Four Ema Strategy

Beginner Questions
22

Hi @Ranjithkumar877, As you have programming skill, defining a strategy for profit will be a lot easier. There are many ways to develop a strategy. There are also many way to generate profit from trading. They can be white strategy, gray strategy and black strategy. These are because market is so huge and naturally having weaknesses, making holes that can be used to generate profit.

I assume you are a retail trader, so I will only talk about white strategy.

The best method to create a trading bot by observing instrument’s character. Never think of a strategy that can fit all instruments.

From my experiences, good EA works base on indicator. So you have to observe which indicator can be used for an instrument. I also found that only indicator can reflect price action can be potential. So the tips will be observe which indicator can mimicking price action is the one you can use.

The basic of price action is detecting market trend and entry zone. So you need to have at least 2 indicators to identify trend and entry level.

If you are following price action strictly, you should have profit factor around 1.5. So, your system should be around 1.5 as well. ( 1.5 RR )

23

Whilst I understand what you are saying here, I don’t think this covers the entire picture. Although there is no universal, mechanical MA-based strategy that has made millions of users of it rich, there is not, to my knowledge, any other type of strategy that has achieved that either.

Let’s face it, Price Action, for example, has been promoted actively for many years now but the percentage of failures reported by all regulated brokers has remained about the same, i.e. 70-80%. Therefore, one can conclude that there is no system or strategy that, by itself, is responsible for generating success in trading. This all points to the conclusion that success or failure is far more due to the trader than the method used.

However, that does not mean that MA’s/indicators and/or PA methods are not useful - it all depends on on how they are used.

As already pointed out above, there is actually no strategy described in this thread at all. We have 4 MA’s, fine. So what are we doing with them? Are they generating mechanical signals? Or are they indicating when the trader should consider entry if other factors are positive? Where is the stop? Where is the profit target? What size position to take? Do we scale in or out?

There are so many other factors that make up a strategy - and then there is the trader’s discipline, patience, etc.

Personally, EMA’s have been the core of my approach for several decades and I have no reason to change it so far.

IMO, a trader needs to establish what they need to know and then decide what indicators or other methods will provide that info. That is all very personal to the individual and there constraints, e.g. time, capital, trading objectives and style, etc, etc.

Just my view on these things. Shoot me if you wish :smiley:

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24

So I was making my point but I respect people are going to trade exactly how they want. I think people are looking for an edge and something they can understand. The way I trade is hard and always has been. If you check out my thread, you see I put hours into preparing for the trading day. Maybe I am just jealous. I knew I would get some blowback on my comment and that’s cool. Good luck!

25

I would just call it discussion and expanding the scope of the topic :smiley: Is that not the aim of a forum?

I also devote a lot of time in preparing for a trade. I think it is a very understated function. In fact, I find that aspect so demanding that I cannot trade more than 2 instruments at any time (mainly only one)! I don’t have the brain power to absorb and retain all the info I need to cover multiple markets :grimacing:

But, as you say, trading is a very personal subject and we all do what suits us best.

The irony is that trading offers both the glory and the nightmare of easy access, a huge range of markets, an even greater range of strategies, an infinite number of ways to make profits - and an infinite number of ways to lose it all. :smile:

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26

You guys are funny. This is proof that trade entry criteria does not matter for profitablity. Derivatives of historical price are of no use and cannot forecast future events.

Once we can understand that, then trading begins. Until then, keep running circles on the subject.

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27

Let get rumble here … :rofl:

I hope no body will get irritated here. It’s normal, we give opinion and others will digest. Discussion will make us a better person.

I want to add here. An indicator quality depends on how we use. What so called repaint, mostly happens because we use it on candle zero. That’s why good strategy with indicator will use candle - 1 ( latest candle - 1).

For example, when we are looking for golden cross on M5 chart. At this moment the time is 01:06. We have to look golden cross at 01:05. golden cross at 01:06 is not valid, it will keep changing after time pass 01:10.

I have some strategies using MA also MACD, Bolinger Band … all of them are inherited from MA. I have been using them since 2011. The reason of the strategies can survive for long only one … Money Management.

Lets enjoy our trades … XAU is looked so attempting. :smiley:

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28

These strategies backtests very well and it seems these settings work well when the market follows a certain trend.

29

May I ask, what the heck is the strategy?

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30

Lol - “naughty naughty”: there are (many) people here inexperienced enough to take you seriously!! :grimacing: :sweat_smile:

Don’t ask.

I asked as soon as it was posted, but there’s apparently no answer.

