Simple Profitable Method

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Quote from trader28:

Good point, love those trades, you can see them building steam as they approach Zero and quite often I will try to anticipate them to get a better price
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T28,

You have a great trading system and no doubt you make money using it. But I've to add that it has more discretionary element to it then simply watching the crossover. Otherwise, you can pay someone to write an ATS and let it trade for you while you sleep peacefully at night. There are dime-a-dozen moving avg crossover systems available in the market. I think you found the winning combination by picking a volatile instrument, a short time frame and adding a whole lot of discretion into it.

More power to you man ! But the newbees trying to follow this (or any other system) should keep in mind that there is lot more of other factors besides the zero line and crossovers [such as early entries, early exits, stepping aside, etc etc]

Once again, I'm glad its working for you and I hope others will learn something from it.

Thanks

Mudit
 
T28, you've given us a great system and some good laughs, to boot. Thanks!:)
I, for one, have traded this real time and it works. Yes you have to fine tune the entry and exit using your own best judgement...that's why trading is an art as well as a science. If every signal could be completely mechanical, there's be no market.
 
The system is indeed very good, but I still have hard times in managing stop-losses. With 2 points TP it is vital SL to be 1 point or less, but putting it arbitrary makes it being hit very often (1 point is less than ER2 usual noise) and waiting for price to close above/below MA with MACD looking like failing makes it much more than 10 ticks sometimes.

Trader28, if it's not difficult, can you give a little more clue on how you manage your exits with a loss?
 
Quote from CFerret:

The system is indeed very good, but I still have hard times in managing stop-losses. With 2 points TP it is vital SL to be 1 point or less, but putting it arbitrary makes it being hit very often (1 point is less than ER2 usual noise) and waiting for price to close above/below MA with MACD looking like failing makes it much more than 10 ticks sometimes.

Trader28, if it's not difficult, can you give a little more clue on how you manage your exits with a loss?
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Yes sometimes the noise will get you but I find the 9 period simple moving average on price chart is a good guage to let you know if things have gone pear shaped

And dont forget the unwritten law... "good trades work straight away"... dont hang around too long if nothing is happening
 
Trader28,

Yeah I see you already have this principle (time stop) built in the system.

Also just made some manual backtesting and saw that your way of entering more agressively (on break above/below 9SMA with MACD looking like it's going to crossover) indeed allows to tighten the stops dramatically, because entering after crossover is often a bit late, the move has already began and you would need wider stop because of high possibility of retracement.

Will dig it further to make it work better and better. :)
 
Trader28,

Just following this thread, very interesting to me.

Just to confirm my understanding on the following :

There are two type of cross over (take long as example) :

1) When MA is above zero line :
Take MA crossover longs when MA crossover is above zero line
(short MA crosses if it below zero line).

2) When MA is below zero line :
Observe the MA crossover (ie MA is below zero line), take the trade when the MA crosses up the zero line.

Quote from trader28:

Ok but remember, only take MA crossover longs if above zero line, and short MA crosses if below Zero line

If you are below the Zero Line and you get a crossover to the upside wait for it to cross the Zero Line first, and vice versa for shorts

They are the only 2 type of trades, Zero Line crosses, and MACD MA crosses (Zero Line supported)


And remember the little things like avoiding trades during lunchtime chop etc to improve your strike rate
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jychiu, its the signal line crossing zero rather than the MA.

For anyone still having problems identifying the signals, if your software allows you to change the color and style of your MACD then you can make it easier to see. Just change the signal line and the MA to a histogram. Set the signal line to blue above zero and red below zero and make the MA white. When you see blue, its a buy signal, when you see red, a sell signal (crap, I sound like WizeTrade, lol). You may have to make sure the MA is plotting after the MACD to get it on top of the signal line. TradeStation does it this way (see pic).

Maybe that will help.
 

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