I thought of sharing a simple MA cross system that I have been testing for the past couple of months. I only tested this with EUR/USD daily chart. So not sure about other time frames.
Starting this week, I have decided to test this with the following pairs
eur/usd
usd/chf
usd/jpy
usd/cad
aud/usd
gbp/usd
I will try my best to update when I make a trade. Since I am working with the daily chart, you will have to wait for a while to get into a trade, but once you are in, you could ride it and get good profits. But as any other system, some trades do go against you (not the holy grail people). There are flaws that I might not be recognizing. So, I appreciate your comments about the method and how to improve it. I would also like to see someone using this in other TFs.
I would also really like to know how to re-enter a trade when the MA cross happened a while back. This is one thing that I am struggling to address. I tried using MACD to identify re-entries, but wasn’t successful. So I would appreciate yours suggestions.
OK, let’s get into it.
Chart Time Frame : DAILY
Indicators
5 EMA applied to LOW (Red in my chart)
20 EMA applied to LOW (Yellow in my chart)
Other indicators (might be useful, but not part of my rules. I just use them if I think the trade is going the other way.)
Remember, too many cooks spoil the soup. So be careful with too many indicators. I myself might be using too many 
Parabolic SAR
Step : 0.02, Maximum : 0.2
MACD
Fast: 12, Slow : 26, MACD : 9
Apply to Close
May be useful (updated on September 05, 2013)
- I also use PSAR with the default settings. This gives me an early signal when MAs are going to cross.
- Drawing the SR lines will also helps when entering / closing a trade. If I did do this, I think I would have minimized the initial 200 pip loss. Well I put that as a learning opportunity.
*** update on 05-Jan-2014 ***
Changes that I did recently to my method.
Entry Rules :
Buy : 5 EMA crosses above 20 EMA
Sell: 5 EMA crosses below 20 EMA
When the EMAs cross, I completely ignore all other indicators, EXCEPT the SR lines.
-
When the MAs cross and if the price is too close to the SR line (about 30 pips), I don’t enter the trade. I then wait for item 2 below
-
If the MAs crossed a while back or if I want to re-enter a trade or price was too close to the SR lines when the MAs crossed, I wait for the following:
a) price to break through SR line
b) Next candle must open below / above the SR line
******* End *******
Why I use 5 and 20 EMA applied to low, well during my testing, I thought this was the best. If anyone thinks there are better settings, please update the thread.
SL : 150 to 200 pips
(Remember, I am trading off the daily chart. So need to give the trade plenty of space to breath. Again this could be adjusted for different charts)
Other points : When my trade goes over 150 pips, I move my SL to open price. After that for every 10 pips, I move the SL to SL + 10
Once SL moved and if the trade goes against, I don’t move my SL. But if I have a feeling that the trade is going the other way, I close my trade. Then wait for days/ weeks for another trade.
Again this is not a 100% win always system. It has flaws and I really appreciate your comments on improving it.
Following screen shot is the trade that I took on Aug 22 2013 around 6 p.m. (EST) on usd/jpy
usd / jpy, buy @ 98.70, current price : 98.96
