The idea that this thread has been created as "the best forex SYSTEM" is worthless. There is no "SYSTEM" posted anywhere on this thread.
Having said that, that doesn't mean that there is no value in this thread.
What I believe is trying to be said, and it's something I've mentioned many times in my posts, is that to be successful, you need to be a TRADER, not an indicator FOLLOWER.
You're not going to find a super combination of indicators that you can follow mechanically on short-term trades. And, if they do exist, they won't be found using MT, because you just can't get accurate backtests with it. Thus, you have to rely on the slow process of forward testing.
Dr4x posted about how he uses MA crosses to generate Setups, not entry signals. I refer to them as Setups, because in other posts he alludes to not neccessarily taking every cross. Thus, they're setups, not entry signals.
He then tells you to use that last swing high/low as the stoploss. This is great. Everybody seems to want to use a fix-pip stoploss. This makes no sense at all because it's just arbitrarily chosen. Using the swing highs/lows, you're taking into account market activity and S/R.
Last, he says to exit at the first sign of reversal. This is good and bad. Good in that it implies discretion, not some magical indicator that doesn't work. The bad thing is that, for trying to post a "system", it's like, "no shit!". Just about Every "system" posted on this forum, or any other forum for that matter, will generate good entry setups/signals. It's consistently exiting the damn trades profitably that is the hard part.
So, for all my rambling, I think what I'm trying to say is:
Summary: Becoming a successful TRADER involves discretion. There's no getting around that.
This is all just my opinion, but maybe somebody will take something from it.
Great post kersis2112.
Say what you will, I actually applaud this thread, though I typically despise indicators. There is alot to be said for a simple 12/89 MA cross system, especially when applied to the 5M and 1M time frame with a few simple rules. I can easily see that its more effective than 99% of the garbage indicators out there. Its simple and effective. Use it in the right time frames along with S/R and MM and its fantastic. Check it out on the GBP from 8AM eastern through 2PM. It gives better signals than most of the byzantine "systems" out there with all their pretty lines and histograms that tell you ESSENTIALLY the same thing, yet less effectively. You just need some experience with price action to utilize it properly. Its a fantastic filter. Combine it with experience, candle patterns, and time-of-day trading, and its every bit as good if not MORE so than anything else out there. Thanks for the post, Dr-4X.
Do a web search for "Guppy+MMA". You will find a truckload of references. Darryl Guppy is an Aussie stock and trading guru, a wiz on tech analysis. I have several of his books in my TA library, he is worth a read.
This is a local reference: https://www.mql5.com/en/forum/173247
why is it so difficult to create a profitable system?
Im new to forex and this thread. Im trying to create a profitable trading system.
This is what I think I have to do, what do you think?
1) Need a LAGGING indicator to tell me that a new trend has formed.
2) Need indicator to measure strength of trend.
3) Need a NON-lagging indicator to tell us that the current trend is ending and new one is forming. When this happens we exit.
So in effect we just take middle part of the trend.
Stop loss can be the nearest high/low.
Thats it right?
Unfortunately, there is no such thing as a non-lagging indicator. All indicators lag. Price is the only non-lagging indicator.
I'll just pop my two cents in this thread.
It is my belief that there is potential to profit from following a mechanical trading system religiously, (i.e no missed trades) but I personally have found after years of both backtesting and live (forward) testing of numourous machanical trading systems that your returns are likely to be rather lack lustre in nature with quite some volitility/fluctuations (and occasionally some stomach renching drawdowns periods) in your equity graph.
After looking over my trading results (both Live and demo) and findings to date, I've largely came to a conclusion similar to what keris2112 has outlined... That one needs to apply discretion in their trading and be able to make emprical decisions in order to achieve anything more than lack lustre trading results. Achieving the experience necessary for discretionary trading I believe will require a number of years of ACTIVE experience in the Forex Markets.
After 4 years
After 4 years (and lots of $$), I wholeheartedly agree Kerris.
It wasn't until I started NOTATING my EUR/USD charts in REAL TIME(using MT4 text) as the day progressed, that I SAW setups and not entry signals. A very important point!
What you end up with is your own "system" of pattern recognition. The entries come from THE SETUPTHAT CONTINUES TO CONFIRM ITSELF through price behavior ......and there is NO LAG with price behavior.....it IS what it IS.
Your entry (like he says) is discretionary....different setups (patterns) at critical points (session times!) in the day have more likely probabilities (or less likely) probabilites of occuring. That just takes experience to know whether to jump in or wait longer for moreconfirmation of pattern development.
Anyway, don't mean to ramble, but to sum up:
1. I agree with the above quote.
2. Start notating your charts.
Good Trading to all.....and NEVER give up!
For the Record....
For the record....
I use eur/usd (only) for pattern recognition.
5 min chart.
DiNapoli MA settings. (3,7,25)
For those who do not want to call the (9/30 cross) a system, I say fine let us insert 3 or 4 colorfull indicators (it only takes 2 minutes to set up entry and exit rules). Ok here we go:
1- Use DPO indicator (14).
2- Use MACD (default settings).
3- use ADX (default).
Enter short if; DPO below zero + MACD line crosses down signal line + the red ADX line crosses up the green line.
Sl 15 pips below/above the cross. TP 40 pips (then follow the price with 20 pip trailing stop)
Viceversa for long.
You can see clearly when the 9EMA crosses over the 30 EMA it will force all 3 indicators to folow suit . Such system was sold 2 years ago for 12000USD. In straight words; they made fool out of you.
Summary: (all you need in FOREX trading is 2 moving averages, no more no less. It is also helps to know historical S/R levels).
p.s. Some like range trading and that is fine too