My New Trend Strategy BBs, EMA, Momentum

[shooly76 10]

here are my sim trades for today> 5min chart

 

this strategy is something I came up w in the last couple weeks...today is the first day I was able to sim trade it. glad I didnt pay for an expensive indicator software package. this seems even better IMO..but I will admit, the trial of the indicator helped me come up w this, I have nearly identical buy and sell signals w this new strategy. but I have added a 20 period EMA and Momentum indicator..still learning about the Momentum inicator though..

 

backtesting seems to be on point. but I have no real structure in my backtesting- I simply go back a few days in the 5 min charts, and look for set-ups.

 

I only go for 16-20 ticks per trade...for now, when my skills get better I will let the trades run a bit..as long as signals are there.

 

I would greatly appreciate any input on this...Im still learning and need all the input I can get..thanks

[shooly76 10]

some info about my strategy>

 

1) stay out if price goes bk and forth over EMA and SMA (choppy)...then wait..

 

2) wait for a higher/lower close beyond EMA and SMA...if above, look for longs... if below, look for shorts

 

3) wait for a new relative high/low, but it must also have a higher/lower close than previous candlestick ( I go back 1 hour to look at recent candlesticks)

 

4) EMA should cross SMA, if above look for longs...if below, look for shorts

 

5) Momentum indicator above/below 0...if above look for longs... if below look for shorts

 

6) wait for 2 consecutive higher/lower closes w/in supp/resistance, if outside, then this is usually more risk.. after 2 consecutive higher/lower closes, enter on open of next candlestick

 

7) enter after above rules are met

 

8) stop/loss is set between 10-12 ticks

 

9) target is set between 16-20 ticks

[shooly76 10]

Ive been tinkering w another aspect of this strategy>

 

Im thinking about my exit strategy> if I choose to let my trades run, or to cut losses if that may be the case> when price reverts back to EMA and or SMA>

 

when this happens, would it be a good exit point? but only if price closes beyond EMA and SMA. so regardless if substantial profit has been gained, or if breakeven, or even a small loss... in most cases, it will still be a safe place to exit.

 

furthermore, my stop/loss should always be above/below the EMA and SMA anyway. so I would actually close position before my stop is hit and losses will be minimal. I realize the trend could go back and continue in my favor, but why risk it?

 

or maybe just set my stop a few ticks above EMA and or SMA, rather than a set 10-12 ticks from entry?

 

any thoughts on this? I realize stop placement is subjective depending on risk tolerance, but my risk tolerance is low... obviously, Im trying to preserve my capital, not lose it.

[shooly76 10]

I will also be tinkering w a trailing stop>

 

any thoughts on what is a good tick number to trail it?

 

example> if price moves in my favor by 10-12 ticks, move my stop closer to entry by 5-6 ticks

 

so 5-6 ticks for every 10-12 ticks of price movement in trend direction?

[shooly76 10]

sorry, after looking at the 2 last posts (about exit and stop/loss), they dont really make a lot of sense (Im a bit confused about placement), I suppose I will have to figure out my exit and stop strategy based on my own risk tolerance.

 

even though I need to figure this out on my own, I would still greatly appreciate any input on exit strategy and stop/loss placement.

[SIUYA 11]

you are heading in the right track, and there is no real right or wrong regards your stop loss, and the choice of running positions or not. You need to pick something that makes sense to you and your strategy, you can follow and be comfortable with, and that ultimately makes money.

if you are buying breakouts and not comfortable with running things, and/or plan to be out at the end of the day anyway then having targets makes perfect sense.If you wish to have an automated trailing stop, or wish to take partial profits - or whatever, you have to just be comfortable with the different risk return trade off and associated trading results that evolve.

This trade off is what you need to be comfortable with - can you watch profits disappear, are you happy to be chopped out more often as profits turn to losses...etc:?

If not then targets will work for you.

 

This is more important than the actual process you choose, because if you cant stick to it its pointless anyways.

