EmaSADX strategy requested by a blog reader.

Received an email from a blog reader with the question if could write a small strategy for him. Many thanks to Marius for this strategy. He agreed of posting it.

Strategy description and rules:

Long Entries:

1. The EMA(20) must be going UP. For better trend following, SMA(40) must be going UP too

2. The EMA(5) must have gone UP at least 2 Bars or more.

3. The Setup bar LOW must be LESS than or touching the EMA(5) and the Setup bar HIGH must be greater than the EMA(20) and SMA(40) .

4. The ADX must be below 25 and heading up

5. From the Setup bar, count 5 bars backwards including the setup bar.

6. Set ENTER point 1 tick/pip above the Highest High of the 5 bars.

Short Entries:

1. The EMA(20) must be going DOWN. For better trend following, SMA(40) must be going DOWN too

2. The EMA(5) must have gone DOWN at least 2 Bars or more.

3. The Setup bar HIGH must be GREATER than or touching the EMA(5) and the Setup bar LOW must be less than the EMA(20) and SMA(40).

4. The ADX must be below 25 and heading up

5. From the Setup bar, count 5 bars backwards including the setup bar.

6. Set ENTER point 1 tick/pip below the Lowest Low of the 5 bars.

Belows you see the code for this strategy. Hold on this isn't the final version.

strategy EmaSADX ==> original strategy
/* written by ctlprogrammer for EUR/USD  */
/* Many thanks to Marius for this strategy*/
/* Warning for demonstration purpose only, no live trading please*/
/* you can freely copy the code but plz leave this header*/
/* http://ctltrading.blogspot.com*/
input periodema20 = 20,periodema5=5,periodsma40=40, lots = 1;

begin

integer currentbar,i;
number high5,low5;
series ema20,ema5,sma40,adx;

currentbar := back(close);
if currentbar <= max(periodsma40,max (periodema20,periodema5)) then return;
 
Mov_Avg_Exponential(close,periodema20);
ema20:=Mov_Avg_Exponential.line;
Mov_Avg_Simple(close,periodsma40);
sma40:=Mov_Avg_Simple.line;
Mov_Avg_Exponential(close,periodema5);
ema5:=Mov_Avg_Exponential.line;
Directional_Movement_ADX(5);
adx:=Directional_Movement_ADX.line;
high5:=0.0;
low5:=100000.0;

if ema20[currentbar-2]<ema20[currentbar-1] and
   sma40[currentbar-2]<sma40[currentbar-1] and
   ema5[currentbar-3]<ema5[currentbar-2] and ema5[currentbar-2]<ema5[currentbar-1] and
   low[currentbar-1]<=ema5[currentbar-1] and high[currentbar-1]>ema20[currentbar-1] and high[currentbar-1]>sma40[currentbar-1] and
   adx[currentbar-1]<25 and adx[currentbar-2]<adx[currentbar-1] then
   begin
       for i:=1 to 5 do
       begin
       if high[currentbar-i]>high5 then high5:=high[currentbar-i];
       end;
   if high[currentbar]>high5 then
       begin
       if short() then exitshort();
       if not long() then buy(lots);
       end;
   end;

 if ema20[currentbar-2]>ema20[currentbar-1] and
   sma40[currentbar-2]>sma40[currentbar-1] and
   ema5[currentbar-3]>ema5[currentbar-2] and ema5[currentbar-2]>ema5[currentbar-1] and
   high[currentbar-1]>=ema5[currentbar-1] and low[currentbar-1]<ema20[currentbar-1] and low[currentbar-1]<sma40[currentbar-1] and
   adx[currentbar-1]<25 and adx[currentbar-2]<adx[currentbar-1] then
   begin
       for i:=1 to 5 do
       begin
       if low[currentbar-i]<low5 then low5:=low[currentbar-i];
       end;
   if low[currentbar]<low5 then
       begin
       if long() then exitlong();
       if not short() then sell(lots);
       end;
   end;
  
end.

Let see how it would have performed the last days. If that's isn't promising its going to the waste bin!

Eur/usd => 1 min , 5 min, 10 min, 15 min , 30 min, 1 hour chart

Everybody who would have used this strategy last week would have made profit. Maybe the current market conditions where ideal for this strategy but still maybe this isn't so bad at all.

Marius did some test on the DAX.cfd and he liked it. But he suggested the following.

For the DAX he adviced the SMA 50 instead of SMA 40. This can be true. I advice to try out different setting for the different ema's and sma depending on the pair or CFD you are going to trade. He also noticed that the strategy is always in the market and he doesn't find that the ideal scenario. He prefers clear entry and exit rules and a stop loss.

So lets try that and add:

• a profit taking level
• a stop stop loss
• an exit for when the entry doesn't looks so great anymore

strategy EmaSADX;

/* written by ctlprogrammer for EUR/USD */

/* Many thanks to Marius for this strategy*/

/* Warning for demonstration purpose only, no live trading please*/

/* you can freely copy the code but plz leave this header*/

/* http://ctltrading.blogspot.com*/

input periodema20 = 20,periodema5=5,periodsma40=40,profit_taking=1000000, stop_loss=-1000000, exit_when_looks_bad=true, lots = 1;

begin

integer currentbar,i;

number high5,low5;

series ema20,ema5,sma40,adx;

currentbar := back(close);

if currentbar <= max(periodsma40,max (periodema20,periodema5)) then return;

Mov_Avg_Exponential(close,periodema20);

ema20:=Mov_Avg_Exponential.line;

Mov_Avg_Simple(close,periodsma40);

sma40:=Mov_Avg_Simple.line;

Mov_Avg_Exponential(close,periodema5);

ema5:=Mov_Avg_Exponential.line;

Directional_Movement_ADX(5);

adx:=Directional_Movement_ADX.line;

high5:=0.0;

low5:=100000.0;

if ema20[currentbar-2]<ema20[currentbar-1] and

sma40[currentbar-2]<sma40[currentbar-1] and

ema5[currentbar-3]<ema5[currentbar-2] and ema5[currentbar-2]<ema5[currentbar-1] and

low[currentbar-1]<=ema5[currentbar-1] and high[currentbar-1]>ema20[currentbar-1] and high[currentbar-1]>sma40[currentbar-1] and

adx[currentbar-1]<25 and adx[currentbar-2]<adx[currentbar-1] then

begin

for i:=1 to 5 do

begin

if high[currentbar-i]>high5 then high5:=high[currentbar-i];

end;

if high[currentbar]>high5 then

begin

if short() then exitshort();

if not long() then buy(lots);

end;

end;

if ema20[currentbar-2]>ema20[currentbar-1] and

sma40[currentbar-2]>sma40[currentbar-1] and

ema5[currentbar-3]>ema5[currentbar-2] and ema5[currentbar-2]>ema5[currentbar-1] and

high[currentbar-1]>=ema5[currentbar-1] and low[currentbar-1]<ema20[currentbar-1] and low[currentbar-1]<sma40[currentbar-1] and

adx[currentbar-1]<25 and adx[currentbar-2]<adx[currentbar-1] then

begin

for i:=1 to 5 do

begin

if low[currentbar-i]<low5 then low5:=low[currentbar-i];

end;

if low[currentbar]<low5 then

begin

if long() then exitlong();

if not short() then sell(lots);

end;

end;

if fpl()>profit_taking or fpl()<stop_loss then

begin

if long() then exitlong();

if short() then exitshort();

end;

if exit_when_looks_bad=true then

begin

if crossdown(ema5,ema20) then

begin

if long() then exitlong();

if short() then exitshort();

end;

/* you can add your own rules here*/

end;

end.

Important:

How to use this! Run a backtest on the pair or CFD you are going to trade. Longer is better. Than look at the result. Especially look at the big profits and the big losses. Now look what settings you need for the profit taking and stop loss to have the best result. This means look what setting you need to cut off the big losses and make sure your profit taking isn't to small either. The profit level doesn't need to be bigger than the biggest winner but it should be about half of the biggest winner. Anyway try out out and share with us.