Price action

Trading Systems Free Forex Trading Systems
21

Hello, what about your daily cross over system have you given up on that ?

22

I do not think it is a trading system all by itself. There are several problems with it (and with other technical indicators in general).

For instance:

  1. How do we tell if the signal is valid? Have the moving averages actually crossed? If so, how do we know the price will continue in that direction? A quick reversal can kill all your profits (this happens a lot).

  2. No money management.

If it had terrific money management to limit losses from reversals or whipsaws and you used it in conjunction with price action analysis, then it might be useful. But I think everything has to start with price action, and whatever follows is just for potential confirmation (e.g., to help identify a trend). If the two disagreed, Iā€™d trust price action first.

With perfect money management, it may still be a profitable system (i.e., if it really identifies trends). A forward and backward tested EA on multiple pairs with various T/P and S/L settings across users would be informative. It would be nice if, as a community, we could arrange to create and test such things in a scientific way! Think of how many systems we could validate (or throw out)!