I just decided to give Mechanical System a shot and I don’t know if this is the right one (though I am winning but ofcourse loses are there) because as I’ve re-read the mechanical system here in babypis I should use 5 SMA, 10 SMA, Stochastic (14,3,3) and RSI (9) but it said that I should just trade on daily chart but I am into hourly one. Should I change the setting of my RSI, SMA and Stochastic to match my trading or it’s the standard for all trade? Sorry just newbie =)
I just read the same thing. One of the setups I use is a cross over 5 & 3 SMA, Stochastic 8,3,3, acustom MACD and Support and Resistance Lines. Rules: I only trade when London and NY are open together. Never trade before major news. In and out on a cross, that lines up with MACD and stochastic. I look for at potential trades on 1 hour. Use 30 minute to get trend, momentum, entry, exit, TP and SL . Use 15 minute to verify and enter. Depending on the pair or what’s going on, sometimes will use 5 minute. I also know traders who use the cross over for day trading as well.
Thank you for the advice. I’ll try that on my demo then to my live. Another question is that they said that SMA is prone to fake-outs so I decided to just use the stochastic as my sole system as of the moment I am still using 14,3,3 do you have any idea if I’ll use this stochastic setting (8,3,3) to 1 Minute or I should use lower stochastic setting?
General Rule of thumb is less periods more false signals. I have used both 14 and 8; 3,3 and I didn’t notice any big difference. You can avoid some fake outs by making sure your indicators line up. You can also wait for the cross and enter on the 2nd candle after. Having said that if I were only using 1 indicator, it would be stochastic.
Another momentum indicator I like is the Commodity Channel Index. Oscillates between a range of +100 and -100. When the CCI moves above +100, it’s an indication of a strong uptrend so you would want to buy and sell when position moves below +100. When the CCI moves below −100, it’s an indication of a strong down trend, so go short and get out when CCI moves back above −100. Here’s a short utube video so yo can see how it works. Now as usual, if this guy is selling anything, I’m not recommending you buy what he’s selling. I’m recommending if you want to see how to use the CCI you check the vid out. In the video he uses 2 lines, I only use one. if you use the indciator just add a 0 for the level and it’s very simple above zero line is +100; below zero line is -100