Jon & Lambchops
Re SMA and EMA you have stated them correctly, 2 close to the price good for reversal, 34 EMA lagging price better for trend analysis.
No problem. I had time on my hands today, still in holiday mode and the market was'nt being very dynamic this afternoon. Along my trading journey many have provided me with advice and so it is only fitting that I offer some of my own because without others experience and guidance I doubt I would have got this far and persevered for so long. I still like to look at new ideas and possible alternative strategies but when you have one that works it is best not to change it so I only consider different strategies for now. The only thing I might add is to take an early position against the trend (before trend line change) if I have a good divergence (CCI speak - or Failure Swing RSI speak) but from a 5 min chart (nothing less) and following a good long trend or price range. There were a couple on the 5 min chart I posted today and it is something I have used before. My reservation is that I like to remain with a trend following strategy and do not want to start hunting false signals so I will have to set certain filters such as those I have already mentioned.
If you are going to trade just the trend changes then the system is simplicity itself and you will have no problem apart from when to take the best profit. Obviously waiting for confirmation of the trend breaking you deal will mean you miss out on some of the gains but at the very least it gives you a clear signal to close. I would look to something that suits you for your exit before trend change, either an indicator you are comfortable with or a set target being satisfied with a percentage of the available gains rather than all of them.
However if you are going to use both methods and trade the smaller moves within the trend then you will need to be more precise when you close. I do reasonably well taking 5 points (often taking 5 points means your done and dusted and ready for the next one) or waiting for 2 movements from the SMA starting at the point of trend change. As the trend continues be aware of the danger of entering near the end of the trend, this is where the combination of bands and RSI can help, where a divergence or failure swing is developing. If SB I would not play the moves within the trends and beware of a non trending market, this is where small points become essential or moving to a longer frame chart.
Good luck and go easy until you have given it a bit of a test. While it works well for me it may prove not to be your cup of tea but all the best. Its about 3 yrs in the making so its had a lot of testing and like you I just needed to get it all together I call it my complete strategy because it allows me to play virtually all the price moves in a day. Along the way I have forsaken 3,4,5,10,13,20,30 SMA's, MACD, MACD Histogram, Stochastics (although they work really well with RSI) Money Flow Index, CCI, On Balance Volume and a few others. Keep an eye out for flags, wedges double tops and bottoms and triangles all popular with the FTSE intraday. There are other patterns but I stick to the common easy one's, when I started I said this system was based on simplification but you can add other things as you see fit it all depends what is best for your own individual trading style.
Kevin
Re SMA and EMA you have stated them correctly, 2 close to the price good for reversal, 34 EMA lagging price better for trend analysis.
No problem. I had time on my hands today, still in holiday mode and the market was'nt being very dynamic this afternoon. Along my trading journey many have provided me with advice and so it is only fitting that I offer some of my own because without others experience and guidance I doubt I would have got this far and persevered for so long. I still like to look at new ideas and possible alternative strategies but when you have one that works it is best not to change it so I only consider different strategies for now. The only thing I might add is to take an early position against the trend (before trend line change) if I have a good divergence (CCI speak - or Failure Swing RSI speak) but from a 5 min chart (nothing less) and following a good long trend or price range. There were a couple on the 5 min chart I posted today and it is something I have used before. My reservation is that I like to remain with a trend following strategy and do not want to start hunting false signals so I will have to set certain filters such as those I have already mentioned.
If you are going to trade just the trend changes then the system is simplicity itself and you will have no problem apart from when to take the best profit. Obviously waiting for confirmation of the trend breaking you deal will mean you miss out on some of the gains but at the very least it gives you a clear signal to close. I would look to something that suits you for your exit before trend change, either an indicator you are comfortable with or a set target being satisfied with a percentage of the available gains rather than all of them.
However if you are going to use both methods and trade the smaller moves within the trend then you will need to be more precise when you close. I do reasonably well taking 5 points (often taking 5 points means your done and dusted and ready for the next one) or waiting for 2 movements from the SMA starting at the point of trend change. As the trend continues be aware of the danger of entering near the end of the trend, this is where the combination of bands and RSI can help, where a divergence or failure swing is developing. If SB I would not play the moves within the trends and beware of a non trending market, this is where small points become essential or moving to a longer frame chart.
Good luck and go easy until you have given it a bit of a test. While it works well for me it may prove not to be your cup of tea but all the best. Its about 3 yrs in the making so its had a lot of testing and like you I just needed to get it all together I call it my complete strategy because it allows me to play virtually all the price moves in a day. Along the way I have forsaken 3,4,5,10,13,20,30 SMA's, MACD, MACD Histogram, Stochastics (although they work really well with RSI) Money Flow Index, CCI, On Balance Volume and a few others. Keep an eye out for flags, wedges double tops and bottoms and triangles all popular with the FTSE intraday. There are other patterns but I stick to the common easy one's, when I started I said this system was based on simplification but you can add other things as you see fit it all depends what is best for your own individual trading style.
Kevin