 2) steps at midnight, EST. Any thoughts?

-Benjimang

[cryten]

5:00 PM EST which is the NY session close time.
This is important when calculating, for example, daily pivot levels etc, since most traders consider NY close as daily close.

[Benjimang]

Oh right, so long as it's consistent. That was the problem when I was analysing the difference between the two platforms I have running here... Time Zone AND time of new candle were different. My conclusion was just to makes trades at the same time of the day, regardless of when the candle stepped.

That doesn't really apply now though because I do tend to break the rules a bit. I wait for the step and start to analyse the situation, but I place my 'daily' orders only when the 4 hour (and sometimes even 1 hour) charts line up too. I suppose it would be too hard to write an EA for that and test it.

My curren entry strategy for the daily is this:

1. Wait for the EMA to cross. I actually have my EMAs set to 'open' so that I can be sure that I have waited for the new candle to form too. At this point I make sure the other indicators are hunky-dory too.

2. Check for any pending news releases for the day that may have a large impact on the pairs I intend to trade.

3. Check up to two smaller timeframes to time my entry.

If I'm trading any tmeframes smaller than 4h I add in an extra step. I'll also have a look at one or two timeframes UP to make sure I'm trading with the trend. Nothing worse than catching a small retracement and then watching the trend resume against you.

-Benjimang

[maurizio77]

Another pretty good day for this system.

Would have been even better had i not been in a meeting all morning.

I didn't want to go anywhere near the dailys today...or the 3H for that matter.

So went down to 15mins.

As you can see there was plenty of opportunities for positive pippage!

I managed 50 of um'.




P.S Cryten, i like the look of your set-up.
I can't get T3 on OANDA, but the Heikin-Ashi is deffo worth more investigation, i like the way it can show you that a run is coming to an end by the shadows....or (and more importantly) that the trend is lasting.
Very useful bit of kit i had never considered.
Thanks dude!

[Benjimang]

Well done Maurizio mate.... I actually made axactly the same first trade as you. I was on a hot date (puffs chest), so I missed the big move too. I actually got 55 pips out of that first move by doubling up somewhat. I noticed that EUR / JPY was moving with some decent strength yesterday so I baught in with that too. I realise this isn't too far removed from just opening twice as many contracts on the GBP pair, but from the price action so far I just thought I might be able to squeeze just a few more pips out of the EUR pair.

Nice to see you confirm my reluctance to trade the higher timeframes too. See you all soon.

P.S. If anyone is interested, my msn email is wassabiwassabi@hotmail.com. Feel free to add me if you're at all interested in keeping an eye on the markets together.

-Benjiamng

[pederl]

Just a thought... why exactly do you bother having the 1 EMA? If a candle closes above/below the 5 EMA it would tell you the exact same thing as the 1 EMA crossing over. I just think it might be easier to read the charts with as little clutter on screen as possible.
Anyhow, I think you have an excellent system worked out here. I've been trying to trade it some the past month, however I haven't had near as much fortune as you have had with it. I seem to have trouble determining when to exit and distinguishing from false signals.
Thank you for sharing your experiences with this method so far, I read this thread daily.

[maurizio77]

Hi Pederl,

Why do i need the 1EMA?.....I simply find it easier...X Marks the spot.

I can look at a screen and know in seconds if i want to enter or stay out.
I suppose it's just a matter of choice...if you don't want it there take it away.

I like it as i find it helps me with any whipsaws should i have them.

Glad to hear you like the system and the thread.

As for not having as much success on this system, don't forget i have been doing this for ages, it is almost second nature to me now.....

The things i look at when i open a screen;

1) is there a cross/possibility of a cross?

2)What is CCI saying..has it peaked, is it breaking 100 (If yes then either there is, just has been..or will be a cross candle so ya can prepare for it)

3) What are my stochs saying?....If CCI has peaked and breaking 100 then its likely they will be breaking the 20-80 lines....a good sign for a move.

4) Trade setup...is the price moving quickly with momentum (harder to slow down and whipsaw = longer trade) Is there any Support/Resistance that your trade might bounce back off?
Today for example i placed a TP on 238.00 TWICE, it hit twice..and bounced back off of it twice. Although it did eventually dive below it for a period later on, i was IN and OUT with the least amount of market exposure as possible.

All these things take me about 45 seconds normally....then i am IN or OUT.


Look at the results of your trades....why are they not always working?
Is it because of retracements/whipsaws?
Do you stay in them too long?
(If so look into Bollinger bands, Channels or Heikin-Ashi candles this may help your trades length...pay special attention to the shadows or wicks on these, i have found they are good at telling you when a move is almost over)

Do you get out too soon? (See above)

Do you get greedy?...We've all done this..i still am some times LOL

If you find you hang on too long, just set your TP for 5 pips.... doesnt sound alot right..... you do that twice a day for two weeks and then say it doesnt sound alot!!.....You'd be suprised.

Have taken a quick screen shot......this is GBP/JPY right now as i type your answer and just look at how many crosses there ...now imagine you got 5 PIPs on each cross.


The candlesticks are Heikin-Ashi ..... look how the colours change at crosses and the resulting price action.

[pederl]

Thank you for replying to my comments. I also really appreciate how you detailed again your thought process and determining factors for entering the trades. Those Heiken-Ashi candles really seem to be a great tool, unfortunately I've been using e-signal and as far as I can tell there is no way of incorporating those for this software (I might be wrong). Which charting software are you using that offers that?

What you say about just trying for 5, or maybe 10, pips makes a lot of sense. I was seriously looking into that as well, because if you could consistently make positive 10 pips a day that way, you would be set. With GBP/JPY pair though, my broker usually has a 9 pip spread. Therefore my s/l would probably have to be around 20 pips. Anyhow, I'm going to definitely be looking into this more, maybe try it out with EUR/JPY pair also since it has a spread of usually 4 pips.

Keep up the great posts and make lots of pips!

[Benjimang]

Hey Pederl, welcome to this system!

Pay attention to Maurizio's thoughts, they'll help you immensely. Just learning the nuts and bolts of the system is only the beginning. I also started out just grabbing 10 pips per trade, just to get used to seeing the system work, and build confidence. After you've been using it for a while, you'll start to learn what market conditions generate different size moves.

My only piece of advice is to watch your time frames. I use larger timeframes to identify 'macro' trends and to set profit targets, and I use smaller timeframes to time my entry.

Example: I see stochs and RSI or CCI heading into overbaught territory. So I'm waiting for the 1 period EMA to cross down below the 5 peroid EMA (or, if you like, I'm waiting for a new candle to form under the 5 EMA). I will look to the Daily to see if the situation is similar. If yes, then trade is good, an I can shoot for some higher profits (maybe 35-45 pip trailing stop). If the daily shows a slight bullish trend, then I might still make the trade, but with a small profit target. Then I will look to the Hourly and 30 min charts. When these line up (stochs and CCI are overbaught), THEN I will enter. This way I only need to use the appropriate stop loss for the smaller timeframe, but the larger profit target of the longer timeframe. This results in a favourable Risk : Reward ratio.

Does this make sense?

-Benjimang

[pipstudent]

Great way of explaining it!!