Hi Everyone,
Question : How to trade moving averages in an ranging market
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I have a 5,10,20,40,80,160 EMA
I wait for cross over from the 5 over or below the 10 and 20, this is my signal to take another look.
If support or resistance from the remaining EMA’s are there I trade.
TP is 250
SL is 200
Stochastic 10.3.3 for extra conformation
Some success but I find with my rules and there are many to buy or sell can get whip sawed out, even though my rules were met. That’s the trouble trading a ranging market with my system. Any Ideas how I can get round this.
Drop the stochastic and add a simple filter rule or two - e.g., buy a 5/10 crossover if the slope of the 40 is upwards and price is above the 160. Avoid trend-following trades in which the current weekly bar overlaps the 10 before it. Make life simpler, not harder.
Thanks tommor. I will try these and incorporate it into my rules. I do switch between the 30 min 1 hour and 4 hour charts to confirm the move with of course candle analysis and patterns.
This sounds either very thorough or very complicated. What about the TP and SL - why are they what they are and how can they always each be the same value?
I’ve found that when I set the SL and TP to 300 on the ones i get wrong i lose more, when i started to incorporate a balanced and tighter SL TP I won more. It’s basically 1:1 system with an extra 50 for spread fees to level out loss and profit. I trade on the hourly chart. This system I have been developing for about two months now after many 50/50 results from previous systems that got canned.
I also found when I set TP to 300 it would almost get there and turn around. Another loss occurred. Setting it to 250 I bumped my winning trades by 25%. That’s based on every 10 trades. I was hitting 7:3 but now the markets are ranging the system is falling short a little.
Sounds OK-ish. It seems you’re adjusting for volatility rising or falling but of course you base that on results rather than contemporaneous pricing, so you’re lose the continuous feedback on how well you are locating your exits and will always be playing catch-up to the losses. I mean, some people can do this by eye, whereas others have to use e.g. ATR and a multiplier, others need a TA-based price level as their guide. Regardless, as exits make (or lose) the money, whatever you’re doing, I’d say they are always worth the closest scrutiny.