M5 Hybrid system

Dear trader
After I have experienced a few trading systems here and there and noted that none of them can make me any profit, I've decided to build my own style. The problem, of course, is not the systems themselves - most of them are great and they DO work. The problem is the trader: me, you etc. You see, I've jumped from system to system to find the holy grail as many others did (or still doing). I'm sure you've heard that before Never satisfied with the results, I've tried to improve, change them. Obviously, I failed. However, I've adapted some of the ideas from the other systems into this M5 hybrid. Hence, the name.
I just wasn't satisfied using others' systems without "improving" them.
And if we think the same, probably this system will not work for you. But I do hope you will find something useful in it and maybe improve your system.
Now, before I start, please don't ask me about success percentage rate, how much money I made, trade explorers and other childish questions. If it's working for me, it doesn't mean it will work for you. I can only describe what I do, and how I do it. Nothing new and not reinventing the wheel here, just writing how I role it Also, I'd like you to understand that I only want to share my method. I don't have much time to answer questions or to analyze your charts/trades as other traders do. Sorry. I mean, feel free to subscribe, if you want, but don't expect much activity from my side
I'd also like to thank everyone else posting their trading systems here. As I have wrote, I've studied many of them and got many useful ideas implemented in my M5 Hybrid.

Summary

I'm trading M5, most of the pairs, but focus on those with low spread. You can try this on higher timeframes if you wish. I'm trading with the trend mostly. My TP is 200 points and I trade 0.01. I don't use a SL (you can try to use one if you want), instead I use equity sentry with a 5% risk - the EA will monitor all open trades and close them if equity reaches a negative 5%. You will need at least a 100$ account for this to work and you shouldn't open trades on more than one chart - will explain later.

My chart
That's what I see.


Indicators & EAs
As I downloaded them from the www or Ff. Please don't ask me for newer versions, mq4, paint/repaint discussions and so on. Feel free to use anything else you can find better. Other are MT4 included, like Stochastic, MA
Stochastic is set to 14,3,7,Close,Simple and will give me the entry signal. Basically I sell on overbought and buy on oversold.
SMA 200 Simple Close, just for trend confirmation and maybe to help me stop entry/exit point better.
SMA 5 2 Simple Typical Price - helps me spot the entry sometimes, but you can skip it if the chart is to loaded.

With this (attached to any chart) I set an equity loss of 5%. Useful if you use the limited martingale exit strategy. Otherwise, just set a SL. By the way, it is an EA, so goes to the Experts folder. All the others are indicators.

RSI custom is set to 14, 50,50. When it's red I usually have to sell and vice-versa for green BUT I personally don't use it to often. If it gives the same signal as the Stochastic, it gives me more confidence. Otherwise, it just looks nice on the chart

AutoPivot is to draw pivot lines and may be used for TP, spot reversal point and so on.

This will display the remaining candle time and the spread. Just to make sure I enter at the right time, after candle closes and on a spread that I can afford.

The stoch cross-level-alert is something I found here, I think, and modified a little. Use the same setting as Stochastic above, will draw an arrow on chart when the time to buy/sell is near. It has the option to display only arrow and signals for either buy or sell or both. So, if the trend is up, you might want to set the TrendDown to false - this way you will not get sell alerts. Please mind that this is not a signal by itself, it will just let you know when the main&signal Stochastic will cross in the overbought/sold areas (below 20, above 80). When this happens, stay alert.

Used to display a breakeven line on the current trading chart and the profit, + or - lower left of the chart. If this is stressing you, you can change the settings in the NB i-Breakeven.mq4 indi so it will not show the profit/loss. But leave the breakeven line on the chart, it is useful.

This is used only to confirm the main stochastic and has a slightly different settings 14,3,3. Honestly, I don't know why I'm using this, probably because it looks nice lol. I only changed the invert_strength to true, so when it is overbought the color is red and vice-versa.

The aTR Stop can help you set the SL. Again, I don't a SL, but if you do, this could help.

Template.

How I enter a trade
We'll use an example chart, EurCad, to buy. Reverse the instructions for the sell signals.
In the order of their importance:

1. First I determine the trend. Just zoom out as much as I can. Check the chart below. It starts in the low left and end up in the upper right, so the trend is up. Alternatively, you can switch to higher TF (I find this to complicated). The fact that SMA200 is rising up and price is above it confirms the up trend. So I'm preparing to buy.

2. Stochastic 14, 3, 7 must be oversold, meaning below level 20. The main line must have crossed up the signal line. Sometimes is will cross a little the level line - if the other signals match, it's a valid trade.
3. Price (candle closed) above SMA5.
4. Stochastic 14,3,3 changed the color to the next lighter color.
5. RSI is red for sell and green for buy.

Below it's an ideal entry. Two entries, more exactly, just in case we miss the first one.

How I exit a trade

1. Take profit

Ideally, you will take profit from the first opened trade. Please remember not to open other trades.
TP is up to the trader, but this is what I could have done if I took the trade signal above. Knowing myself,I'd have settle with only 200.


