More tinkering

Blasted allergies are laying me low.

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Well, my fears about the intraday charts were confirmed. I got zapped on a short EUR/GBP that should have been very profitable. The price reversed when I was unable to keep an eye on things.

So, back to the day charts for all of them.

Again, I'm using four LRIs (5, 10, 20, and 40). Generally, when one of the longer term lines crosses the five day line a exit/entry signal is given.

A feature with the CMS charts is that one can have the LRIs change color when they are going up or down. I've found some additional meaning when they are highlighted this way. For example, when the ten day crosses the five day from below it would normally signal a exit long and enter short. But, if both the twenty and forty lines are pointing up this is most likely a small correction and the price will continue. The only exception to this is if the ten, twenty, and forty day lines are clustered together when they cross the five day line. Careful though, EUR/USD will have the twenty and forty clustered and still continue. I think the difference is when the forty line holds tight to the five day line as opposed to shooting past it.

The tricky bit is how much weight should be given if one or two of the lines are indicating one direction and the others are not.

Another item that has caught me during sideways movement is when the twenty and/or forty line changes directions while staying on one side of the five day. Especially when an entry signal is given. For instance, a short entry is given but the twenty and forty lines are going up. Three or more bars go by and both the twenty and forty lines reverse. I've found that this does not mean that a short can now be entered. More likely the price will jerk around some more and you should consider yourself lucky if you can get out with any kind of profit.

I need to figure out if there is a one size fits all approach to stops and exits.

Progress

I'll know more tomorrow (as I'm working from home and can watch the market), but I may have a workable and simple system put together.

Instead of the two LRIs, I'm using four. One for 5,10,20, and 40 periods.

The hangup I was dealing with was looking at all the spreads with the same timeframe.

One of things I'll be testing is what timeframes work best with each spread. At this point I have the following:

Four hours:
EUR/USD, USD/JPY, GBP/USD, AUD/USD, and EUR/GBP

One day:
EUR/JPY, USD/CHF, EUR/CHF, USD/CAD, and CAD/JPY

There are exceptions if I am able to watch the market during the day. When that is the case, I'll watch USD/JPY on the two hour chart and USD/CAD on the four hour chart.

I've also changed how I handle stops. I now look at the ATR of the previous period and subtract it from the low if I'm going long or add it to the high if I'm going short. The current exception to this is with EUR/GBP where I use a half ATR.

For the spreads that work better for the intra-day charts I'll still run into the problem when the market moves and I'm not there to act on it. Not sure how I'm going to deal with that.