MA cross with controversial 'M' word
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This may or may not already exist as an EA, and I've searched around to make sure if it does or not. However there is only so much searching one can do in this WWW!
I'd like to share my MA cross strategy which i've been demo trading manually. I'm sure it can go further than what I could do with it so far. It IS using martingale so if I have already turned anyone off by now with that word, feel free to stop reading, curse a little here and there, then go to another thread.
I've used it on 4hr TF. Not tested on 1hr or daily. I plan to on daily eventually. I believe daily will produce much higher return with the lowest drawdown and least levels.
A, B and C below are not the same strategy. They are different ideas. Not sure if 1 EA can handle all.
(A)
An always in strategy, 2 MA's, 4hr TF: (for now I will skip mentioning fast or slow MA as we all know what cross will trigger a buy and so forth). Confirmation is next candle open above/below cross.
1. assume first signal is a cross up, so place a buy on ma cross up
2. as long as total balance is positive (or next cross down is above buy), wait for a cross down, when cross down confirmed, close buy and reverse
3. if balance not positive at confirmed MA cross down, add sell at multiplier of buy
4. as long as balance is positive, in other words we are on the correct side of trend, wait for next cross (in this case a cross up). When cross up confirmed, close all and start over, at this stage it would be a new buy
5. repeat (2) above
I havent seen it go beyond 6 levels deep on trending pairs in my manual trading of this system. Even better on Gold! When I say 6 levels, its happened only twice but drawdown was still very low.
Of course we could add filters to lower even further the number of potential levels. Eg only place a trade X pips above/below cross, or adding a ranging indi (such as slope of some kind) to stay out of sideways moves and so forth. However it just happens that I've never had to worry about that since I used it on 4hr TF and my MM tolerates up to 10 levels.
(B)
I've also toyed with a single MA using the above. Confirmation on candle close above/below MA.
Both strategies work well on certain MA settings and trending pairs, especially Gold, draw down is very acceptable yet profits are great.
(C)
I dont want to make this long, but another variation I use is where I part close the negative trade(s) with 50% of the profit of the positive trade(s). This decreases the size of the negative position, yet pocketing some profit on pullbacks or trend reversals at which point I close the older negative orders with a total positive balance. I know this has confused some of you, but I can explain later.
One thing at a time I guess. I believe lots of testing and optimisation of MA settings and FX pairs etc will make this a profitable system.
This is a trend following system. The 'M' functions are done at the crosses, after that we simply move with the trend until the next cross. This is why I believe that it will work real well on daily TF.
I know that there will be questions for more details such as account size, risk, MA settings, which pairs etc etc, I can answer from experience. But first I wanted to see if there is interest in making an EA or not or modifying an existing MA cross EA.
Best Regards
PS - I have to say this so that there is no confusion. You do need to have adequate capital to withstand sideways market conditions. I havent had the misfortune of such a lengthy move when it comes to the 'M' word so far since January this year, but since this system uses the nasty 'M' word, dont be fooled that it will not rain heavily one day... or many times in a day! I've managed to use (C) above to stay on top.