Parallel EMAs

Parallel EMAs

I am trying out this method. Using GBP as test cases. This method allows me safety to place my order for the day and wait to collect my "sure" profits at the end of the day (hopefully). No need to monitor until the end of the day and thus allow me to do other things, like trading on another account, or other commodities or simply spend time with my family. Good for intra day and inter day trading.

Using a 0800 to 0800hrs time frame, I calculate the Pivot line, R1, R2, S1 and S2 for the day.
Next checking using the 1 hour chart for ensure that WMA5 is parallel to EMA21, EMA55, EMA100 and EMA200, I will place my limit order buy at R1 (take profit at R2, stop loss at Pivot) and limit sell order at S1 (take profit at S2, stop loss at Pivot).

Contrast to Parallel EMAs is what David Kolachi termed as dispersion, where WMA5 cuts EMAs or when a "lower time frame" EMA starts or has cut a "higher time frame" EMAs. Example EMA21 cuts EMA55, or EMA55 cuts EMA100. In such a day, I will reserve my trade and trade with caution.

Which Time Frame to use?

Using a 0800 to 0800hrs time frame yield the white Pivot line, S1 and S2 lines at 1.9451, 1.9375 and 1.9321 respectively for 5th Jan 07.

Using a 1200 to 1200hrs time frame yield the yellow Pivot line, S1 and S2 at 1.9430, 1.9328 and 1.9269 respectively for 5th Jan 07 .

But using a similar technique for placing limit orders at S1, take profit at S2 and stop loss at Pivot Line, resulted in good profit.

As seen, both cases filled the limit order at different time and managed to square the position for the day, without triggering stop loss.

For the 0800 to 0800 time frame, a total of 54 pips, while the 1200 to 1200 time frame has 59 pips.

On 3rd Jan 07, there is 70pips from the 0800 time frame and 75 pips for the 1200 time frame.

I will leave the decision to you, dependings on what time frame you are comfortable.