Trading rules are important to maintain trading discipline, but it is equally important that you use good common sense and market awareness when you are in a trade or about to make a trade as other factors may dictate what you do, when you enter and when you exit, and it is important that you listen to these other factors.
There are going to be some very similar systems located on this 1st thread based on currency pair and time frame as i believe that there is no one size fits all in forex. I am curretnly working with the following pairs and time frames.
- eurusd M5
- gbpusd, usdjpy, eurjpy H1
Basically my goal is 3%+ per day with a max dd of 6% per day for each system.
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EURUSD M5 System: Template and Explanation
This section was updated on 08/06/08
Setting up my charts: Most cases I set all bullish indications to Lime and bearish indications to Red for all indicators
LSMA3 - I changed the yellow color to gray so it would show up better on my charts and changed green to lime.
JMA Slope set to 34 - This will be for trend direction.
Fisher_m11 set to 34 - This will be for trend direction.
Sonic Slope set to 9 (Thanks SonicDeeJay ) which i will use for exiting the market. Change the grey color to white.
144 EMA shift 8, Median HL/2 color, dark thick blue
144 EMA Envelopes set to close, shift 8: I use these lines as reference points to help me better visualize price action and for helping me exit the markets.
- .02% deviation color aqua dotted
- .06% deviation color green dotted
- .09% deviation color blue dotted
- .15% deviation color dark orchid dotted
- .24% deviation color chocolate dotted
- .39% deviation color chocolate thin solid
Fib Pivot Version 3 - Used for locating daily pivot points.
Entering Trades:
- I will only enter trades when price moves above the set-up bar for a long or below the set-up bar for a short by 1 pip. I will never place market orders.
Trade Entering Exceptions: These are very important
- I will never trade into the daily pivot unless there is more than enough room to reach my t/p and will normally not trade into R1, R2, or R3 and S1, S2 and S3.
- I will never take a trade if the high or low of the triger bar landed right on the 144 EMA
Take Proft, Stop Loss and MM:
Take Profit: A few thoughts on this one.....My goal for this pair is 20 - 26 pips per night. This is a high probablitity trade. The goal is to take profit off the table. I have a sound exit strategy that gets me out plenty early without losing many pips. I will be adding additional positions as the trade continues in my direction.
Knowing all this, the question do you play for the big run or do you just take small profit off the table? As i write this, 4 trades would have triggered so far tonight (8/4/08). Had I used my exit startegy I would be up around 6 pips or so. Had I used ATR x2 for my t/p I would already have my 20 pips. The other thought is that I usually only trade the London market until I have to go to work and this is usually a time when price can break out for many more pips than the ATR would have given us.
I guess for now I will use my exit strategy for trading London, but the lull between London and New York (about 4 - 6 AM CST) and all other times (asian, etc.) I should be happ with using 2x ATR for my t/p, and try to hone this part in as I move along.
Stop Loss: I will set a hard stop at 19 pips + spread, just incase of some weird spike but i never let the market get that far. I will watch my exit indicators and usually exit the market somewhere -13 pips or or less.
MM: Basically i use a 3% risk based on 13 pips.
Entrance Strategy: General Rules: Updated 08/06/08This is a basic breakout strategy.
You should see 2 horizontal lines in with the LSMA3 indicator. One colored red and the other colored purple. If they did not come through with the template insert two horizontal lines in the same bax as the LSMA3 indicator.
You will then place the purple colored line at the most recent highest completed green segment of the LSMA3 line and the red line at the most recent completed lowest red segment of the LSMA3 line. You now have your breakout channel formed. Continue to move your red and purple colored horizontal lines each time a completed segment dictates that you do so. Now that you have your channel and you know how to maintain your breakout channel, all we are waiting for is a break of either the upper or lower horizontal channel lines.
Long Trade: If the LSMA3 line closes above your upper purple channel line and the Fisher (34) trend is green or the JMA Slope (34) is green; place a long order 1 pip above the bar that coincides with the segment that closed outside your upper channel line. If the Fisher (34) is not green at the time of the breakout, continue to move your horizontal lines and wait for the next siganl. If the bar previous to the set-up bar has a higher high then the set-up bar it may be advisable to use the parameters of that bar for your entrance point.
Short Trade: If the LSMA3 line closes below your lower red channel line and the Fisher (34) trend is red or the JMA Slope (34) is red; place a long order 1 pip below the bar that coincides with the segment that closed outside your lower channel line. If the Fisher (34) is not red at the time of the breakout, continue to move your horizontal lines and wait for the next signal. If the previous bar has a lower low than your set-up bar it may be advisable to use the parameters of that bar for your entrance point.
Adding Multiple Positions: As the trade goes in your direction, the LSMA3 will likely go to gray and will go back to going in your direction. Continue to move your horizontal lines accordingly and you will have the option to entering additional trades for additional pips. The riskier re-entry is when the LSMA3 goes back to gray in your diriction, the more conservative entry is when the LSMA3 goes back to being the color of the trade you are currently in.
