Don’t. Any system needs discretionary decision-making. That is where experience comes in.
If you trade the Asian market, EURJPY will give you best combination of trend opportunities, clear signals, and pips, at least at the shorter time frames that I trade, IMHO.
I wonder if you’re looking closely enough. I’ve been trading a similar system using ADX, Bollinger Bands, and Ichimoku cloud, the heart of which is a new DMI high. This RLGL system is simpler and, I’m beginning to think, better! Of course, like any system, it needs discretionary decision-making which comes with experience. Stay thirsty, my friend.
In this system, you are trading short-term, almost scalping. The idea is to find an instance of short-term momentum and get in and out–talking trading here, folks–quickly. That is why the ADX line is not useful; you expect to complete the trade before it could take effect. Under such conditions, if you wait to exit until price closes beyond the EMA or until the dominant DMI crosses below the other, you will often lose a large portion of profit. A good rule of thumb is to draw a Fibonacci Expansion on the prior AB wave, and exit at FE 100, that is, when the height of wave C equals the height of wave A. That is because many traders expect this to happen, so it become self-fulfilling. If your platform doesn’t have a Fib expansion tool, just do it by hand–still talking trading. Then, instead of gambling your winnings to try to prolong your trade, just wait for the next opportunity. Good hunting.
I suggest a rather drastic modification to RLGL. I trade a similar system, but I use the middle line of Bollinger Band 20, 2 to gauge trend. (I use the turning of the opposite outer line as an indication that the trend leg may be exhausted; I also prefer price to bounce off the outer line.) I use ADX 20 and require a DMI new high, to confirm momentum, before I enter. This tactic cuts down on the number of opportunities, so I use the five-minute or one-minute time frame in order to get enough trades. The extra more reliable momentum seems to outweigh the higher volatility. I don’t use ATR; I set the stop-loss below the pivot candle and adjust the position size accordingly. I enter two equal positions, each risking one percent of my account. I exit position 1 at 8 pips profit and try to let position 2 run. I recommend this money-management tactic even if you don’t incorporate the DMI new high. I often exit position 2 on Metatrader’s Fib Expansion 100. Like RLGL, this system attempts to find a temporary situation of high momentum and grab a quick profit, but it does so with an extra safeguard on a faster time frame. Otherwise it’s exactly the same, ha ha.
Hi Vince,
Thanx for sharing this with us all. I have something similar that uses ADX and a simple MA for direction.
Just a quick question(sorry if its been asked/answered before). For the movement across the EMA, does it have to open on one side and close on the other, or can you use the HI/LO on the opposite side to where it closes? Hope the question makes sense.
Thanx
Pipex, I don’t quite know what you mean. (BTW, my name is Bob; Vince lived down the street but he got stabbed.) I look at the pattern, not the details, and try to find a setup with immediate momentum, then try to grab a quick profit. I like a traverse of the Ichimoku 7, 22, 44 kumo (you can leave out the lines) to show a breakout from broad medium-term support/resistance or a bounce off the kumo in addition to a bounce off the outer Bollie to show resumption of an existing short-trend. I like to trader in same direction as SMA 500 except after a trend reversal, when you just need the reversal. E.g., if trend reverses from bullish to bearish, you can enter short after a lower low followed by a lower high followed by a second lower low. If this sounds like gobble
degook, take a look at the accompanying chart. (I’m not forum rat; hope this picture-showing procedure works.)
Hi Bob, Thats terrible news about Vince! Thanx for the reply. I like the system because of its simplicity. Just curious as to the one signal, ie breaking the EMA. Does it have to be Open on the one side and Close on the other? I have attached a picture to maybe help clarify. Scenario A would be a signal to sell, but would scenario B be? Scenario A opens above the EMA and closes below. Scenario B opens below, but the HI goes above and then it closes below. It just so happens that they both would have been profitable.
Thanx
Gary
Hi, I just want to say to Vince, THANK YOU FOR THIS SYSTEM. Your system is gold sir, gold. I just started to use it, and I opened up 5 trades with this system in the proper usage and I have basically instantly made atleast 5+ pips within 10 minutes. It’s brilliant! Thanks sir!
Scalping in 15m time frame is good
Vince do you think it would be a good idea to team this system up with the Bollinger Band, for measure of a break out along with the ADX and EMA 9 indicators?
Hi All,
Been working on improving RLGL. Been evaluating many indicators to help reduce drawdown while improving P/L ratios. Hope to put out the new version by March.
Happy Pip-ing!
Hello Vince,
I am interested in scalping using this system, have you tried it on the 1 minute and 5 minute, do you know if this is effective on these time frames? I am looking to take little bits, even 5 pips here and 5 pips there, and I think this may be able to work that way? Have you made any new changes since the original posting?
Thanks man.
Hi Guys ,
I not really understand “Set your Stop Loss to the value of ATR14 at the time of the order placement.” >.<
Btw, Mine Atr is kinda different from you all . Mine shows 0.0007 till 0.0015 , but why most of your all shows 0.0025 till 0.0058
Hi Vince are you still consistantly profitable?? great thread by th way :35:
First of all, sorry my poor english 
This is a great strategy, however need more false signal filter. I try RSI and BB, but not enough effective. Have someone any idea?
Thanks for posting this strategy, I’ve been looking for a method to use on the shorter time for a while now,
I think successful trading in shorter time frames requires a system that suits the individual trader’s mindset more than longer time frames.
I got quite excited with this as the idea behind it suits me nicely and there are some good similarities with my longer tf method.
I set up a new trial account for it this morning and promptly bagged 60+ pips on my first two goes with it, begginers luck of course, but I can live with that!!
I am using it with larger round numbers indicated as they should show good price action at this time frame and I’m also playing with the idea of using the TDI instead of the ADX, I think they’re both just as good but I’m more used to the TDI.
I will be following the thread with interest.
Good luck and good profits to all
Andy.
Thank you vincejg327, you have shared not only the outstanding system but some great trading manners as well. I’m trying out the system with my own exit rules (1. ADX line goes below 40, 2. Trailing stop), will feedback the result as I progress.
Is i possibile to post this System EA?
I would like to back test variation settings of this system on large time interval, and it is to much job to do it by hand…