I have just recently started my new venture into forex markets. I’m on the lookout for new strategies. The “Cowabunga System” seems great. The only true issue I see with it is that you are indeed “on call” most of the time. Now I like to day trade, however to be “on call” means you have to have the money to have a service that can provide you with alerts (X-Tic). I cant afford that at the moment. I have however been studying a new strategy that might prove to be beneficial. Crossing EMAS on the MACD… Lemme explain.
Not all currencies can use this strategy. Only the EURO/USD (from what ive done research on) can this strategy truely work. I think its because of the volume traders that use it that make it slightly more reliable. Now to the good part…
I’ve noticed over the past month or so - that the crossing of these MA’s have provided both small and large profits. Now I have grasped hold of the fact that profits take time to accumulate. Thats all fine and well. I dont expect to be reaping millions in a week. So i have constructed the 16 pip / day method. Only achieve +16 pips a day and the day is over. Doesnt sound like much - but thats all I need because compounding will do the rest. Trying my best not to be too greedy by chasing pips all day long and holding out for max profits. So, moving on, I have noticed on the 30min Charts for the EURO/USD that the cross overs of the MA’s of the MACD can allow me to attain this goal. There is a small drawback though. Here is where the newbie comes out… wait for it… Stop losses must be placed around -100 pips. Now I know this may be a fatal mistake however there are other rules. They are…
Only Trade EURO/USD
Only use 30min Chart
Upon Purchase set T/P to +16pips
Upon Purchase set S/L to -100 pips
Have lots of patience
Trade only from 6:00 am to 5:00 PM PST (M-Thurs)
Can only trade from 6:00 am to 1:00 PM (Friday)
Can only place purchasing trade upon close of the candle after the crossover candle. So once you see the cross over candle - wait for a confirming candle so that it gives you confirmation of the trend.
If you dont reach your profit target and the MA’s do a reversal and cross again - you may close out the trade.
If you your stop loss is hit… END THE DAY (your gonna be bummed anyhow - dont make it worse by placing makeup trades).
Not really a rule but it may lower stress if you dont look at your profits and instead look at the pips counter instead. This may reduce nervousness when seeing -$XXX.XX dollars on one trade.
So thats about it… Remember in my own particular scenario - im looking for only 16 pips a day. To some that may not be enough - but my leverage is high 50:1. Through my past days research using the time frames outlined above I have yet to see a failing trade in the past 3 weeks. Although I think sometime last week I saw a 75 pip loss before it came back up to +16 pips (hence the -100 pip stop loss). Now I know the stop loss is of concern to many out there - its understandable. But im only using money I can afford to loose. This is still in its testing phases and I will keep you all updated as to how it works out. Please lend some critisizm as you may - as i can only benefit from it.
Also, I am looking to backtest this over method on historical data. So far I have only been able to do this manually which takes significant time. I have meta trader 4 but finding it very difficult to set my conditions (ex. time frames, entry positions, etc). Any suggestions would be very beneficial and appreciated. Thanks again folks.
Have you considered what two or three losing trades in a row would do to your account? This is a more than likely event, and as I understand it, 3100 equals 1618 - that’s 18 days of uninterrupted winners to catch up after three losers, plus you always need to make more pips than you lost to come back after a loss. It seems that those unusual losses may be extremely expensive for you. Just one every now and then is enough to keep your compounding plans from happening. R/R ratio of 0.16 needs to be thought about seriously… That will require extreme levels of winning trades. Can you really do that? Best of luck
Well that is what im attempting to look out for. It’s looking as though that your stop loss will most likely not be hit and you will close the trade when the two Moving Averages cross again. Typically this is under the -100 pip mark. I will have a few hours tomorrow to look into this aspect a little more in detail.
Here is a picture (below) of a loosing trade using this method. This trade would have never occured because the trade falls outside of our trading time indicated in our rules but to give a small example, The Purple dotted line is your crossing candle (5:00 pm), The Green is your Entry Candle (6:00pm) (Which you would enter your trade at the open of the candle) and the red line is the manual close at 7:30pm on the crossing candle (Close your trade when the candle is at its close so more like 8:00pm). The pip difference in this instance is -54 pips. Please be aware however that sticking to our trading times the appropriate entry time would be the 7:00am Candle. We would have taken our +16 pips for the day and have quit for the day. As you can see that would have been our only trade for the day.
I find that the early morning cross overs are more reliable because of both NY and London volumes. The later in the day you trade - the less reliable this system is and more prone to losses. Will keep you updated on what happens over the next week.
Hey guys, as promised here is the numbers for Jan 12th 2009. We had a purchase just below the opening quote. The volatility of both markets moving caused a slight reduction in my opening purchase. As stated before - we are only looking for a 16 pip gain however since the volatility impacts our asking price i made a move to go for the 17 pip gain to have our order filled as close to the 16 pip gain we were looking for.
Time: 8:00 am (PST)
Short at 1.33501
Target: 1.33331 (+17 pips)
Win
Fyi that ended up being the low for the half hour surprisingly. Might have gotten lucky there but remember if that price was not hit - this order would still be open until the lines cross again or god forbid the stop loss was hit. Below is a view of todays buy. The day is at an end since we hit our target - will update tomorrow with new results.
