Simple 5 EMA High/Low scalping strategy

[enhu]

Danny, can you also send me a link to the pdf please. I’d like to implement your system.

[mylos]

Hi Danny i’ am very interest to study your system.Can you send me the pdf link please. Thank you so much.

[Joepippin]

trading your system in its simplist form, with VSA… Is pretty nice on pairs like Ej Gj. Atleast the backtesting ive done has proved well. haha

[Danny_K]

If you guys want to learn more about this in a new thread, feel free to tell me and we’ll see how many people that are interested.

I also want to add that the method I use is explained in Petefaders threads (I do not want to take credit for it, the credit goes to Pete). The only difference between me and Pete is that our entries differs a bit, and I rely a little bit more on price action aswell.

[uttkal]

Hi
I download your attached indicator and template zip file.
but there is .tpl file also what to do with this file. please explain.
Thanks

[Merchantprince]

If you guys want to learn more about this in a new thread, feel free to tell me and we’ll see how many people that are interested.

I also want to add that the method I use is explained in Petefaders threads (I do not want to take credit for it, the credit goes to Pete). The only difference between me and Pete is that our entries differs a bit, and I rely a little bit more on price action aswell.

As long as it’s easy to understand and well-encapsulated without needing 50 pages to get to the particulars (like so many other VSA threads), I’m all for it. Count me in!

[robert211]

Thanks Lesso for the indi’s. I tried them but didn’t care for all the bell dinging on false signals.
I actually still prefer Danny’s original system with an added MACD. When the MACD crosses the zero line, it really confirms the trade direction. I just need to work on my patience and stop trying to jump the gun by getting in way before a cross, and then getting burned because it doesn’t reach the zero.
I’ll get it.

hi guys

does anyone knows how you make the cadles red and green, i have meta4

Thanks for any replys

[robert211]

If you guys want to learn more about this in a new thread, feel free to tell me and we’ll see how many people that are interested.

I also want to add that the method I use is explained in Petefaders threads (I do not want to take credit for it, the credit goes to Pete). The only difference between me and Pete is that our entries differs a bit, and I rely a little bit more on price action aswell.

hi Danny,
sorry, i downloaded your attachment but what exactly is in it and where about i attach it? i know how to insert 5 ema so what else i need to know? and whats in that attachment?

Thanks

robert

[Danny_K]

hi Danny,
sorry, i downloaded your attachment but what exactly is in it and where about i attach it? i know how to insert 5 ema so what else i need to know? and whats in that attachment?

Thanks

robert

Hello,

You don’t really need it to trade the 5 EMA strategy, It’s just a template so you don’t need to add the 5 EMA yourself.

Just to clarify, I’m not trading it anymore and the last few pages have been about another method that I use.

[Jack_Larkin]

Hey all…

In case anyone hasn’t already made up their mind on the system presented on the first post of this thread (5 high/low EMA scalping,) I just wanted to say I scripted it and ran it over a year’s worth of data across a few pairs and a few timeframes… and the result proves there’s no edge to be found.

Issues are as followed:

[ul]
[li]Gunning for 5 pips with a stop of 8 makes the only effective timeframes 15min (general) and 30min (only with some pairs.)
[/li][li]Like some of you have noticed, losers are often the result of a candle opening beyond the 5EMA high/low but moving further away and causing the 5EMA line to swallow up the entry price… This isn’t a false signal, since it technically signaled correctly, it’s just a product of the EMA line being drawn to include the current bar’s price info, and thus, a long bar will drastically alter the value of EMA (it’s a front weighted moving average after all.)
[/li][li]Assuming a perfectly behaving pair, with default values for the stop and TP, the expectancy of the system ends up being a loss of the spread. This means there’s no edge, and the outcome is random, so each time you’re just playing the spread. (In the example below, I used a spread of 1.5 pips on EUR/USD, and the expectancy was -1.6 pips.)
[/li][li]Adjusting the values of TP, SL, and even adding in my own ideas to filter out trades never improved the expectancy to a better value. (I tried filtering out the “near line” signals by saying the open price must also be a given pip amount away from the line. While this filtered out a lot of trades, it didn’t improve the expectancy.)
[/li][/ul]

Most results end up looking like this:

So I think this puts the issue to rest… the idea looks awesome on paper, since when you visually go back and look at charts you’re seeing the ‘post’ price movement of EMA, and this cuts out all the ‘near line’ bad trades. But in forward testing, the system does not give you any edge over randomness.

