So, I bought the Rover North system a couple of years ago when I first started trading, and have been using it off and on with some success. Mind you that I have a full time job so I don’t always have a lot of time to trade. Anyways, the issue I have with the system is that sometimes, if you enter a trade late in the trend, price ends up reversing and you’re stuck in a losing trade. Additionally, the risk-reward ratio isn’t that great if you happen to have a losing trade. I think the guy who actually traded this system and won the Surefire Trading contest was using it to capture 5-10 pips per trade at maximum leverage, and then to close the trade a.s.a.p. I was never really clear in my understanding of where to put a stop-loss on the trade since the pip capture he showed on his training video’s was so low.
Then, last year, I stumbled upon a guy by the name of Greg Stefaniak. His system was pretty simple as well using the ADX Indicator (Average Directional Movement), Momentum Indicator, and the SAR Indicator (Stop and Reverse). He seemed to be fairly successful as well but, again, his trades weren’t necessarily flawless. He did offer some free videos online showing how to trade his system. If I can find a link for them, I will post it for you to view.
Both systems seemed to hold promise, but neither, I felt, were close to perfection. And, to take a quote from William Shatner as Captain Kirk in one of my favorite movies “Star Trek: The Wrath of Khan”…: ‘I don’t like to lose…’
So, a couple of weeks ago, I had an epiphany: “What if I were to use both systems simultaneously with the rules for both commingled, and see what happens…” I started going through my charts for the major pairs and setting them up using indicators from both systems. As I did so, and I applied the trade rules for each system together, the results of the trades were pretty impressive. I did make some ‘minor’ modifications to the Stefaniak system opting for a lower Directional Index signal than what he uses, but it seems to be working. I have a Demo account (AVA Financial) I opened this week and have placed a few trades using the two systems together, as well as the daily pivots, to determine my take-profit. There weren’t a large number of trades available due to the scrutiny of the two systems working together, but the accuracy of the trades was fairly flawless.
As an additional note, I have a candlestick indicator that I bought from Don Steinitz that I was using as well to help determine candlestick pivots. His indicator draws a line straight across the chart whenever a bearish or bullish candle is formed so you can visually see where the support and resistance is. And, it settles my mind knowing I have a buy or sell candle in the mix.
I was hoping some of you could take a look at it and let me know if it looks promising, and something that warrants further investigation… You don’t necessarily have to have the candlestick indicator as long as you have the daily pivots to show you where to establish a take profit level. I tend to use this indicator more as a confluence indicator than anything else.
Here are the setups and rules that I’ve been using below…
1.) Setup a regular candlestick chart in Metatrader. I change the colors to Red for a sell candle and Lime for a Buy candle
2.) Add a 14-period EMA (Exponential Moving Average) to the chart. Use the color light blue or something similar
3.) Add a 144-period EMA (Exponential Moving Average) to the chart. Use the color purple or indigo
4.) Add the ADX Indicator window. In the ‘Level’ section of the indicator, establish a line at the value ‘25’. Period is 14. And, for the positive Directional Index (+DI) I use the color lime, and for the negative Directional Index (-DX) I use the color red. This helps to visually see a buy/sell cross.
5.) Add the Momentum indicator window. In the ‘Level’ section of the indicator, establish a line at the value ‘100’. Period is 14. When the line is above 100 it indicates a Buy environment. When it is below 100 it indicates a Sell environment.
6.) As an extra measure of confluence, you can add the MACD Indicator to show MACD Crossover. It’s up to you. I added that this week and was looking at it off an on. It’s up to you.
7.) Add the Daily Pivots indicator to your chart.
8.) And then if you have the candlestick indicator, you can add that as well.
Here are the trading rules…
1.) The Rover North system is basically an EMA Crossover system. You start on the 5-minute chart and look to see if the 14-period EMA has crossed over the 144-period EMA. If so,…
2.) Go to the 15-minute chart and check to see if the 14-period EMA has crossed over the 144-period EMA. The 15-minute chart should have a crossover in the same direction as the 5-minute chart. So, if price is rising, the 14 period EMA should be above the 144-period EMA on both charts. If so,…
3.) Go to the 30-minute chart and check to see if the 14-period EMA has crossed over the 144-period EMA again, in the same price direction. In essence, you should have price on all three charts, as well as the 14-period EMA above the 144-period EMA for a ‘Buy’ signal, and then all of them below the 144-period EMA for a ‘Sell’ signal. Do this again on the 1-Hour chart as well. You should have confluence on all four time frames.
4.) Now, on the same four charts, look to see if the Directional Index on all four charts is at or above 25. If it’s a Buy signal, the green DI should be touching or above the 25 level on all four charts. If it’s a Sell signal, the red DI should be touching or above the 25 level on all four charts. Greg Stefaniak advises that the DI for a trade on the 5-minute chart be at or above 35. I haven’t seen much of a difference with that as long as all four time frames are at or above 25, but it’s something to fine-tune and play with.
Also, some of the Rover North traders wait until the price retraces back to the 14 period EMA before placing a trade in the opposite position. If you have a strong candlestick moving in the direction of the EMA’s, you may have to wait for that retracement to happen, if it happens at all. But, definitely something to look at… Next!
5.) Look now at the Momentum indicator on all four charts. For a Buy signal, is the Momentum indicator above 100 on all four charts? If there’s a Sell signal, is the Momentum indicator below 100 on all four charts?
6.) Finally, look to see how close price is to the next daily pivot in terms of price movement. If you have a Buy signal, you’re looking for the next Resistance level. If you have a Sell signal, you’re looking for the next Support level.
7.) OPTIONAL: Add the MACD indicator to see if there’s a cross on the timeframes. Usually there is, but it’s an added measure for confluence.
If all of this measures up, and the conditions are met, you should be able to place a profitable trade with a very, very high level of success.
TAKE PROFIT: I set my take profit level right now at ten pips MINUS whatever spread I have on that currency pair. So, if my plan is ten pips, and my spread is 2, I set my take profit at 8 pips.
STOP LOSS: I haven’t figured out a good stop-loss yet. The trades have pretty much been successful. I did set a Stop Loss on one of the trades and didn’t set it high enough… Ergo, I was stopped out, and then the price moved in the direction I wanted it to. Bugger.
Any comments or ideas would be much appreciated. I’ll post a screenshot of what I’m using so everyone can see the setup firsthand, as well as a profitable setup.
Thanks for your time!
The Piptomitrust
P.S. If you’re really paranoid about price reversing on you, you can go to the monthly charts and check to see which currencies are really overbought or oversold right now. As an example, the USD/CAD is pretty oversold, whereas the AUD/USD is fairly overbought (My Opinion on both of these). You could only place Buy trades on the USD/CAD and Sell trades on the AUD/USD.
P.S.S. Another thing that you can do is visit a website like MQL5.com and look at the top currency signal providers. They post their current buy/sell positions live, and if you find one with a high enough ‘win’ ratio, you can take a look at the current open trades they have and determine if they’re in a trade that’s going in the same direction as the trade you’d like to enter. It’s just another method of confirming the decision you’re making to enter a trade. And, of course, it helps to prevent a loss…
