The 5 EMA method I use

Hi everyone

SO about a week ago I have posted a thread on here about how I use the 5 EMA and RSI for trading.

So basically I just want to add a few things to it maybe.

I said in my last post I use this method on the 15min charts and upwards, I found it doing not too bad though but could be better though too.
So basically I use 5EMA and also use a 50EMA ( for trend basically ) then I set my RSI to 5 also… When I look back I can see a few good trades and have also been using it on my demo account, it has been doing okay but since this week I started using it on the daily and 4 hour charts, basically before I didnt want to as like to trade during the day and see what I am doing. But on the Daily charts I think it works just so much better.

So once your 5ema crosses your 50ema and RSI cross the 50 line, boom there is your signal, I do like to wait for the candle of that day to close though, and if the next one starts I will open a trade either long or short depending where my ema’s crossed.

Any of the big guys here maybe wanna see how this works out.

So far I have opened 4 trades at 8pm last night (20/08/2013) on USD/CAD, EUR/USD, GBP/USD, and also EUR/JPY.

This morning i opened my charts and found usd/cad has moved just over 200 pips in my favour and on the eur/jpy just over 150 pips, the gbp/usd and eur/usd is dragging a bit but am standing on 30 + pips so far on them both.

Cool. Keep us updated about your trades. I ll be watching this thread.

Okay so basically I still have 2 of the 4 trades still running, I do not know why but I made the mistake of putting trailing stops on these orders and the eur/usd stopped out at around 180 pips… the usd/cad and eur/jpy is still running at the moment, usd/cad is 377 pips in my favour sofar, and eur/jpy 152 but still going…

I think I might let them run over night still but by tonight before bed time I will put trailing stops on both of them just incase as I will be asleep by the time the new day starts.

Also this is trading on 1 lot for each trade sofar…

What about SL and TP?

I am still trying to work out the best way how to use r:r here… At the moment I am using a ridiculously high stop loss but only until I can find a better way to run my trades this way without having to use a high stop loss… On the trades I have open now I am using 150 as a stop loss and about 600 as take profit but I am running a trail stop of 80 behind my trades

Also as I said I am still testing this only and am hoping to get some positive feedback and maybe some tips to make this better.

As said on this before also, I have now only one of these trades still open for the last 3 days, standing around 1155 pips on profit, on USD/CAD, so if I can find a way to make my stop losses smaller and still be able to stay in a trade it would be good.

Am still looking at this also… But to be honest if your trade starts going sour I can imagine you just want to get out and its exactly what I tend to do though… I have now got a 50 ema running with the 5ema so basically I will place my stop loss just behind the 50 ema…

I think you should post some charts screen shots and point out the entry and exit levels. This thread will become more interesting that way.

Ofcourse, see attached chart for USD/CAD. I wait for a candle to close above both EMA’s, as you will see the last trade happened I waited for the ema’s to cross and a candle to close above both of them(yellow line), then where the blue line was drawn is where I placed my TP, but running a Trailing stop behind the trade which i made 200pips… You will see it did not go further then the purple line and when it went back down it hit my trailing stop and i walked off with 1200 pips ±

Look I hink the ideal thing is to wait for a candle on the daily chart to open and close above the ema’s in order to get a better entry…

Does this look like it could be a possible good set up?

Wow these are some good trades won bro :slight_smile: I desperately want to know that how you set your TP with this system? A previous support or resistance level? I mean the price did went to your TP and then retraced back so this shows that you did set a very nice TP level. Please let me know about it. Is this the daily chart and what was your stop loss?

Also please tell me your exact RSI settings. I am very interested in testing your system. Thanks.

interestingly simple strategy… i like it! have you tried backtesting it? what kind of results have you gotten so far?

Yeah as you can see the last highest point I could find which was the top line was my TP, the stop loss unfortuantely was quite high though, although when that trade started I got in as the candle opened, so I used 100 as a stop loss, but within an hour it went up and up and I cancelled my stop loss and just used a 200 Trailing stop…When it started retracing it hit my trailing stop of 150 and I got out the trade while I was asleep… I used the USD/CAD on the daily but could go down to the 4 hour maybe even 1 hour but have not tested it on the 1 hour at all yet… you have a few set ups from it but I only used it to find the entry as my daily chart’s candle opened…

As for back testing it I havent been doing any back testing on it yet, still in the process of trying to find better way to use a stop loss here though… AS to be honest I am not a big fan of having such a high stop loss in the first place

Sorry, the RSI settings I used was 5 I think the default for it is 10 or 14 but I simply changed it to 5 for my own benefit though…Hope this helps…

I am playing around a bit more with this and have even been trying other EMA’s but nothing I can rave about just yet, although using the 5 and 50 EMA is not bad I am sure I can make it better…

Are you only trading it exclusively on these four pairs: USD/CAD, EUR/USD, GBP/USD, and also EUR/JPY? Or is your system also applicable to others?

The only reason why I used these 4 pairs was I had good entries on them, I have been running this method on all pairs so far, and being able to get into good trades… Some dont last as long as others and some ratrace alot but hence me using a trailing stop on them… As soon as I see them crossing the break even zone I move my stop loss to break even and set my trail stop in… after that I let it run…

Thanks for the reply and explanation bro. If you ask me, your SL is not bad. I mean you make over 1000 pips by just a 100 pip SL and this is pretty great risk and reward ratio. I may risk more than 100 pips to get such good profit. Bro I have a couple of questions:

[B]1) [/B]The problem is that I dont know anything about RSI and I dont know where to change the settings. These are the screenshots of my settings:

Can you please tell me what numbers should I put in each field? Please tell me the exact settings which you are using.

[B]2)[/B] Which time frame is the best for you so far? Daily or H4? I never traded on daily charts so just curious!

[B]3)[/B] I have tested a couple of MA crossovers before but I failed to tackle the whipsaws so can you please tell me is there any way to solve this? Is RSI is for that purpose?

Please reply. Like I said I am very interested in testing this method as soon as I know the RSI settings.

Not a problem

If you look at your 1st picture you posted, you will see when you are in parameters, the period on there at the moment is 14, just change that to 5

The other ones leave it as is though, also, I am using this on the daily charts only, got good signals on the 4hr and 1hr but i prefer the daily though…

If you do go down lower then the daily time frame ie. the 4 hr or even 1hr(be careful and make sure of your trade) then basically as soon as the ema have crossed either top or bottom, then you will have a candle closing above or below the cross, once this has happened you can open your trade although what I did on a few of mine is basically waiting for a 2nd candle to open and close after the cross and then open a trade… If you wait for the second candle to open and close after the cross and your RSI has crossed 50 then its a very good set up though…

Hope this helps, if not please ask I am more than willing to help, look I am sure there can be some tweaks on this method but am still working on it though

9 or 5 for the RSI settings ?

[QUOTE=giormet;524139]9 or 5 for the RSI settings ?[/My apologies, It is 5, I edited my last post just to make sure it does not get lost here somewhere