2. Limited martingale

The majority of the traders are indoctrinated with this idea that they must use a visible SL, it must be there and no matter what. I am happy with my Equity Sentry EA and, when in doubt, I set a very high SL so that the CHF crush will not happen again. But let's be honest, how many times it can happen?
Now, to explain the limited martingale approach - I used limited so it won't scare you
If I didn't catch the right wave, and the price will go against me for a while, I (as I said) don't use a SL. I just wait for the next valid signal. When this happens, I just enter the second trade and this time I use 0.02 per lot - the next signal is usually 200-300 pips away. I then set the TP 200 pips away from the second opened trade.
If the price goes against me again, I will enter the third trade with 0.03 - same, 200-300 pips away, when the signals come. Again, I move the TP 200 pips from the last (3rd) trade. After that, I do not enter a new trade, EVEN if it has a valid signal. Three only and I let the Equity EA do its job.
So from trade 1 to trade 3 I should have more than 400 pips. At this point I am checking again whether the trend is about to change or not BUT, no matter what, the 3rd trade is final. And this is also where the breakeven indicator is useful. If you think the price will still go against you, exit as soon as you are on breakeven or even earlier. Accept a small loss.
However, many times you will notice that the price moved in your desired direction and you will feel sorry for exiting to early. In the picture below I exit 2 trades earlier just to take the screenshot and post the foto here. After I started to write this the price moved; it would have hit my profitable TP. I still exit on profit, however.


3. Lose 15$

Well, if I got to lose, I got to lose
Sometimes I don't get profit from the first trade and maybe, the price turns against me, making me lose all 3 martingale trades.
Now, I don't know how much money you trade. I usually play with 0.01 and don't have more that 300$ in my account. So the 5% is around 15$. I know that for most of the traders it looks like I'm risking 15$ to earn 2$ - it's not exactly like that and I really don't want to start a discussion about the importance of SL.

4. Stop Loss (only for you)

If points 2 and 3 are to scary for you, just set a SL of your choice and ignore the Equity Sentry EA as well as my instructions above (2,3). Feel free to post your winning trades, if you want. I myself am curious about how you set the SL. Since I don't use it, I can't advice where to set it. You could use the previous Highs, Lows, maybe ATR to calculate the SL (added an indicator to help you set the SL in the first post). For me it's a head-ache, so please don't ask me about SL.

Epilogue

As I wrote (I think) above, feel free to use a SL if you want and ignore points 2 and 3. Don't blame me for your loss. It is working for me because it is my system. As none of the systems I've tried worked for me, probably this system will not work for you either... unless we think almost the same. But I'm glad if you will find something useful in it.

Happy trading

Some exceptions from the entry rules
I had to open this trade earlier because I rushed to get my kid from school and so I didn't wait for the SMA5 or the colored megastochastic to change color. I counted on the fact that the trend was strong enough and the price will probably bounce from the SMA200, or the support trend line (zoom out and draw it). I set the TP 50pips under the daily resistance line and trailed it. It exit with +266, so I took a clean and fast point 1 profit - no complications. Still, the trail was to tight and after it throw me out, the price reached my initial TP.
In conclusion, don't count (or wait) only on my entry signals. Make use of everything you know: trend lines, fibos, SR lines, market hours, news etc.

Timing

I'm living in Thailand and I must say that this is not the best location (for me, at least) to trade. I wake up at 7am and this is the time (here) when Tokio opens. Problem is that around Sidney and Tokio there's not much movement. But if I have a signal I enter a trade in the morning. Things start to move at 1pm, and then 2pm with the London opening. I should get a signal or two afternoon, before the next session starts - NY at 7pm. By this time I'm already tired and can't 'enjoy' the London-NY cross. I'm just trying to close what I have, in profit, so I can go to sleep relaxed. Another reason I like M5 is that it allows me to close the trades during the day and have nothing opened overnight.
However, many times, before I go to sleep, I switch to H1 and look for an entry there. It rarely happens to find one, because if I don't have the ideal signals aligned, I don't enter. I prefer to sleep without worries and don't dream about charts or candlesticks all night

Anyway, below are my last trades for today (it's 9pm already) and another example of the limited martingale exit. The ideal TP of 200pips didn't happen. Price went down for approximately another 300 pips and so I entered the second buy a little above the daily pivot. At this point I didn't care about the SMA5 or the RSI (again). I bet on the daily pivot to act as a support line and for what it looks like a falling wedge to reverse the price drop. And they did, at least for 200 pips, enough for the trades to close in profit.

