Respect to the previous post, I've mantained the rule for entering a long/short position unchanged (Cross of Signal EMA5 with EMA10) and I've erased a lot of rules that no add substantial profit to your position.
Better identify recent levels of fixed target and stop profit levels (in precentage) in order to consider recent volatility of markets and then let's start your trading machine, your "dices".
END OF DAY
SIGNAL:
Ema5 crosses Ema10 (-> if cross up then long, otherwise short)
ENTER
Do not enter immediately but either
– in the last minutes of the trading day
– in the next day, just putting an order with limit the high of the signal day + 1 tick for long positions, or with limit of the signal day-1 tick for short position.
The purpose is to enter, but not at any price.
E.g. long case) in the signal day the stock A gives you a high of 4.99 €, then put an entry limited to € 5.00
short case) in the signal day the stock B gives you a low of 2.74 €, then put an entry limited to € 5.00
EXIT RULES:
Target Profit: simply reaching fixed target limit, valuated on the opening price of the position (suggested : + 4%). Better use a 2-times leverage (like ETF) for reaching 8% target.
Stop loss: if the close of the day is above (under) for short (long) case the high (low) of signal bar.
Just wait the second close for a confirmation. The result is often a stop loss < 2- 2.5%.
That's the end. If you want to complicate your life, you may consider – from a qualitative point of view – eventually rejection of the prices from the 20-period simple moving average.
WEEKLY (lony long)
If you are more an investor than a scalper, you may use a weekly frame.
Just enter and exit with the cross of the classical 20-period simple moving average. You don't go short, long only, since the nature of the market is to grow except in the falling year.
This could lead to bear virtual losses of 10-15%. I advice not to bear more.
Beside, trade in US stock market since USA are the locomotive of the world economy (I advise against Japan and European markets).
examples:
Leonardo:Italy – daily
in march do not enter since buying order has not been executed (low of the next day > high+ 1 tick).
On April open at 10.215 € on day 12. Target (4%) of 10,6236 has been reached only 2 days after.
On April 29, you are now short (@ 10,505) Target @ 10,08 has been reached again after few day.
In both the cases above, there have been no close under the low of the signal day (when long) or above high (when short)
Weekly: Cicso: Nasdaq
There are much less signals: in the first operation we exited with a profit of about 2 $ (about 4.5% in 2 months).
With the second operation, there is the real power of this desk: you are again in position with a profit of about 10$ (21,7%). This frame help you to join the uptrend of the market.
The success of the operation however depends on your will to bear losses: prices go down to $ 42 area (my suggest is always to watch the close of the week, not the low), for about a 10% loss (since entry price was @ 46).
The 20-moving average is a sort of trailing stop.
My suggest for your portfolio is to divide it in 2 parts:
– 50% for daily trading
– 50% for the weekly one (on US Stocks).