Trading system question

First of all I apologize if this has been asked before but I did not see other threads like it. After going through the babypips school lessons and seeing an example system shown there I decided I wanted to try it out. My question however is would it work on a 1 minute chart instead of on a daily chart? This is the system shown in the “create your own system” lesson:

Trading Setup

Trade on daily chart (swing trading)
5 EMA applied to the close
10 EMA applied to the close
Stochastic (10,3,3)
RSI (14)

Trading Rules

Stop Loss = 30 pips
Entry Rules
Enter long if:
The 5 EMA crosses above the 10 EMA and both stochastic lines are heading up (do not enter if the stochastic lines are already in the overbought territory)
RSI is greater than 50
Enter short if:
The 5 EMA crosses below the 10 EMA and both stochastic lines are heading down AND (do not enter if the stochastic lines are already in oversold territory)
RSI is less than 50
Exit Rules
Exit when the 5 EMA crosses the 10 EMA in the opposite direction of your trade OR if RSI crosses back to 50

I want to use something similar to this. Maybe with MACD and Bollinger bands added as well. Any feedback would be greatly appreciated!

start with the hourly chart. 1min is too hard for newbies.

daily means u don’t get many setups.

Thanks for the reply. I will try it but so far I am finding everything longer than the 1 minute chart boring as price movement is slow.

Is it about quality or quantity?

Trust me you would rather be a little bored than losing money. You shouldn’t be trading for fun anyway. You should be trading for profit.

Scalping is very hard to do and be consistly profitable and not something a new trader should try. Fine if you want to try it just to play with something, but don’t expect to make money scalping the 1M chart.

Also, signals on the 1M mean literally nothing. Even scalpers who are good at it rarely go below the 5M.

P.S. price movement isn’t any slower on the higher time frames. It’s the same price, same price movement. It’s just that you won’t get signals for a method as quick on higher time frames.

P.P.S. aditional tip. Technical analysis and indicators are far more useful in higher time frames like 4H to Monthly charts. The lower in time frame you go the less they mean. This is because it’s like taking a statistical analysis of price over time.

If you ask one persons opinion on where price is going, that is not such a strong opinion. If you ask 400 people where price is going and most or all of them agree, that is a pretty strong opinion.

Hello MoneyMachine, welcome to the forum…
Let me give you some advice.
The problem with that system is that it will not give you good risk/reward entries. What newbies dont know is that you need to have at least 3 timframes to trade: the bigger, the home chart and the smaller. You are missing two of them.

Try this:

big chart: 4H
home chart: 1H or 15 min
small chart: 5 min

Moving averages work very well in trending markets, so use both 5EMA and 10 EMA them to identify a strong trend (up or down) in the bigger timeframe (4H).
If the trend is up, then only take long entries in the 15min and 1H chart. If the trend is down, only take short entries. Learn how to use stochastics and bollinger bands to enter your trades in the 15 min and 1H. I suggest you read TYMEN thread as well as Graviton thread.

Use the smaller timframe (5min) to find better places of entry.

If your SL is 20, then go for 20 pips. Try to take quick profits for now. Later you will learn how to let your profits run. But now focus on getting the “felling of the market”.

Hope that helps! :smiley:

Wow I guess I was doing it wrong haha. I tried this system today with my real account and it went ok(I was profitable) probably due to luck. Thanks for all the info guys it is greatly appreciated.

I have one more question though, how often are you supposed to check the two additional charts? For example If I was using a 5 minute, 30 minute, and 4 hour chart and my main is the 30 minute one how often do I need to check the other two? Thanks again!

One piece of advice: Don’t ever voluntarily close your trade. [B]Ever[/B]. If you have a soft target, move your stop. If you have a hard target, move your stop. If you have any target, move your stop. Don’t take your money out of the market unless the market makes you take your money out of the market.

An analogy: A stranger gives you $50, then says he’ll give you another $50 if the coin he flips lands on heads, with no downside risk. Why would you refuse him?

You bet it was luck. You will NEVER make money in the long term just looking to one timeframe.
Always check the bigger and the home chart, as long as your trade last. The smaller timframe is for better entries only.
But let me tell you something: always make a plan before you enter the trade. Where is your target, how you will trail your stop, etc. Keep everything on a journal. Your PLAN is your holy grail.

Or a stranger gives offered $100 bucks, but you only took $50 because you didn’t see the other $50 he had hiding behind his back.

There are areas of support/resistance that present themselves to be fine opportunities to take profit out of the market. I agree with what you are saying, however, I would be more apt to doing that in the middle of a trade if I see that price no longer appears to be heading in the direction of my intended profit target.

Have you noticed price is the same on all charts for the same pair no matter what time frame? Price moves at the same speed on all charts. The different chart time frames are like a zoom lens on a camera. All you are doing is zooming in and out when you switch time frames. Let that sink in.

Im sorry I think I worded my post badly. I meant that I liked the 1M chart because there are more trading opportunities. Of course I didn’t know all the indicators I like to use would be useless haha. Anyway thanks again everyone for taking the time to help out.

If you think the S/R level is going to end up being a market top/bottom, why are you taking money out? Move your stop to the level that you would expect price to reverse at. You are still locking in profit, but you are also giving yourself the opportunity to gain more if, by chance, the market continues to rally.

If I moved my stop to the point of where I expect price to reverse, then my stop would be ahead of price effectively being my take profit point.

The idea is to take money out of the market.

And if price continues. and my price action analysis suggests more movement, then I enter into another trade. There are times that I have the opportunity to enter into two separate trades within the same movement. Thereby increasing my overall profitability of that single move.

I would suggest that having more control over your trades will result in an increase of profitability as opposed to loose behavior. There are known repetitive areas of support and resistance that allow you such control.

Hello everyone, I have yet another question. I took all of your advice today and started trading on a 30 minute chart. So far I have only entered one trade and still have it open with a profit of around 40 pips so far.

My question is what do you guys do when there isnt much happening as far as price movement. For example I keep checking the 4 hour chart as recommended and have checked the important news for today. However while watching the charts I get distracted and find myself browsing websites and so on. Is that bad? Im just trying to understand how the pros go through a day of trading as I am just starting to trade with real money. Thanks again for everyones feedback and support!

This again places emphasis on the need to have both a profit target as well as a stop loss. For me, I have a predetermined price where I place my profit target and stop loss. This allows me to not have to hover around the charts all day and watch what price is doing. I can enjoy my day and come back to see how my trade turned out.

I spend roughly 15-30 minutes a day observing 19 different currency pairs. Of which, I generally have between 2-5 open positions that I monitor in that same time frame.

You are usually going to get the most price action/movment around 12:00 to 16:00, because of the London/ US market overlap. After that it tapers off until about 20:00 -23:00 which is often very dead with little movement at all.

If you are trading for smaller targets and in profit, best to get out before the London close.

The asian session is often a mixed bag. It can not move at all or suddenly take off.

Wait for the next setup. Must be a consistent trader not a sporadic one.

Meaning you open multiple positions at once?

Not at all. Waiting for the next set up means you do nothing until the set up you are trading happens again. For me, the setup is when price is about to become 1.xx00 or 0.xx00 or xxx.00.

At the present moment, I am waiting for gbpusd to become 1.4900 or 1.5000. Current price is 1.4929. I will do nothing until that happens.