That’s absolutely right. I absolutely don’t know how much the losses could be per day or per trade.
It might be that a stop-loss is essential in case the majority of trending pairs suddenly fail to trend. While I hope that if the counter-trend moves would be enough to immediately start reversing the 20EMA slopes so I would only be hit once per counter-trend move, that might not happen in practice. Demo is a way of using greater simplicity even at the cost of greater risks.
If forced to put in a stop on each trade I would definitely start with ATR.
Thank you for your interest but this is too simple to gain from illustration with a chart.
Open a daily chart. Set 2 EMA’s, one at 20, one at 50. If both slope upwards at about the London open, buy that pair: if both slope downwards, sell that pair. Exit all positions at about the London close.
If one EMA slopes up and the other down, do not either buy or sell that pair today.
I tested it out on a demo account for a short period today using a simple back-up Ichimoku cloud on the daily chart. I selected three trades: EUR/USD, GBP/USD buys and USD/CHF sale. Note: had the USD bucked the trend I would have suffered three losses.
I set a S/L range at c.20 pips and a T/P at c.30 pips while not risking more than 1% of my capital per trade. While in theory it seemed a ranging market, clearly the USD was taking hits all round on the fundamentals and well worth taking a position.
After two hours just as London was opening I closed out an overall profit on all three, and will give it more Asian market tests, minus AUD/NZD,this week.
So thank you for a enabling a promising approach - a welcome change for me.
Hi Tommor,
Thanks a lot for sharing this simple strategy.
Can you share some charts so that we can identify ideal cases please with Entry point and closing point?
Can you share some test results please?
Entry point is based on the start of the London forex trading session, about 0800hrs UK time: exit point is when it runs down, about 1700hrs.
You might develop your own additional criteria for entry but right now I only have 2 - I simply look at the 20EMA and 50EMA slope directions on the daily chart. If they’re both up I buy, if they’re both down I sell.
May I suggest a fine grain filter for entry using the open/close 9 period EMAs that I’ve outlined previously. That will hopefully increase your chances of success. Needs testing of course.
Hi Tommor,
Even though on a particular day, both 20 and 50 ema may be sloping upwards and we go for Buy trade, but the trade may go for Sell direction and at the end of day 5PM UK Time there may be heavy loss. How do we manage this scenario?
Thanks,
These dumb trades rely on statistics and probability rather than technical analysis. Prices in an uptrend go up more often than they go down. They go up at least as much per average day as they go down but usually they go up more.
My big fear is that the majority of forex pairs suddenly reverse their trends in the same day and continue in the reverse direction for another day and another, all the time whilst not causing the slope of the 20EMA to reverse. But how likely is that? That’s what I’m trying to find out through the demo programme.
Today was an unusual surprise. The Japanese Prime Minister resigned, so I cut all the JPY long positions before lunch, all were losers.
Overall, of 6 days traded (1 last week, 5 this week), these are the basic statistics -
days traded = 6
winning days = 4 (67%)
trades = 72
wins = 40 (56%)
total gain = +1.8%
Worth bearing in mind that the positions opened are the minimum sizes permitted for each pair by the demo account. So far so good.
