So im testing a strategy which mainly is a 50 EMA AND 20 EMA BOUNCE STRATEGY using price action around these areas.
This obviously works very well in a trending market! not a range bound market.
What I need is a good way to determine when I can enter a trade when its only trending, I ave used say EMa’s SO IF ITS UNDER 100/200 EMA? But this can still go pretty flat for a while which would lose me alot of trades with the moving averages.
I was wondering if anyone has any good ideas of what they do or what I can do??
Maybe the below in some way>??
Angle of the moving average line?
To do with price action in some way, candles?
maybe an RSI or stoch or something else?
Would love to hear anyones input, and appreciate all replies.
First off you must shake off any belief you might have that the conditions which tell you to enter must be removed or reversed before you can exit. This is the major failing of purely technical systems such as MA crossovers, momentum or overbought/oversold indicator trade signalling systems etc. etc.
The tighter our entry set-up conditions, the fewer trades you will enter. You could guess that maybe each additional condition cuts your entries in half. So if you buy when the 20EMA is sloping upwards you might be able to take 100 trades: if you only buy when the 20 AND the 50EMA are sloping upwards, maybe you’ll only get into 50 trades: if you say the two EMA’s have to be sloping upwards and the 20 must be above the 50, maybe you’ll only take 25 trades. Etc. etc.
A lot of trades is neither financially better than just a few, nor worse.
Forget angle of slope, it varies continuously even after its been printed by the high-low range of the price action within the time period of your chart.
yes i understand that and i didn’t say i traded this way, but for my trades to work it must follow a trend so do you have any advice on knowing if its trending or in a range ? thanks
There is no universal definition of trend. Its a trend for you if it fits your strategy. The fact that the same chart does not fit my strategy does not mean there is no trend, its just that there is no trend for my strategy.
This is another good reason to disbelieve any BS about price only trending 25-30% of the time. In truth, nobody can say this.
yeah that is true, i understand what youre saying ,was hoping to fiind something useful to use as a rule to only enter a trade because of a certain parameter. i can use judgement but id rather not ha as maybe not as reliable .
i see you comment alot here do you use moving averages in your strategy ?
Yes, all my long-term trades are trend-following and MA’s are a fine tool for confirming trend. I use only the daily 20 and 50EMA’s, overlain on both daily and weekly charts. I’m interested in the slopes of the EMA’s, not their sequence, nor where price is in relation to either EMA. I don’t use any off-chart indicators.
I too only use the 20 and 50 ema but looking for retracements to these levels and then looking for price action in relation to the trend to enter a trade using 1xatr as sl and tp do you think there’s anything else i can use? ie indicators etc
ATR’s a good check for a SL level. Price is the primary information and what price does is more important than what an indicator says it has done.
I’m currently also using the weekly bar for assessing trend strength. So if the last weekly bar had a higher high and a higher low than the previous, or of the last weekly close was right up in the top 25% of the week’s range, or how many previous consecutive weekly bars overlap with the last one etc. etc.
i like this idea with the weekly but wont it cancel trades if it isnt a higher high etc? maybe i can look how they relate to emas like the lower charts? maybe i only trade certain candles also?
No you don’t have to have only weekly bars with HH and HL to continue the uptrend. An inside weekly bar with a LH and HL would probably not really damage an uptrend and would almost never be a mark of reversal into a downtrend.
I’m currently using 8 TA trend features such as mentioned earlier which can be either bullish or bearish: if the score is 6 or 7 or 8 bullish points, I will look to get in long, 6,7 or 8 bearish points and I will look to get in short.