Hi!
I have been following this system for quite some time now, and believe me, have never had a losing day.
The system is very simple and though I cannot guarantee massive profits, you will get consistent returns.
It utilizes Dual time-frame Momentum and EMA Crossovers on a 5 Minute Chart and is best suited to trade Nifty Futures, though any stock can be traded with this system over any time frame.
Coming to the actual system now, the following is required for a long position to be initiated:
Entry Strategy
1.
In the 30 Minute Chart, the Stochastic should be bullish.
(That is, the fast stochastic line should have crossed over the slow line. It does not matter how long ago the crossover took place, it should just be above the slow line and should be going upwards).
2.
In the 5 Minute Chart, the Stochastic should be bullish as well.
(Fast stochastic line should have crossed over the slow line and should be moving upwards.
It should not be in overbought condition yet, that is, it should not have crossed 80 yet).
3.
The 5 Period EMA crossed over the 13 Period EMA from below and moves upwards.
When all three conditions are met, we buy, placing
stoploss at the low of the last bar or the bar to the left of the last bar, whichever is lower.
Stochastic Setting is 8,3,4 for this system.
Exit Strategy
1.
When fast Stochastic reverses from it's upward move, curves downwards and crosses the slow line from above,
sell half of the units.
2.
If the next bar goes below the low of the previous bar, exit completely, otherwise keep a tight trailing stoploss and enjoy the continuing bull market
-----------------------------------------------------------------------------
The second point of the exit strategy might seem confusing, but it is there as in a trending market, the stochastic might reverse while the market is still going up, so we do not exit completely on stochastic reversal as we do not want to miss out on the rally. But if the next bar goes below the previous bar (where we have exited half), it is confirmed that there might be a reversal, though short term, but we exit with the profits we have.
I tend to avoid taking positions if the crossover is near an important support or resistance level.
For going short, the exact opposite of the above rules is used.
Thats it! I have been following this and making around 50 points everyday.
-------------------------------------------------------------------------
These are the trades that I did today with this strategy.
Overall profit of around 50-55 points after removing brokerage and slippage.
--------------------------------------------------------------------------
As I am not here to sell anything to you, I will not flood this post with hundreds of examples and charts where this system proved profitable, you can backtest yourself and see how it works out for you.
The main purpose of my sharing this system with you is that we can have a discussion regarding it and see if any tweaks/modifications can make this more profitable.
EMA Crossover Non-believers, please stay away from this thread.:thumb:
