This is a discussion on EOD trend following system within the Trading Systems forums, part of the Methods category; Now before I get eaten alive I have to stress I have no idea how this performs in a sideways EOD trend following system. Community Links Members List. EOD trend following system This is a discussion on EOD trend following system within the Trading Systems forums, part of the Methods category; Now before I get eaten alive I have to stress I have no idea how this performs in a sideways Jan 7, , 1: Now before I get eaten alive I have to stress I have no idea how this performs in a sideways market.
The basic premise is to work with the trend for trade entry and to have a clearly defined stoploss criteria. The attached image illustrates the idea.
A daily chart chart is used and it is the end of day values which are key. If the 34 is above the 55 we are looking for long entries. If the 34 is below the 55 we are looking for short entries. If there is little divergence between the EMA's they are very close to each other then do not use the system until the dominant trend is clearly identified.
Always wait for a pullback into the zone between the EMA's. If the previous down candles had penetrated the 55 EMA then a long entry can be considered at a close above the 55 EMA. If the previous up candles had penetrated the 55 EMA then a short entry can be considered at a close below the 55 EMA.
For the chart shown lets look at the marked points. Point A Pretty straightforward. The down move had penetrated both the 34 and 55 so we could enter on the first close above the If we had taken this entry we would have been stopped out when the actual crossed back through the The following day it completed above the We now go long with a stop at the 34 EMA level.
Run the trade with a trailing stop as usual. Point B Again straightforward. The down move had penetrated the 34 EMA and so we would enter on the first close above the The day following entry we would have stopped out on the intraday move back below the 34 EMA. Point C A little messy but it still holds together. It does not close above the 34 but continues down through the 55 EMA.
It then completes above the 34 EMA and triggers our long entry. I have used the Dow to illustrate this but it seems to work across a wide range of instruments. Those trading Forex might find it interesting as Forex does seem to have lengthy trending periods.
Comments and criticism welcomed. Last edited by jpwone; Jan 7, at 2: Jan 7, , 8: You are of course only looking at a very small sample with a very good trending market. Life isn't like that for long. Try it on the FTSE Jan 7, , Hi JT I knew I should have used a different data sample: I think that you would have to selectively apply this technique ie.
The FTSE did quite well with it in the past 12 months from a quick look at a chart or have I missed something? Trend is the key. I've looked at 21 and 55 Weighted MAs on a straight crossover.
If you use a 1 or 2 period delay for confirmation you filter some whips out. These crossovers will keep you in "forever" in a trend. You can of course use a 3rd average say 89 as well and wait for them all to cross. All these things work some of the time.
Jan 9, , 9: Jan 15, , I have always found systems based on MAs are very simple to operate but difficult to make work. I personally have yet to find on which consistently works in all types of market - trending,ranging, tanking and ballistic mode. They seem to provide more profits than losses. If you can stomach huge drawdown Thread Tools Show Printable Version. Search this Thread Advanced Search. EOD trend following system Now before I get eaten alive I have to stress I have no idea how this performs in a sideways market.
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