Put a 20 EMA on a 15 min chart, when the EMA is uptrending buy on a retest of the EMA, and when the EMA is downtrending short on a pullback to the EMA. When the EMA is flat the market is in chop. Average into a position put something like 10 contracts on the exact tick level of the EMA, 20 contracts 2 ticks behind, 40 contracts 4 ticks behind, etc. Take 2 ticks profits everytime and call of the trade when 2 ticks of profit have been made. Watch price action to see if the move back to the EMA is a pullback, or a reversal and it won't bounce. This strategy will make you a millionaire in a decade! This strategy doesn't use a stop. It only has an emergency stop in place in case of extreme volatility. This is about 3 ES points
lol, ok bud. You're saying buy pullbacks in an uptrend and short them in a downtrend, and you're using training wheels to help you to understand where the pullback can possibly be. I am going to assume every trader knows to buy on dips. Your epiphany, is not an epiphany. It is the fundamentals of how the market moves, lol. And this so called strategy of yours, is you just drawing a line in the sand and saying, "if it pulls back to here, buy no matter what" I pay attention to setups similar to this, and if this is only the criteria you are going to use, you are going to get burned more often than not, which certainly won't make you a millionaire !
I would think the profitability of your "strategy" relies heavily on this yet you have not defined how you "read" price action.
If the movement of price towards the EMA is fast, it is more likely to pause and take a breather. However if the movement is slow than the move will have less chance of taking a breather thus less chance of the trade being succesfull. So look for fast retracements to go long or short on. That is price action, no?
yah, that is price action, but you are making generalized statements here that are simply not true. There are a lot of contributing factors that come into play in a scenario like that. For you to make statements like this shows you still need a lot more screen time but you are indeed on the right track !
The strategy can add filters like standard MACD and RSI. If they show divergence you don't trade the touch of the EMA. But this strategy is all about letting price action guide the trade. Once you're in the trade, if price action is looking good, you stay in the trade for 2 ticks of profit, and if price action is bad, you scratch the trade or your emergency stop gets hit. Since you scale in more and more contracts the emergency stop will be about 4 points for the first few contracts instead of 3 points.
Historically trading with a version of a MA crossover and/or one MA with price closing above/below the MA as your trigger has shown to be the most consistent method for a positive PE [profit expectancy]. Look at the 5-7 day ATR to determine your required stop size. If the stop size required is more than 2% of your account--DON't take the trade--wait for a proper set-up that keeps your risk within the 2% parameter. Confirm that your target is greater than your stop size e.g. pivot point or some other support/resistance point for a target. Trail the stop to continue to decrease risk as the trade progresses {you can use an ATR based volatility stop for this}. I would NOT recommend basing your entry/exit on your impression of price action. You will have no way of assessing the PE of your system over the long haul with this approach. In the end if you can AVERAGE one point (ES) a day you can have a very profitable career by using sound money management. The key to success is being CONSISTENT in executing your plan. If you have developed a simple plan/method that shows a + PE over time and you the execute it CONSISTENTLY you will then begin to see profits CONSISTENTLY. Good luck Chris