Momentum E A
It was already written with many versions. It is qq EA. One thread in elite section (check sticky files' thread) and one thread in this public forum https://www.mql5.com/en/forum/173213
Thats right
Yes and in the basic format that you percieve, its deeply flawed and not that simple.
Not profitable
Pilot
Yes and in the basic format that you percieve, its deeply flawed and not that simple.
Not profitable
PilotMy belief is there has to be a momentum method which captures 5 to 10 pips of a momentum push , and does it consistently
If a price on Euro/usd moves 20 pips ,enter a trade with 10 pip stop and 10 pip take profit.
Anybody test this Out
I am not looking for a whole momentum ride but a part of the ride
Regards
El Cid
Nope
My belief is there has to be a momentum method which captures 5 to 10 pips of a momentum push , and does it consistently
If a price on Euro/usd moves 20 pips ,enter a trade with 10 pip stop and 10 pip take profit.
Anybody test this Out
I am not looking for a whole momentum ride but a part of the ride
Regards
El CidPure Momentum of price or by use of Momentum indicator? Either way it probably doesnt really matter in the manner that you have laid it out.
Yes I have looked into this extensively and actually built a pretty serious EA after observing price behavior/cycles for years.
However your misguided expectation of a further 10 pip profit on the EUR AFTER a 20 pip push with only a 10 pip stop is highly erroneous.
Cycles on the Euro AVERAGE in oscillations of 15 - 25 pips. A entry after move of 20 would be right at moment where price is likely to pull back and make you sweat for a good period of time or 85% chance stop you out.
Additionally, throwing into the mix spreads taking more 'fat' out of the trade there will be virtually nothing left.
Entry must be by a more elegant approach and this is sledgehammer simplistic.
Sorry
Pilot
Elegant Approach
Pure Momentum of price or by use of Momentum indicator? Either way it probably doesnt really matter in the manner that you have laid it out.
Yes I have looked into this extensively and actually built a pretty serious EA after observing price behavior/cycles for years.
However your misguided expectation of a further 10 pip profit on the EUR AFTER a 20 pip push with only a 10 pip stop is highly erroneous.
Cycles on the Euro AVERAGE in oscillations of 15 - 25 pips. A entry after move of 20 would be right at moment where price is likely to pull back and make you sweat for a good period of time or 85% chance stop you out.
Additionally, throwing into the mix spreads taking more 'fat' out of the trade there will be virtually nothing left.
Entry must be by a more elegant approach and this is sledgehammer simplistic.
Sorry
PilotHi Pilot,
Looks like you imply an antimomentum entry strategy should be seriously considered..any additional comments you might want to post? After 25 pips then go against recent move for 10 pips less spread..less say 7pips,with a 10 pips stop..85% vs 15%...5.5 pips expected per trade ?What about trendfilters,if any?
Yes, it's in that vein
Hi Pilot, Looks like you imply an antimomentum entry strategy should be seriously considered..any additional comments you might want to post? After 25 pips then go against recent move for 10 pips less spread..less say 7pips,with a 10 pips stop..85% vs 15%...5.5 pips expected per trade ?What about trendfilters,if any?
Good to hear from you Simba. You are one of the few who have something of worth to contribute and have started many a fine thread.
Simba you are pretty much bang on the money regarding previous statement. I already commented why it is that the momentum principle as El Cid suggested is flawed so I will try not to rehash.
Basically, so many of the indicators we use are archaic and lagging but what's worse is the actual lack of original thought and blind use of them. I say this because its amazing what you can accomplish with a couple trend lines, price and volume. Unfortunately my next comment will upset many newcomers looking for the easy answer but sorry...becoming intimate with the market and it's ways takes time and effort.
All too often the biggest mistake in trading is being faked. For example, the market breaks up and by the time you have gathered the gumption to buy, much of the energy has expired and it comes tumbling back which then causes you to stop out and then perhaps panic opening a sell in order to recover the loss in which case that also has lost energy and sometimes fly's back the other way again. GBP is notorious for this. So begins the spiral of doom until account is wiped and your trading psych completely decimated.
The answer is in ANTICIPATING the markets next move whilst not FORECASTING/PREDICTING it....and yes there is a huge difference. Anticipation is based on sound principles, tried and tested over time but humility and wisdom stops you from assuming you know where the market is going to go.
Yes, I am getting to the point. El Cids method is that of trying to get on the horse 200 yards after it has jumped the fence and galloped across the paddock and this is no good. By the time you catch the horse and sit astride, it will likely just stand there all worn out and wander back to the hay trough.
Getting on the horse FACING THE CORRECT WAY is like being in the starting gates with it pointed in the direction down track. When the barrier explodes open, away you shall fly with all the pent up energy the horse (price) had locked in it's loins.
Simba touched on filters and trend and he is 100% correct. It SHOULD be in every traders knowledge that the trend is your friend (as tired as that saying is) and yet how many counter trend systems do we see here (most failures). No jockey who wants to win the Kentucky Derby, walks the horse into the gate so that the ass of animal is pointing in direction where all the others are going.
So firstly lets improve our odds by up to 90% (yes that much) by aligning with the trend. Now, I'm not going to tell you how to do this because everybody has their favorite indicator/trend line/method to determine trend and if you don't know how to read a chart, then you should not trade, PERIOD.
