Hi all, I’m a new trader and currently completing the pipsology course while practicing with a demo account (I learn a lot easier that way by putting what I read into practice). I’m using a 30minute chart plotting 3 ema lines at 25,50 and 100, trading the cross-overs. I’m hoping to slowly build a strategy around this as I learn more! Any tips would be most helpful. I’m not a scalper but I prefer the quicker activity of a 30min chart over say a 4hr if that makes sense.
Thanks in advance
I would avoid the lower time frames while constructing a strategy, but that’s just me. As a Noob, you would be at a high risk of losing capital, even if you’re currently doing well with a demo account. And EMA crossover strategies are not reliable indicators of a price movement - so be careful. No Nonsense Forex on Youtube could explain why.
But the bottom line is what works best for you. Do more of that and less of what doesn’t. That will be your edge.
Best of luck.
Thank you for your reply. I will give that a watch. Is there anything you would suggest I could use along side the moving averages?
Thanks again
I’ve been experimenting with the RSI, which is used by traders as an indicator of overbought and oversold positions - for what that’s worth. Not much really as it could take days or weeks for prices to turn…
I removed the 30&70 lines and replaced them with a 50 bar, which is exactly half way between upward and downward trends. When the moving line is above the 50 level it’s a signal for an upward price trend, and vice versa if below the 50 level… Combine that with MACD 3 -10 -16 setting using the bars for strength of trend (and also the best and earliest entry signal) and there’s immediate confirmation of correlation.
At the very least it gives me confidence that however market sentiment differs - and by JC has it done that - that combo is accurate.
You haven’t said which crossovers you are looking at and how you are using them but there are a number of alternatives here: 25 over 50, 25 over 100, 50 over 100 , both 25 and 50 over 100, etc. This can be confusing unless you are just waiting until all three line up. But if you then wait for all three to line up again before exiting then you will not find this consistently profitable.
Using EMA crosses for trade entries can work ok but if you apply the same crosses for exits then most, if not all, of the profit will often disappear before the signal is given.
One reason for this is that trends do not flow in smooth cyclical formats. Trends can often take longer to gradually build and peak out than to reverse.
People enter trends at differing times as it gradually emerges depending on their strategies and timeframes. You would spot an emerging trend on a 30 min chart sooner that someone using a 4 hour chart because they are looking at a bigger picture.
But once everyone is in the trend with a position they are all going to be exiting a lot quicker than when they got in as soon as a reversal is identified.
Here is a little picture showing this. This is from a EURUSD 1-hour chart. Note the different gradients of the upmove from the 1st crossover (entry, 25 and 50 EMAs) compared with the subsequent downmove until the next crossover (exit). The price has returned to the entry level.
Selecting and optimising EMA pairs to work on entries and trend following is called curve-fitting, but the curve on the reversal is so often much steeper and the same pair is then too slow in responding.
If you are using EMA crossovers for entries on a short TF like 30 mins, then I would suggest you consider a different method to determine your exits. These could be, for example a preset target in pips, Fibonacci levels, trailing stops. Each and every method has its own pros and cons and it is worth remembering that nothing works in all circumstances and that every trend/move is different (although often similar :))
Just some thoughts
Thank you for taking the time to reply, it really is appreciated. I guess I’m starting by learning the basics and seeing how they work before moving on. The heads up on no nonsense forex has been great, I’ve listened to about 20 podcasts already today and had my eyes widely opened!
I would suggest avoiding lower time frames because they contain a lot of noise and you might not even be able to find exactly what you are looking for. Switch to higher time frames instead.