After posting elements of my "wisdom" across the site, it occurs to me that maybe I haven't posted in detail what I'm doing - how I actually put all this into practice. So, I felt a little obliged to be open about how I'm doing what I'm doing.
This is not a journal, I won't be posting my trades, but I aim to post how to identify what I will be trading and how I will get in/out.
First off, I am a long-term trend-follower. A price chart will have to trend for more than a week before I'll get interested. Also, I only enter/exit trades via orders, I never manually open/close a trade: there's no need for me to watch price charts live and I've got better things to do.
I follow a very simple strategy with no off-chart indicators, no news input, no FA input. As far as possible, I want to use objective criteria only.
Primary requirements -
(example is for longs, reverse as appropriate for shorts)
All must be fulfilled.
1. 20EMA is above 50EMA
2. 50EMA is sloping upwards
3. 50EMA is above 200EMA
4. Price is above 200EMA
Secondary requirements -
As many as possible of these must be fulfilled: a higher score prioritises a trade in that pair.
5. At least 80% of last 16 weekly highs, lows and closes above 50EMA?
6. At least last 4 weekly bars not pierced by 50EMA?
7. At least last 8 weekly bars not pierced by 50EMA?
8. At least last 4 weekly closes above 50EMA?
9. At least last 8 weekly closes above 50EMA?
10. Does last complete weekly bar overlap fewer than 4 immediately preceding weekly bar ranges?
11. Does a clear majority of other pairs with same base currency also show 20EMA above 50EMA?
This gives a possible maximum score of 11 per chart. I will prioritise long entries into pairs with highest scores. Entry signals are not a key factor but will be typically -
a) just above a daily close that is above the 20EMA following a daily close below it on the previous day
b) just above a daily close on a bullish candle that has traded below the 20EMA but closes above it
An admission - I sometimes take a long when the 20EMA crosses above the 50EMA as long as price is above the 200EMA.
Stop-losses on the initial position is TA-based, e.g. just below the low of the last swing low on the dailies. If that's too far away, use 1-2ATR below entry (the aim at this point is to be long in the uptrend, not to get the most finessed entry price).
When initial trade opened, set a new entry order where initial trade will reach profit equivalent to initial risk in £. When this triggers, set trade 2's risk to the same in £, move Trade 1's SL to b/e. Keep setting new entry orders at each increment of the same gain in £, and moving each existing trade's SL up by the same £.
Be aware that pyramiding this way only shows an excess profit over a single buy-and-hold long once 5 consecutive trades are open. After that the advantage goes almost parabolic.
I could spend all day listing what I don't give attention to but the main ones would be off-chart indicators, newsflow, support/resistance and trend-lines.
Cheers folks. A bit more detail to come later on my top-scoring charts.