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EMA cross + Stochastic

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    Registered User

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.
Posted Image
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.
Overall profit of around 50-55 points after removing brokerage and slippage.


Posted 02 January 2011 - 02:42 PM

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I can't zoom enough to have a clear view of the chart. But I do agree with this strategy. One thing that newbies or traders must also learn is to wait. Because many will going to read this one I guess only one out of one hundred will ever going to try to use this in trading. Because they will simply just going to jump in from the moment they login in their account. True trader can wait.

Posted 30 November 2011 - 12:14 AM

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