Hello everybody
I am starting this thread mainly in order to talk about my really simple yet powerful trading system that uses PA together with only a single EMA and a normal Stochastic indior for guie. The second idea behind building this thread would be to monitor my personal trades and get the others' suggestions to enhance it. . So this thread behaves like an interactive journal so I encourage everyone to join the conversation about this particular method and of course I welcome any suggestions relating to this particular system and will value your participation.
The key tools utilized in this system is a 70 EMA (shut ) and a stochastic (8,2,4) which mainly enable us to ascertain the trend management (using EMA) and OB - OS state of the market.
EMA 70 (shut ) is utilized to identify the main trend direction but also a sign line for us to enter or depart our positions. Stochastic is used to confirm if the market is in OB or OS state to either shut a position or to add another place at the direction of the market trend.
However the principal tool that we'll use mainly is PA.. You need to know only few basic candlestick patterns that have weight such as , bullish bearish engulfing cloud, hanging man, hammer, morning star and evening star formation.
Of course as we're handling stochastic, other definitions such as divergences and OB OS conditions will be discussed and you need to know the basic things about them because they help a lot by means of deciding to close or open positions.
These patterns repeat over and over in every market and you might find them in every time period but we know the greater the time frame the more burden these patterns will have... therefore we utilize H1 timeframe to be not so long term like daily rather than so whipsaw mode like 5M... therefore we'll stay with the center nonetheless effective time period. Now:
Tools:
1- EMA 70 (shut )
two - Stochastic (8,2,4)
Rules:
1- We input a position (either long or short) when a candle closes over or below the EMA 70... so we go long if market is below EMA and then a candle closes over EMA 70 and vice versa for using a candle shut below EMA to go short.
2- we put SL directly below the low of the candle which closed over EMA (for long positions) and large disperse of the candle which closed below EMA (for short positions).
3- In the subject of placing TP I rather behave random i.e it is determined by the strength of the trend and I'll continue to keep the positions open until a significant PA seems on chart or finally a candle closes at the other side of the EMA. Because this component requires some illuions we'll discuss it more later.
4- The principal benefit of this system is that it's patience behind it and waiting for big results not heading for 50 - 60 pips profits. The basic to acquire such results is adding to positions based current market trend and using PA (as entering signal) and stochastic (as guide). I'll elaborate it .
Cheers