[brownsfan019]

In this thread, Bearbull posted a neat little chart that is more appropriate here.

The premise is simple...

Experiment with say 15min or 30min chart and a EMA of 20 and focus on just two setups, a hammer in an uptrend at the moving average and a three bar reversal pattern (downbar, inside bar , followed by an upbar, ie. Harami setup, infact if you learn to blend them , you realise that the setup turns out to be a hammer
Similarly focus on an inverted hammer in a downtrending moving average
You could even try this out on 10min chart.

And the chart that followed the post:



It's an interesting trading idea that I thought could get some life here. I'll invite Bearbull over to comment more.

A few charts that caught my attention using the same idea:









* IMO the yellow highlighted one above would be the primo setup - a pullback to the 20 EMA after a move and an immediate rejection.


=================

Is there potential here for a very tradable system? Perhaps.

Items to consider:

* Entry is only part 1 of the equation, need an exit strategy.
* This may or may not be an all day trading system. There needs to be some movement for this to be viable IMO.
* Rules of entries could be flexible as some I have highlighted above or more strict like the one highlighted in yellow.
* Chart timeframe can make a big difference as well - minute chart, tick charts, volume charts - all could be viable options here.

[OAC]

You forget the other component of this popular set-up which is ADX>30.
When Dogpile was around, a lot of his set-ups were along this line.
Palin influence ? No, LBR influence, Trader with lipstick.
She also has a set-up called short-skirt which is also a pullback set-up similar to the one above. Hey she named it, I didn't.

[james_gsx]

I frequently use the 21 EMA, which I won't lie I got from John Carter.

The biggest issues I can think of off the top of my head would be money management, exits, and even entries. You could use pulbacks, but that is often more difficult in real time then it appears in hindsight - but that could just be me.

Also, price will sometimes hang around and chop near the 20EMA. So money management would be key or you could get stopped out fairly easily. You could make a counter trend setup, for example a hammer that's "far away" from the EMA and make the 20 EMA your target.

Overall, I think using the 20EMA with a simple oscillator like a stochastic could be a simple strategy on say the 15 minute chart.

[Bearbull]

It does not matter one iota which MA you use and who employed it first, the whole point is about concepts, to read the setup via candlestick pattern in terms of context.
One could draw a trendline or a moving average or both. Then wait patiently for the setups in an uptrend and vice versa, experiment with this, work out the risk/reward ratios, test it thoroughly, see if it gives a trader a consistently profitable approach, if not then by all means add ADX and so on. The primary message was to avoid attaching meaning to every hammer, engulfing bar , gravestone doji etc
However if anybody disagrees, fine, lets keep this civil and constructive, we know it is the most easiest thing in the world to criticize but then one should be prepared to post something which substantiates that and top it up with a positive contribution which will enhance the value of the thread and the forum.

[Kiwi]

I'm a little annoyed BB. You and BF are giving away my trading method.

FWIW I got the 21 ema (and never forget the mystically effective 34 ema) from an old guy who got it from another guy who'd been trading the ema zone since Linda BR and John C were just twinkles in their parents eyes.

[brownsfan019]

Hey guys,
Thanks for participating. I will keep the thread clean and on point. Over here I can magically delete any posts that are off topic.

The premise behind the trade plan is simple, yet will require work for anyone serious in using it. For me personally, I have found that EXITS are the most difficult thing for me. I have plenty of entry methods. When/where to exit is what can drive me nuts for days.

Feel free to post your own version of the EMA premise - 20, 21, 34, 28.627, I don't care.

[brownsfan019]

Here's a failed one that just occurred:




This one was a solid setup that just didn't work. Depending on how you entered the trade, about a 1.5-2pt loss. It appears that ones that work can move a substantial amount, so if the money management was good, no biggie on the loss.

It comes back to how you exit. You can lose 2 here if the winners are +4 or more for example. You can even get +2 if your winning % is over 50%.

So many ways to work the #'s and the system.

Maybe BB, Kiwi or Gsx can chime in and give some ideas on how you might exit trades using this setup.

[brownsfan019]

Here's another:




So this one has/had potential depending on exit strategy.