 

(example- the other day I was shorting the ASX SPI contract (Australian equity futures contract) my process has been to take smaller profits on it at present as while I am bearish I dont wish to get caught with giving profits back when whipsaws occur. So naturally I am disappointed when I take profits after 10 ticks and it falls another 20....but so what as my plan is to take those ten and wait for the next rally to short again. For me at present (and this does change as my view on the market might also change) the pain/anguish/disappointment/frustration of missing the bigger moves is less than the pain/anguish/disappointment/frustration of getting whipsawed.)

[joshdance 10]

backtesting seems to be on point. but I have no real structure in my backtesting- I simply go back a few days in the 5 min charts, and look for set-ups.

 

I would greatly appreciate any input on this...Im still learning and need all the input I can get..thanks

 

Like any trend-based methodology that has mechanical rules as you seem to have, it will work well on days like the day you posted this chart, and fail miserably on ranging, choppy days. It's my belief (and therefore only my reality, not necessarily yours) that you must learn how to actually trade. There's a reason why every single thread on every internet forum where someone posts rules like this either fail immediately in practice (backtesting has little merit in general, even less so with these kinds of things), or in the long run. Because people are not really learning how to trade the market, they want something black and white to do in every case, and hope that guarantees success. They want words on a paper to do the trading for them, instead of using their own brains in a real live situation. I'm not saying this applies to you, just the vast majority of threads where people post a "system." Others then jump on, hoping it will work for them, and of course it does not. It looks like you are on the right track since you came up with this yourself, which means you are willing to think for yourself instead of wanting someone to spoon-feed you the answers. Keep up the good work.

 

My one piece of advice would be to ditch the momentum indicator. You already have several entry criteria, why mess up a good entry opportunity by giving it yet more more hurdle to jump? Watch your price bars forming, that should give you all the information on "momentum" that you need.

 

How long have you been watching NQ? Learn how it moves, and then adjust whatever methodology you want to use accordingly. Use your experience with its movement to determine optimal stop loss and targets. Each market is different as people who trade them are different. Learn about the humans and computers who trade NQ. What are they like? When do they usually like to move? Is it really directional when it moves? All of these things you can learn just by sitting and watching.

[phantom 16]

Shooly (and anyone else who cares),

 

Why not trade 2 cars and take 1 off when you reach 15, 20, whatever ticks while leaving the other contract active with a trailing stop?

 

 

Luv,

Phantom

[shooly76 10]

thanks for the replies!

 

I didnt get a chance to sim trade my strategy today due to girl probs and job sked...lol.. but I was able to do a bit of quick 'backtesting' from todays 5 min chart of NQ..I also had backtesting images of YM and TF but now I cant find them on my comp.. anyway here is an image of NQ..I plan on sim trading this strat for a couple more weeks..so I will try to post my sim results daily

[shooly76 10]

just saw I made a mistake on the long set-up..I shouldve placed entry arrow on previous green candlestick. as this is the candle after the second consecutive higher close.

[shooly76 10]

...that is after relative high w higher close

[Tradewinds 12]

some info about my strategy>

 

9) target is set between 16-20 ticks

 

Personally, I would take profit every time price had surged hard over a BB and immediately re-enter an order at a one tick better price than your exit. There is a problem with this way of trading. You need to be watching the price constantly. And you probably won't hit the perfect peak or bottom, and may need to re-enter at a worse price. The advantage is that it locks in profit, and minimizes the problem of giving up a lot of profit if things go wrong.

[shooly76 10]

I saw a nice set-up on the 5 min 6E chart tonite>> I went for 16 ticks, I tinkered around w trailing my stop (manually). I ended up w only 6 ticks of risk on the table...shouldve been zero ticks, but I got distracted w price movement..

[shooly76 10]

here is a 5min 6E chart and a 5min NQ chart..16 ticks on the 6E and 20 on the NQ

[shooly76 10]

you can see I got in on the 6E trade a little late, if I was had the chart up earlier, I wouldve entered on I think it is the 7th-8th candle after my set-up signal. I would have waited for it to revert back to EMA a bit, then pulled the trigger.

[shooly76 10]

I havent seen any safe set-ups in the markets today (NQ, YM, TF, or 6E)...too choppy so far..I guess the monthly job report is a good day to stay out completely..