Forex Ema System

Love Trading Buy/Sell Arrow Signals? Try This!

I came across this trading system on babypips.com this morning and thought it was worthy of some attention. I have not tested it but like the concept behind it. Mostly I like the fact that it starts with smaller stop levels than the target levels. This means you can afford to take the hits that will eventual come with any system.

It was original posted by a user call Morzino a few years back but the thread on the subject is still going. I think it might give some newer traders some ideas and maybe help my cause of convincing traders to use stops and a positive reward to risk ratio.


I don’t like complicated systems, as i find it slows me down at the most crucial moment and i end up missing pips and getting a bit frustrated.

I liked the EMA systems i have seen, but all too often they cross half way down a major move, and you end up catching the “tail” of the trade, or at worst, end up entering right at the point of a retracement!!!

I would not say this is a Holy Grail and it is not perfect. I have worked out that i win about 4 out of 5 using this system. But the winning trades are always much larger than the losing ones.

Anyway, let me know what you think…

So after playing about and watching the results, the closest to the move i could find was this;

Ema5

Ema1

I have RSI (14), Slow Stocs (14, 3) and CCI (20) up too, this is just my preference, i use it to try and predict when a cross-candle will appear…..for this system i don’t really need them.

I use this mainly on GBP/JPY on 15m, 30m and daily. (Daily is generally the most lucrative and predictable but requires patience, it can sometimes seem a small reward for such a long wait)

This is what i do;

I will wait for the Ema’s to cross and for the timeframe on that “cross-candle” to have almost come to an end.

Once i have seen the cross, i am looking to enter as soon as the timeframe makes the step to the next candle, i will enter in the direction of the Ema cross.

If i am at my desk i will not use a stop ( i use a mental stop in this instance), if i am going to be away from my desk i will put on a stop of 3/4 of the cross-candle.
So say the cross-candle was 100 pips from OPEN to CLOSE i would make my stop 75 pips……..if the cross-candle was 80 pips OPEN to CLOSE, i would make my stop 60 pips etc….

Take profits;

I tend to use a trailing stop, and as i use Oanda i have to do this manually. (unless anyone knows any different)

This depends on the timeframe you are trading on;

On 15m chart i use a trail of 10-15 pips, looking for an overall 25-40pip trade.

On 30m chart i use a trail of 10-15 pips, looking for an overall 30-50pip trade.

On daily chart i use trails of 25, 50, 100 & 150 pips, looking for an overall
2-300pip trade.

I just looked on my history and for my last 15 trades i won all but 3 using this system. 4 of those trades were on the daily and netted me over 200 pips each.

Let me know what you think, Maurizio77


Afterthoughts by me:-

“I will wait for the Ema’s to cross and for the timeframe on that “cross-candle” to have almost come to an end.
Once i have seen the cross, i am looking to enter as soon as the timeframe makes the step to the next candle, i will enter in the direction of the Ema cross.”

I think in essance he is trying to say that you enter a trade at the start of the candle after the ema cross.

An ema cross will not be fixed until the end of a period/candle/bar is complete. You can, in some charting packages, set indicators to calculate on a minute by minute/tick by tick basis within a period but as this guy is waiting until the next candle to trade this is not needed.

Also a 1 ema is basically the close of the period. So the cross in short is the price closing above or below the the 5 Ema.

So in short it’s an ema 5 and ema 1 cross on longer time frame system. Maybe one for the daily trader?

Cheers

Jason

2 Responses

  1. Jason says:

    It’s actually a (very) similar idea to Jeff Wilde’s Ultimate Forex System

  2. Forex brokers generally open trading on Sunday around 4-5pm
    EST and close trading on Friday around 4-5pm EST.
    The exact time of the open and close can vary by broker due to liquidity offered to them
    by the banks. . . During that period from Sunday through Friday, the forex market trades 24 hours a day.

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