Cheers,
Jack

[robert211]

Hey all…

In case anyone hasn’t already made up their mind on the system presented on the first post of this thread (5 high/low EMA scalping,) I just wanted to say I scripted it and ran it over a year’s worth of data across a few pairs and a few timeframes… and the result proves there’s no edge to be found.

Issues are as followed:

[ul]
[li]Gunning for 5 pips with a stop of 8 makes the only effective timeframes 15min (general) and 30min (only with some pairs.)
[/li][li]Like some of you have noticed, losers are often the result of a candle opening beyond the 5EMA high/low but moving further away and causing the 5EMA line to swallow up the entry price… This isn’t a false signal, since it technically signaled correctly, it’s just a product of the EMA line being drawn to include the current bar’s price info, and thus, a long bar will drastically alter the value of EMA (it’s a front weighted moving average after all.)
[/li][li]Assuming a perfectly behaving pair, with default values for the stop and TP, the expectancy of the system ends up being a loss of the spread. This means there’s no edge, and the outcome is random, so each time you’re just playing the spread. (In the example below, I used a spread of 1.5 pips on EUR/USD, and the expectancy was -1.6 pips.)
[/li][li]Adjusting the values of TP, SL, and even adding in my own ideas to filter out trades never improved the expectancy to a better value. (I tried filtering out the “near line” signals by saying the open price must also be a given pip amount away from the line. While this filtered out a lot of trades, it didn’t improve the expectancy.)
[/li][/ul]

Most results end up looking like this:

So I think this puts the issue to rest… the idea looks awesome on paper, since when you visually go back and look at charts you’re seeing the ‘post’ price movement of EMA, and this cuts out all the ‘near line’ bad trades. But in forward testing, the system does not give you any edge over randomness.

Cheers,
Jack

thanks for your info, so it is defintly the 15min time frame and not the 5min origanaly described?

[Jack_Larkin]

@robert211

thanks for your info, so it is defintly the 15min time frame and not the 5min origanaly described?

Well, you can run it on any timeframe, I’m just going by what had the best result. (Keeping in mind no results were good, but I was pointing out the best expectancy.)

In this case, you lose another 10th of a pip expectancy wise by going to 5m with the same settings. I found no shift in SL/TP levels that improved expectancy without drastically affecting the risk profile of the system.

Here’s the 5m result:

You could call it ‘almost’ the same as 15 min, but the frequency of trades explodes… making any negative expectancy system burn through cash faster.

EDIT: I should have mentioned, this were done on a tick-level data set and covered from Jan 1st, 2011 through to the end of last month. So just over a year worth of sample data.

[robert211]

Well, you can run it on any timeframe, I’m just going by what had the best result. (Keeping in mind no results were good, but I was pointing out the best expectancy.)

In this case, you lose another 10th of a pip expectancy wise by going to 5m with the same settings. I found no shift in SL/TP levels that improved expectancy without drastically affecting the risk profile of the system.

Here’s the 5m result:

You could call it ‘almost’ the same as 15 min, but the frequency of trades explodes… making any negative expectancy system burn through cash faster.

EDIT: I should have mentioned, this were done on a tick-level data set and covered from Jan 1st, 2011 through to the end of last month. So just over a year worth of sample data.

ok great, do you use any ea, robots and if you do which ones you got good experience with? do you know how you make the candles red and green on the meta4?

[Jack_Larkin]

I don’t trust EA’s not written by myself

I’m trying to get better at programming EAs, so I’m finding strategies around the net and making EA versions of them.

This one took me ~20 minutes to code up, which is still painfully slow considering the strategy is so simple, but I’m getting better every time.

In general, automated trading can work… but it’s not a matter of finding the ‘right one’ so much as understanding which tool to use under a given market condition. Automated strategies often blow up when left unattended and the market does something that it wasn’t expected to do (happens far more often than you realize.)

As for the candles… that’s not a programming thing, just right click on your chart and go to properties… set the colours as you see fit.

[robert211]

I don’t trust EA’s not written by myself

I’m trying to get better at programming EAs, so I’m finding strategies around the net and making EA versions of them.

This one took me ~20 minutes to code up, which is still painfully slow considering the strategy is so simple, but I’m getting better every time.

In general, automated trading can work… but it’s not a matter of finding the ‘right one’ so much as understanding which tool to use under a given market condition. Automated strategies often blow up when left unattended and the market does something that it wasn’t expected to do (happens far more often than you realize.)

