Short term trading with EMA(3)

Hello there...

first of all i have to give my high respect for this amazing forum..everyone is offering free knowledge in order to develop our skills in trading..I haven't seen so many capable people in one place and moreover the level of discussions are very high...

Watching the system 315 of Tradehunter (i have read all his threads) and how you can make it more effective and comfortable..NTrader42 gathered
all the rules but there was a 6th rule..

6. Take a Short Term Trade in opposite direction (contra) when the candle does not touch ema3 for 2nd day in running

This was my source in order to built my trading system...I usually trade in US where there huge number of stocks with good volume and something came up in my head..So let me tell you my simple rules..You can backtest them..i have already started trading in this way and i have amazing score until now..
Possible luck?Perhaps..We will see...

I am very defensive trader...I was looking a trading system where doesn't need to be on screens all day long..Buy at the close..Sell at the open..or at least wait for a bit..I want book my profits fast and i haven't so much patience..My basic problem, is the fear to be short on strength and vise versa..this system covers all the above..It has a very strong philosophy
where i really like it and gives me confidence during my entries..However i have to be more efficient in exits in order to maximize my profit rate..Now its really low..

The rules:

1. Τhe complete candlestick (incl. high&low) isn't touching the EMA(3) (Thanks NTrader42!!)
2. You trade contra/opposite in the current direction.
3. You entry in the close.
4. You prefer the entry candlestick to have the close is above open when you short and vise versa. This an optional rule but i believe is more prospective to give you more profit in short term basis.
5. a) In case you gain next day you book your profits when i.) reaches your target e.g. 1% for me ii.) touches again the EMA (3) iii.) book partial profits watching the intraday chart .
b) In case you loose next day then i.) in case the close is real near your entry,less 0.5% you sell anyway ii.) usually you do nothing. Wait for the close. iii.) in case it didn't touch EMA (3) once again or made a considerable gap, perhaps you entry once again with 50% of your initial capital
c) After 2nd day you sell any time if the price touches your entry unless you follow the intraday chart and you are expert in this kind of trading i.) however in case you still loosing you buy at the close 50% or 100% of your initial entry. It depends from your pocket and the type of candlesticks. Usually the third day is the best one for taking a new entry.
6. You wait until the 5th day. In case you are still loosing around the close of 5th day, you sell your stock anyway..Possible it will continue to move opposite your position.

Naturally these are the basic rules. Many times i filter them with my experience, mainly when i take new entries. You have to know to read the charts well.

The system "makes" me to open a position in the opposite direction and when its in full strength. It helps me to take more efficient new entries. MAs work as magnets for prices so the stock have to return back to them and gives profits or at least minimum losses...

I can post few charts in order to see it in action...Your observations are welcome..I hope the system continues to work good as the last 10days..

I had to share it with all of you because you are the reason that helped me to develop it...really thanks...:thumb:

This a yesterday trade where i took successfully...

thank you. not a frequent occurring event !

i guess we need a screener to scan through stocks that meet this parameter.


thanks for sharing this strategy.

indeed you need a stock screener...and this is another advantage of this system..it doesn't happen frequently..usually one or two times per 6 months for one stock..perhaps not at all...
Guys how can i upload more charts..all the time exceeds...give me an easy way...

Thats why you need many choices..with good volume..I use to trade with stocks with more than 10$..US market is the paradise for this system...

upload your image to sites like imageshack.us, copy the "forum" link that is generated on the site and paste it on your message.

to check if you've done it right, use preview message option.


rgds

suggested tweak:

what if we enter 50% long/short on close of 1st candle away from 3ema and 50% on the 2nd candle?

from the chart you've uploaded, candles [sep 25?, oct 15?, nov 13?] and have closed away from 3ema but the follow up candle couldn't stay away.

i guess, this would increase the trade opportunities too...

perhaps some backtesting would throw some light.

By hawktrader at 2012-01-06