Updated 08/05/08
**********************************************************Important Note ***************************************************************
Make sure that you do not have price divergence between candlesticks and the LSMA3. If you are looking to go long and you had a LSMA3 breakout signal, but price is actually lower than price was at the last completed green LSMA3 segment (or the laset swing point), chances are it is not a true breakout and in fact, may be time to take a reversal trade. Opposite is of course true for a short trade.
Exiting the Market:
Long Trade Exit: Exit the market when the Sonic Slope (9) has closed in red. You will then notice that the previous bar is now white. If the candlestick that coincides with the red bar is lower than the candlestick that coincides with the white bar exit the market 1 pip below this bar. If the candlestick that coincides with the white bar is lower then the one that coincides with the candlestick from the red bar, exit the market 1 pip below the candlestick that coincides with with white bar.
Short Trade Exit: Opposite the Long Trade Exit
Trades using this updated method start with post #40
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GBPUSD, USDJPY, EURJPY H1 System: Template and Explanation:
This section was updated on 08/04/08
Setting up my charts: Most cases I set all bullish indications to Lime and bearish indications to Red for all indicators
LSMA3 - I changed the yellow color to gray for clarity purposes and changed green to lime
JMA Slope set to 13 - This will be our trend indicator. We will never take a trade against the trend.
Sonic Slope set to 21 (Thanks SonicDeeJay ) - Currently I will use this for exiting the market if needed. I will be keeping an eye open at the moment. Change grey color to white.
144 EMA shift 8, Median HL/2 color, dark thick blue
144 EMA Envelopes set to close, shift 8: I use these lines as reference points to help me better visualize price action and for helping me exit the markets.
- .13% deviation color aqua dotted
- .34% deviation color green dotted
- .55% deviation color blue dotted
- .89% deviation color dark orchid dotted
- 1.44% deviation color chocolate dotted
- 2.33% deviation color chocolate thin solid
Fib Pivot Version 3 - To locate daily pivot points.
Entering Trades:
- I will only enter trades when price moves above the set-up bar for a long or below the set-up bar for a short by 1 pip. I will never place market orders.
Trade Entering Exceptions: These are very important
- I will never take a trade if the close, high or low of the trigger bar lands on the main 144 EMA.
Take Proft, Stop Loss and MM:
Take Profit: I will put a hard t/p for 150 pips, but watching your entry signals is paramount to exiting in profit. After 30 pips in profit I will most likely move to b/e +1 and continue to step up my profit for every 30 additional pips of movement in my direction.
Stop Loss: I will set a hard stop at 30 pips + spread, but will watch my indicators for the proper exit position.
MM: Basically i use a 3% risk based on 34 pips.
Entering the Trade: General Rules:This is a basic breakout strategy.
You should see 2 horizontal lines in with the LSMA3 indicator. One colored red and the other colored purple. If they did not come through with the template insert two horizontal lines in the same bax as the LSMA3 indicator.
You will then place the purple colored line at the most recent highest completed green segment of the LSMA3 line and the red line at the most recent completed lowest red segment of the LSMA3 line. You now have your breakout channel formed. Continue to move your red and purple colored horizontal lines each time a completed segment dictates that you do so. Now that you have your channel and you know how to maintain your breakout channel, all we are waiting for is a break of either the upper or lower horizontal channel lines.
Long Trade: If the LSMA3 line closes above your upper purple channel line, place a long order 1 pip above the bar that coincides with the segment that closed outside your upper channel line. If the bar previous to the set-up bar has a higher high then the set-up bar it may be advisable to use the parameters of that bar for your entrance point.
Short Trade: If the LSMA3 line closes below your lower red channel line, place a long order 1 pip below the bar that coincides with the segment that closed outside your lower channel line. If the previous bar has a lower low than your set-up bar it may be advisable to use the parameters of that bar for your entrance point.
Updated 08/05/08
*********************************** ***********************Important Note *********************************** ****************************
Make sure that you do not have price divergence between candlesticks and the LSMA3. If you are looking to go long and you had a LSMA3 breakout signal, but price is actually lower than price was at the last completed green LSMA3 segment (or the last swing point), chances are it is not a true breakout and in fact, may be time to take a reversal trade. Opposite is of course true for a short trade.
Exiting the Market:
Exiting the market can either happen when either the JMA Sloe (13) or the Sonic Slope (21) has changed colors against your trade.
You should also watch when the LSMA 3 changes color to being against your trade two times without giving you a trade in the other direction. This should be a signal that the market may be going to move in the other direction very soon. This is riskier, because often you don't get two in a row with no opposite siganl without eating up all your profit.
Sample trades can be seen on post #34, #35 and #36
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Expert Advisor
****This is not an EA for my trading system, just one to help me enter and exit the market****
Here is an Expert Advisor that i came across that makes it easy for me to set my trades when they signal, so if i space out while trading, everything is already set. Here is the thread where you can learn how to use it. http://www.forexfactory.com/showthread.php?t=98061