I am starting this thread to act as a daily blog to share my experience with this system, derived from the Cowabunga system. It is designed for those who only want to check the charts 1/day and keep things simple.
Currencies: all major pairs
1 day chart
5 EMA
10 EMA
Full Stoch 10,3,3
RSI, 9
MACD, 12,26,9 (default settings)
Entry points: When 5 EMA touches 10 EMA, (indicating likely swing from previous trend)
Full stochastics are movng in the same direction, not over sold, or over bought, (20, 80 respectivly)
RSI is over, under 50
MACD histogram indicates that momentum is building in the direction of a pricing trend reversal.
Stop loss placed at most recent swing low/high
Money Management: risk 3%, adjust size of lot such that pip value is appropriate
Exit: when 5 EMA next touches 10 EMA in opposite direction
EXAMPLE:
If 5 EMA is above 10 EMA from a rally, then swings down and touches 10 EMA, this indicates that a reversal may be about to occur.
Stoch is moving down, and at 42, is not over sold, (20 or below)
RSI is 42, indicating momentum is right for a short sell
MACD is increasing on the negative side, indicating that momentum is not only negative, but increasingly negative.
Exit when 5 EMA starts heading up toward 10 EMA and touches it. Stoch, RSI and MCAD should verify that another reversal is beginning.
Close out short position and enter long position
TRADES FOR 12/13/07
EUR/GBP: 5 EMA has moved down to touch 10 EMA, (indicating a priceing reversal is beginnning) Stoch is 64.2 and headed down, RSI is 49.38, headed down, MACD shows growing negative momentum
2150 EUR/GBP shorted at .71654, with sl at latest swing high, .72324, representing a 67 pip loss
The quantity traded was calculated as such,
Starting balance, $1,000, risk 3% = $30/67 pips = $.44/pip = 2150 EUR/GBP quantity representing a leverage of 2.1
I will update this thread once/day, with both new trades, if there are appropriate signals, and updates on how any open trades are doing.
All comments appreciated.