[-ForexPhantom-] Daily Crossover System

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748

There doesn’t seem to be a full-proof way to avoid this. Sometimes a trade can simply turn against you. I would recommend AVOIDING trades in the following cases:

  1. When the two moving averages are very close to each other for a few days (indicating a non-trending market). You want there to be a nice gap between the two moving averages, and then for the cross to occur. Let’s call this avoiding a “weak cross”.

  2. Big news events can reverse trends. I don’t usually pay attention to fundamental analysis, but it might be good to avoid trading on big news days or whatever. There are calendars out there which highlight this sort of thing if you’re interested.

Number 1 is the big one in my opinion. You can recognize a good cross after practice.

749

Hows everybody doing applying this system?

Any recent results or ongoing trades? Any tips on entry eg waiting a couple of candles after cross?

Thanks

750

Hi Ryani,

I just bought the GBP/USD last night before bed, and woke up to found it had turned against me quite a bit. The signal was valid, yet it still turned against me. I did notice that the pair seemed to have really big swings lately in the positive direction, and was trading at a pretty high level.

Maybe it had reached its peak. I do think that there needs to be something more to guide entries. I’m not sure about waiting a few candles after cross. My hunch is that you’ll miss the train if you do that, but maybe not.

I’ll keep tinkering with it. The system has a lot of potential, but entries need to be better.

If you have any more ideas let us know! And try out the few candles thing. It may honestly be the trick we’re looking for.

751

FP - Well I did the same thing I took that trade, as well as a USDCHF sell trade as well as you can see (or hope you can all see) :

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Number 1 - Took the trade! Got my cross so took the sell at the end of the day (UK time bout 11pm). It was also bouncing off my SHI indicator.

The next day bar you will see my reaction. I like a good Arghhhh! So what can I get from this? SHI is a slight help but not a be all end all. But I also had a cross of course.

Now price action is something that is always pushed in lots of techniques and Im sure with good reason. Having a look at the chart, I’ve marked a region A to B. That clearly shows more green than red. I’ve marked 2 & 3 to indicate that those red candle are in a sea of green. So why did I take the trade at point 1 (that could easily compare to 2 & 3)? It seems to go against the trend right? yep I gotta agree. Sooooo even though I waited for the cross and it bounced off my SHI - it went against me. I know I cant be 100% right, but defo want to be over 50% by a good way :).
I can see that the weekly timeframe shows the pair in an upwards trend… so there’s that to compare possibly to (as others have in previous posts) and I cant help but think possibly the ADX indicator. Might just try going in the same direction as the weekly trend for now as I would like to keep this as simple as possible.

As a note - Some will notice that, I have an ATR indicator at the bottom. I want to incorporate this. It is set as 15, so takes an average daily movement over the last 15 days. I then take this and multiply this by 2. So for this trade the average was 25 pips, multiply by 2 = a nice round 50 pips. Please nobody try this out yet though! As it clearly hasn’t worked yet for me but that might be that the trade should have never been taken.
I like that as the market changes and it is set on different pairs it changes depending on the market movement which seems right but gotta be tested first. Possibly multiply by 3.

So still testing what works well for me and as we’re all individuals, I need to find my own comfort zone.

Still like these techniques very much tho.

Thanks

Ryan

752

Ryani,

Cool post. The fake-outs are interesting. I will figure out how to fix them. I will only take good trades in the future!

Let us break down a fake-out in the context of this system (I am thinking out loud here). This system details moving averages that are applied to the MACD. In simple terms, it’s a moving average system with a twist. Moving averages show the trends. A good investor trades with the trends because a trending market is profitable.

So if moving averages are telling us a direction, that means that the market is assumed to be reversing to start a new trend. Let us think about this. This means that, up until now, the market has been going in the opposite direction. What we are trying to do is detect the start of a new trend and jump on-board as soon as possible.

Let us think about these words. Realize that most things in life continue on a certain path unless some other force interrupts them. The easiest thing in life is for something to continue on it’s current path. It takes a great force to alter the path of an object.

Applying this to trading, we can see that it takes a great force to reverse a current trend. What kinds of forces could possibly reverse a trend? One factor must be volume. Remember, if a pair is currently trending downwards, and we get a cross in the upwards direction, that does not necessarily mean that the signal indicates the start of a new trend. As we have seen, the pairs can flicker up for just a moment, and then continue going downward yet again.