People are too busy (saying “similar to the system I use”, and “I have seen people make good gains from strategies based on this idea” and “Interesting strategy” and “not a bad system at all” and “I’ll develop a bot using this strategy” and “these strategies backtest very well”) to appreciate that no strategy was actually mentioned - just a list of 4 moving averages.

Apart from Ryan’s tongue-in-cheek comments about hedge-funds, @Jag757 also made a very helpful, intelligent, educational and absolutely correct point, right here, but that also fell mostly on stony ground.

Such is Babypips.

Nobody takes any notice of the very small and decreasing minority actually talking sense.

I used to let it upset me, but that was my problem. Now, I just feel sorry for @Ranjithkumar877 , who has done absolutely nothing wrong at all and is simply trying to learn (unfortunately but understandably without yet being able to distinguish between those who actually have something to teach and those who know even less than he does himself). :roll_eyes:

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31

Hi @Heteroskedasticity, I don’t understand why people ask something here without elaborate more information. But, I had communicated with many people from different forums. Most of them afraid to expose their strategy because they want it exclusive for their own. :slight_smile: Here @Ranjithkumar877 asked 4 EMA without telling how to use it.

This will give us many interpretation. For me I asked him the rule. I can develop an EA by the rule and it can be used for backtesting to produce its trading stats.

I even wrote here how I use 3 EMA.

As he want to develop his own system, I can only give him tips. I believe most trader doesn’t likes to expose their trading secret. So, better don’t ask it more, unless he/she voluntary tells us for advise or help.

Everyone may ask anything, but without giving proper information, we can only treat it as a common dialog, so our live wont be so bored :smiley:

I am happy to answer any questions here. No intention for anything or hidden agenda. I’m a fund manager … bored and like to talk anything about trading that I know and allowed … :rofl:

By reading the question, I believe he is a beginner, most likely a software engineer who has interest in CFD trading. Confuse about strategy, indicates he doesn’t have sufficient trading experience. Eager to learn will be a good start. Good trader always born from a hard self learning environment. So giving a good direction here will be the best option, the rest will be depend on himself. :innocent:

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32

I agree; I agree. The problem is that many people here who try to “advise” him will be doing so with misinformation (as you can see from some of the other threads he’s started).

It’s really a very difficult situation: the people who need help the most are inevitably the ones least able to distinguish between the few people here who actually know what they’re talking about and the many who don’t.

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33

No worry @Heteroskedasticity , everyone will know, by the time, who are willing to help or mislead others. It’s part of natural selection and training for the beginner to get tough and better. :innocent:

Here come different people, different background and different purposes:

  • Some may have ill intention to mislead others just for fun
  • Some may show their knowledges to get acknowledgment for being superior
  • Some may help others for gaining self-happiness for doing a good deed.

We can’t deny all types. For me, I accept all people, because without them, this life will be very very boring … :smile:

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34

Thanks for sharing

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35

You might want to tweak the lines a little. Moving averages are subjective. Also you may wish to incorporate trend lines to isolate the entries.

You have the beginnings of a good strategy and you will probably betweaking it forever as the market shows a new face.

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36

What is the strategy then?

37

The big boys use two Emas

20
And
150

You need to include 150

38

Do you open a trade when price crosses the EMAs?
Do you open a trade when the EMAs cross each other?
Do you open a trade when the space between the EMAs widens?
Do you open a trade when price finds support or resistance at the EMAs?
Are you only looking for longs when the 50 is above the 100 and price is above both?

A list of EMAs and a timeframe doesn’t exactly constitute a strategy.

I’m sure you have one based on this list that you aren’t mentioning, which is why I’m surprised to see others commenting on the merits of this strategy when all we have are a list of EMAs. It’s like the emperor has no clothes and we’re pretending like he does.

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39

I would say it’s missing TDI indicator.

40

I am surprised by the number of comments generated by this thread. Especially when there is actually no strategy here to talk about. User has listed 4 EMAs and wants an opinion on a phantom strategy that nobody knows. Fun fact : to get an opinion on a strategy, people actually have to know the strategy. Then some of us with coding skills can simply test it for you and advice you to stay away or go forward.

At best this is just a popularity stunt.

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41

Exactly right.

Apparently not, in this forum.

No, don’t think so. Some people really do imagine that 4 indicators are a “strategy”. :roll_eyes:

(I know; I know; it sounds ridiculous beyond words, but the underlying problem is the one described here - they have all learned to “trade” from online “information”.)

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