As for the candles… that’s not a programming thing, just right click on your chart and go to properties… set the colours as you see fit.

thanks for your prompet reply. i didn’t relised your’e programmer. thats very good, let us know for some more strategies.

[Danny_K]

Hey all…

In case anyone hasn’t already made up their mind on the system presented on the first post of this thread (5 high/low EMA scalping,) I just wanted to say I scripted it and ran it over a year’s worth of data across a few pairs and a few timeframes… and the result proves there’s no edge to be found.

Issues are as followed:

[ul]
[li]Gunning for 5 pips with a stop of 8 makes the only effective timeframes 15min (general) and 30min (only with some pairs.)
[/li][li]Like some of you have noticed, losers are often the result of a candle opening beyond the 5EMA high/low but moving further away and causing the 5EMA line to swallow up the entry price… This isn’t a false signal, since it technically signaled correctly, it’s just a product of the EMA line being drawn to include the current bar’s price info, and thus, a long bar will drastically alter the value of EMA (it’s a front weighted moving average after all.)
[/li][li]Assuming a perfectly behaving pair, with default values for the stop and TP, the expectancy of the system ends up being a loss of the spread. This means there’s no edge, and the outcome is random, so each time you’re just playing the spread. (In the example below, I used a spread of 1.5 pips on EUR/USD, and the expectancy was -1.6 pips.)
[/li][li]Adjusting the values of TP, SL, and even adding in my own ideas to filter out trades never improved the expectancy to a better value. (I tried filtering out the “near line” signals by saying the open price must also be a given pip amount away from the line. While this filtered out a lot of trades, it didn’t improve the expectancy.)
[/li][/ul]

Most results end up looking like this:

So I think this puts the issue to rest… the idea looks awesome on paper, since when you visually go back and look at charts you’re seeing the ‘post’ price movement of EMA, and this cuts out all the ‘near line’ bad trades. But in forward testing, the system does not give you any edge over randomness.

Cheers,
Jack

You can’t enter a trade whenever a candle opens above/below the 5 EMA, it’s all about entering on the right place and a little practice will do the trick. This strategy could be a great way for Forex beginners. I’m actually not gonna spend time defending that this strategy worked for me. I don’t use it anymore and I’m happy with how I trade now.

Thanks for your input, but don’t rely on automated trading, it won’t take you long in your trading career.

[Jack_Larkin]

You can’t enter a trade whenever a candle opens above/below the 5 EMA, it’s all about entering on the right place and a little practice will do the trick. This strategy could be a great way for Forex beginners. I’m actually not gonna spend time defending that this strategy worked for me. I don’t use it anymore and I’m happy with how I trade now.

Thanks for your input, but don’t rely on automated trading, it won’t take you long in your trading career.

I wasn’t attacking it at all, I was proving the signal itself fails to give an edge on it’s own. Most systems fail to give an edge when left on their own, that’s why most trading robots fail.

Maybe you could talk about the conditions where you would and wouldn’t take a trade?

I can add them in to the mix and see what impact they have on performance.

[Jack_Larkin]

Also:

[B]You can’t enter a trade whenever a candle opens above/below the 5 EMA[/B], it’s all about entering on the right place and a little practice will do the trick. This strategy could be a great way for Forex beginners. […]

[…]
[B]Rules[/B]

Entry sell: If a candle opens ABOVE the 5 EMA high SELL

Entry Buy: If a candle opens BELOW the 5 EMA BUY

[…]

So… again, what additional criteria is needed?

[Danny_K]

Oh okey, I thought you were here to prove me wrong.

I’m actually busy working on another thread right now, but I’ll give you a quick explaination. In the first post I do say that this strategy works best in a ranging market and right before a trend begins or when it ends. It won’t work if you keep taking countertrend trades.

Well, I know I don’t really put it up like that in the first post but It was a long time since I traded this strategy but I remember I usually took a loss when price started to trend, then I wouldn’t take another trade in that same direction, only if price bounced back up a bit so I could enter in the direction of the trend, otherwise I would wait until the trend came to an end.

[cwk]

Hey,

I couldn’t send a PM to you so I used the “Send Email” link. Tell me if you got it :).

Hi Danny,

So sorry for the late response…was really bz…

I got your email and the precious attachment! Very valuable! I’m digesting it but I really wanted to say a big THANKS to you! I can see the potential of VSA but needed something simple to start with for learning. What you have given me is just what I wanted to have for a long time!

Thanks once again!
cheers!