This seems to be a 2-part process. First, we have to get the crossover signal. This indicates that the trend is subject to change and that we are aware of this fact. Second, there needs to be enough momentum to cause the trend to reverse. This is the part of the equation that will make us money. Figuring out if there is enough momentum is the key. If there is not, we will wisely avoid those trades. If there is, then we will enter the trades.

If volume tells us the level of momentum, then it would seem that in order for the trend to reverse, we must also have more momentum today than the pair had yesterday. This tells us that people are jumping on-board and that there is enough momentum to reverse the trend.

I will investigate volume measures. I am ready to receive my forex profits as I feel this is the missing ingredient!

753

For me a lot of the main crosses are looking fairly flat right now. Have checked some other crosses - the buy GBPJPY looking okay. I can see the cross, the weekly trend is on the up, ADX is on the up, I’ve got 3 days in the green, and Im fairly sure I saw a lepricorn today. So I’ve decided to buy into GBPJPY as sitting on the fence is not gonna get me anywhere.
Cross them fingers people! Cross 'em!

754

The market so flat right now. It makes trading the trends tough!

755

Bummer. My platform does not let me set a linear moving avg less than 2. I don’t suppose there is any way around this. Guess system won’t work with 2 period lwma and 4 period lwma.

756

Hello all!

Firstly, I would like to say thank you to ForexPhantom for sharing his trading system.

I’ll foward test a similar system this month joining both ideas from the amazing cross over system and daily crossover system.

I’m using the template of this thread but I changed to EMA 5 and EMA 10 as in the 1 hour crossover system and still using the RSI rule as in the 1 hour amazing crossover.

I added to wich pair the ATR 21 periods indicator to each pair. This indicator gives me the daily average range for each pair. For example, EURGBP daily average is 30 pips and GBPAUD average is 96 pips. I’m using the ATR for the size of stop loss. Take profit is ATR * 2 ( 60 pips TP in EURGBP and 192 pips TP in GBPAUD for example). I’ll use always buy limit and sell limit orders to enter the trades.

I’m using a fixed R (risk) value. Each trade I will risk 30 dollars. Each take profit is 60 dollars. If this system is as good as it looks it is I’l probally have a win rate of at least 40% which is enough on this risk/reward relation. Everytime the trade moves 1R (30 pips on EURGBP or 96 pips in GBPAUD) towards TP I’ll move the stop loss to break even.

I’ll share results at the end of the month. Good luck everyone.

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757

Brutus,

The moving averages of 1 and 4 are not set in stone. Experiment with 2 and 8 - it seems to work well, too.

758

Best of luck with the modifications! Let us all know how it turns out. It’s an interesting idea to combine the RSI and the MACD moving averages. You might be on to something. :slight_smile:

759

Waldmann007

I too have been experimenting with RSI and ADX combined. The theory of it looks promising, so I’ll be looking to demo trade this week with these indicators alongside the original MACD.
I’m also using an ATR - 15ATR*2 (possibly *3 we’ll see).

Let us know how it goes!

Ryan

760

Hi all. I have been reading this thread for a while now and this week started forward testing. I have one question, regarding the entry signal. Often the crossover of the RSI and the EMAs are not exactly coincident on the same bar, see screen dump (if it attached ok)… As you can see, the EMAs cross on one bar but the RSI lags just very slightly, but before the next bar is formed. Is this a valid signal?

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761

you have to check D1 timeframe

762

Dear Forexphantom

Could u please clarify the same said below…

the EMAs cross on one bar but the RSI lags just very slightly, but before the next bar is formed. Is this a valid signal?

Fine that it should be checked in day chart… But… what if there is a situation as above in day chart?? Because I had been reading both of your threads and am almost about to complete and start live trading… But at times I get the above doubt… Could u please clarify this…

763

Hi, I’m new to Forex trading and I’m using Trading212 as my broker, using their online platform. There are tonnes of indicators including many moving averages, but not one simply called ‘Moving Average’ like stated in this thread?

I have:

  • Simple Moving Average
  • Exponential Moving Average
  • Weighted Moving Average
  • Triangular Moving Average
  • Kaufman’s Adaptive MA

Could someone please assist as to which should be used. Many thanks.

764

The second one

765

Point taken… but it happens in all time frames…

766

Hey its nice one as many of you shared your experience in FOREX really its the market where you need to be concentrated and gain learn as much as you can…

767

I think it can be considered valid