The price looks like it will go a little more up now, but I always limit the 2nd trade to 200pips, so I can exit the trade faster. Only the first trade has a TP > 200pips, based on S/R lines, fibs, whatever. If it works, fine, I did a good analysis; I'm glad. If not, the 2nd trade is opened IF there is another valid signal and the 3rd trade might be opened IF I think it will make me close everything on breakeven. So after the 3rd trade, if the price hits the breakeven, I'll gladly close all the trades. Sometimes even earlier, losing a little, depends on the price action. The Equity Sentry EA is mostly used as a backup, in case I somehow missed something, or if I have to go to the bathroom and something bad happens on chart. Usually it doesn't hit my 5% loss limit.
I think this will be my last post here. I feel like my job was done, nothing more to explain
I do hope traders will find something useful in it, if not in the system itself at least the indis I use.
Good night and trade safe.

Hi wat, thank you to share your strategy, could you please share tpl file . thank you

And while you're at it, could you please share your profits too?

I knew I've forgot something. Updated. Cheers.
Wow... you haven't even read the 1st post

Hello!​

I have been a long time lurker of forex factory but your post for some reason made me want to say thank you! Your thinking and ideas about trading are very similar to mine and so yea, I just wanted to say thanks for sharing your great ideas. I will be practicing with them myself!
Thanks again!

I didn't mean your statement. I meant your actual profits! Money money money!!!!

Wattaman! Thank you for sharing the logic of your trading! It is good to know what is behind of all indies.
Happy trading!

Another martingaled trade. Honestly speaking... writing, this was a mistake. Changing on D1 frame it looks like the NU didn't decided to go up yet, so the best thing would be to stay away and see what'll happen.
Anyway, I bought and, lucky me, the price rise a little after the second opened trade (from the H4 trend line). So it was a profit, after all. However, now I'm gonna close the NU chart so I won't be tempted again (read: fail to control my greed lol)

Dear wattaman,

Looks like a very promising system! Thank you for sharing it!

All the best,
Dragos

I'm glad some of you guys found this useful. Thanks for the thanks
I made a small EA to test the entries. It's trying to catch the wave - the EA buys when the price is above the 200SMA, RSI above 50, Stoch oversold and Stoch's main crosses the signal. The other way around for sell. The testing results are not bad. I've been testing EU, this year's data, on M5. TS of 30, no TP or ST. There are 35 wins and only 1 losing trade, the last one - this is the trade that the strategy tester closed automatically at the end of the test, so it could be a win, too.


M5Hybrid testing EA. Please mind that the Open Trades option doesn't work well. I made this from pieces. I'm not a coder. If you set to more than 1 trade, it will open the next trade (if all the trigger signals align) on the next candle. So, if set to more than 1 trade, you might get 3 consecutive sells, for 3 consecutive candles, for example. If they all go wrong, you'll lose 3X. If not, win 3X. What I wanted to do is to open the next trade when the next signal appears, the next wave - I don't know how.
Again, this is to test only. It is not for trading.
Hopefully you'll manage to do something useful with it.

Fyi - it doesn't apply to the chart as EA, in my case (I have build 840). Did you use it as EA or as indicator?

840 here, too.
I never used it on chart. Only in the Strategy Tester - here it works - so it is an EA

Hi Wattaman, thank you for the EA, but missing M5Hybrid-testingEA.ex file if not it don't work neither on the chart and by strategy tester.....

My apologies, you guys are right. Try the one below. Please mind that if this won't work then it's something wrong with FF. Open it in Metaeditor, it should point to the errors. In the first one I've just downloaded to check I found some strange characters (@%^#$) at the beginning of the code - I didn't put those there.
Meanwhile, I got rid of the multistochastic - to many colors, but since I like the Stoch so much I replaced it with Digistoch (I don't remember where I got it from). This's showing the Stochastic for multiple timeframes at the bottom of my chart. I don't think it needs any other explanations.
So my chart looks like this now (I'm using the PSAR 0.03/0.2 to set the SL - I just want to see how good it is, I never used it before):

For testing only.

A multi-timeframe Stochastic


And something to cheer you up if trading is making you to tense

Thank you, will test it.

Regarding multiframe stochastic though - how do you trade it?
For the current timeframe M5 is clear, but if all conditions for M5 are met then how it is the relevant if there are different colors on higher timeframes ?.. If higher tfs agree is fine, but if they don't you just miss what could have been a trend change starting on M5..

Hmmm.... A short explanation is necessary I only find this indi useful because you can see, without switching the timeframe, where the Stochastic is on the other timeframes. In my trade example, it was overbought on H1. I saw that it was (still is) overbought on H4, too. So I guessed it is probably the time to retrace or, hopefully, change the trend, because there's no room to go higher - and so it did.
If you follow the main idea and stay on the M5 timeframe, you could take a look at this digistoch before you enter a trade, just to see where the stochastic is on the next higher frame, M15. It is not required. I have just discovered it and I'm trying to see how useful it is. And I'm used with a crowded chart and multiple colors lol but if to much information is hard for you to follow, deleting some indicators is probably a good idea. To much will distract, not help you. And base your trades primarly on the trend, Stoch overlimits, candle signals and price action.