Next - ENTRY - Lets assume by our determination, the trend is UP and therefore only Buys are on the cards.
Right now I am going to mention a couple VERY profitable methods and all you have to do is be mechanical about it.
Many traders I know use the simple method of applying a 50SMA to M5 chart to determine trend. When you have a decent angle of ascent (use the eye - 22 degree plus) and the intraday trend has been in play long enough to establish 1-2 lows that seem to coincide with the angle of SMA, then its a simple case of buying in the dips when the price falls back towards 50SMA. If this were the EUR/USD, your standard upward advance might be a 25 pip forward push with 15 retrace back to towards the 50SMA at which time you would literally enter almost at bottom of swing. Place your stop at the level of previous low (see chart). Bare in mind that the price will not always come back exactly to 50SMA and sometimes it shall actually fall through it, trading is not an exact science but the idea is to align the odds in your favor. The rest of Risk is taken care of by way of MM/Stops and that's what they are there for.
Now, I have quoted pip figures for EUR/USD which comes from years of watching price. Each currency has it's own quirks and volatility including times in which it is ideal to trade. For instance, the EUR will usually give you fantastic channel trade scalping opportunities during the Asian session after which it might start trending towards Europe. Here again, you then need to know how to draw simple lines that interpret to you that the currency is moving sideways or trending.
GBP/USD, when smooth trending tends to cycle in 35 - 45 pip advances and sometimes as much as 85% retrace. Here again, your saving grace will be moving with the trend only and I cant stress this enough.
Rather than just using price (which takes years to get a feel of and yet is the best indicator of all), chose your trend tool, take into account the distance price has moved and then perhaps pick another indicator to guide your entries even better.
Just using something like the 50SMA method placed on 3 currencies, should provide you opportunity for at least 2-3 trades a day with expectation of 20 - 50 pips average. (Don't be lazy and ask for an EA. This is not a method easily adapted and trading is meant to be WORK)
I hope this has helped
Regards
Pilot
Yes, I am getting to the point. El Cids method is that of trying to get on the horse 200 yards after it has jumped the fence and galloped across the paddock and this is no good. By the time you catch the horse and sit astride, it will likely just stand there all worn out and wander back to the hay trough.
PilotPilot
I was hoping for some answers about momentum trading and it's viability/profitability.I do not use this method because it is very similiar to moving average crosses or breakout systems.Most of the day's profit is missed out on using chasing the price methods like breakouts and mas,leaving the trader with a very poor risk reward ratio.
Have you noticed from your charts you are buying on support and selling at new resistance on trending days?
Very good post
Regards
El CID
No problem
Pilot
I was hoping for some answers about momentum trading and it's viability/profitability.
Regards
El CIDEl Cid
Thanks, just trying to help out.
Yes, people use breakouts and crossovers for a reason - A reference point. Without a reference point you cannot start the journey, so it begs the question (genuine, not critical), what do you intend as your reference point in time and level? Traders chose previous sup/res so that when these break convincingly with momentum, their hope is to jump in whilst 'energy' is still young.
I don't like B/O systems as it is STILL too late for me and prone to reversal.
SO....is momentum viable? Yes but it requires multi dimensional thinking and several reference points (rather than crappy old indicators) so as to ensure you are in a move that is actually going to last.
Momentum for the purpose you first outlined (scalping) is very unlikely ideal but rather for medium - long term swing trading. The meat which you can scallop from these moves using momentum as I describe is HUGE.
By nature something must be moving in order to gauge its momentum and therefore once it has moved a certain distance it has lost a significant amount of power, hence the reason why this is not a good trading strategy for scalp moves.
When it comes to medium/long term, you start with a reference point, have price move by calculation in order to show increasing/decreasing/sustaining momentum and then decide whether it is wise to enter. Once you have entered price will likely retrace, sometimes significantly but this does not concern you because you are in for the long haul and as long as the median momentum from initial reference point sustains/increases you can stick with the trade. As time goes on, you will note momentum decrease and perhaps here is where you think of exiting the trade. It wont be right at the top/bottom of run but you will have captured the majority of the move.
After all of this you may have 'bled' 10-20% off the beginning and 10-20% off the end of move but at least you have captured at least 60% which in swing trading terms is BIG money.
That's it.
Pilot
Excellent
Hi Pilot,
Excellent posts,and ideal philosophy for trading..nicely explained..congratulations
Thanks Mate
Hi Pilot, Excellent posts,and ideal philosophy for trading..nicely explained..congratulations
Thanks Simba
Have been keeping an eagle eye re performance on the 'SIMBA' thread 
. Looks like its chuffing along nicely.
Regards
Pilot
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Hi Folks
Anybody fancy writing a momentum E A .
The purpose of the E A is to determine the optimum results of momentum entries .The E A backtests will reveal that after a move of x pips (could be 15,20,25,30) , a trade entered in the direction of the trend with a stop loss of x pips(5,10,15,20,25,30) and a profit take of x pips (5,10,15,20,25,30) is the the optimum momentum trade.
The E A should allow only 1 trade during a momentum move
The expectancy is for a small profit but consistent profit with low drawdowns.
The currency pairs of interest are euro/usd , gbp/usd
Regards
EL cID