Extreme TMA (All time frames)

The market, like a pendulum, is a never ending sequence of extremes. It forever tries to reach the mean but never succeeds, constantly overshooting it´s mark, reversing and trying it again but always failing to reach balance. This system attempts to capture those extremes. It is a compendium of my understanding of the market, brought to it´s simplest expression. Up front I will say that this is not a fully tested system. That´s what we will be doing in the coming weeks and months.

The principles are not complicated. The first indicator, the smoothed TMA shows us the average of the path that the price action in the market is following. As such, it is a backward looking indicator and attempts to determine the future from the recent history. It corrects itself by repainting itself. It has two outer bands that show us the outer boundaries of price movement that we are searching for. Our second indicator, the TMA Slope indicator will show us the relative change in the slope of TMA as compared to previous candles. It determines in which direction a trade must be placed and also shows divergences to price. For example, if price is rising but the slope indicator is dropping, it is announcing a high probability of a drop in price in the near future. The steeper the drop in the indicator the higher the probability of a drop in price. The same concept applies in reverse in the case of a dropping price and a rising slope indicator. A third use of the slope indicator is for exiting purposes as described in the exit options below. On the right side of the Slope indicator you will see the value (white) of the current chart time frame. Above it (Grey), the value of a user selectable time frame and below the trade status of the current chart TF. The third and final indicator is Trix (THV4 System) which we will use solely as a visual guide as to the direction and strength of price action. We will be talking more of THV and especially of the great importance that the Coral (Multicolor line) and the 200 SMA (Dark Blue) on trading and in relation to each other.

MTF TMA: Included in the templates are 3 TMA indicators. The M15 TMA (dashed grey lines), the H1 TMA (solid orange lines) and the H4 TMA (solid magenta lines). You can use any of the three without leaving the M15 chart, for entry and exit purposes. M15 TMA will be used as a short term scalping tool (trades of 2 to 4 hours and potential gain of 30 to 50 pips), H1 (trades of 8 to 36 hours and potential gain of 80 to 130 pips) and H4 (trades of 1 to 5 days and potential gain of 170 to 250 pips). If you set the chart time frame to M15 or lower, you will see all 3 TMAs, the current time frame TMA and the H1 and H4 TMAs. If you set the chart to H1, you will only see the H1 and H4 TMAs. If you set the chart to H4, you will only see the H4 TMA. I recommend setting your chart time frame to M15. Having 3 TMAs on one chart is extremely helpful for determining longer time frame trends and combined, they have high predictive value of future market moves

Stop Loss Use: There are various options in this department and I won´t recommend any particular one. A natural level to place your SL would be above a previous high for a short and below a previous low for a long. I myself use only an emergency SL very far away from the PA (100 Pips). If a trade goes against me, I will use Recovery Trades to exit the trade at breakeven. I have included detailed instructions describing the Recovery system in the Documents folder contained in the Packet.zip file.

Entry Rules:
Attachments: I am enclosing Templates, Indicators, Documents and 3 EAs, compressed as a Packet.zip file. Extract it and as usual, place the indicators (.mq4 and .ex4 files) in the Experts/Indicators folder of your MT4 installation. Place the 2 EA (5x5) files and the CaveManager file in the Experts folder, not in the Indicators folder. Place the Templates (.tpl files) in the Templates folder. The Extreme TMA Large templates are designed to follow one currency pair on one screen. The Extreme TMA Small templates are designed to follow 4 pairs on one screen. The CaveManager EA is a fantastic money management 

1- We will first determine trend in the TMA by using the TMA Slope indicator value of the TF you are trading. Ranging TMA (-0.25 to 0.25): Trades can be placed in both directions. Buy Only TMA (Above 0.25): Place ONLY Long trades. Sell Only TMA (Below -0.25): Place ONLY Short trades.

2- Once trade direction is determined, we will look at the TMA and wait for price to cross one of the 2 outer bands of the TF you are trading, the top band for a short order or the bottom band for a long order. The further price moves across the bands, the more reliable the trade will be.

3- We will now look at the TMA Slope Indicator and only enter long positions if the Slope value is rising and only enter short positions if Slope value is falling. The steeper the rise or fall on the indicator, the stronger the signal.

4- When trading charts with time frames of H1 or less, the H4 channel must be ranging (-0.25 to 0.25) or rising for a long trade and ranging (-025 to 0.25) or falling for a short trade. On H4 TF, the same conditions mentioned must apply to the Daily channel.

Entering the Trade: There are two ways to enter the trade, depending on your risk management profile:

A- Without Tight Stop Loss: If you do not use a tight stop loss (within 30 pips of entry price or less), after complying with the 4 rules mentioned above, Sell as the first Heiken Ashi candle changes color to Red. Buy as the first Heiken Ashi candle changes color to Blue. Waiting for a close of the candle is not necessary but will give a higher percentage signal.

B- With a Tight Stop Loss: If you use a tight stop loss (within 30 pips of entry price or less), at this point apply to the chart the correct EA of the two supplied. The 5 x 5 Buy EA for a long trade or the 5 x 5 Sell EA for a short trade. Please, be aware that this option will reduce your profit by several pips per trade. The trade off is less risk, since you enter the trade in the desired direction.

The 5 x 5 EA will trigger an order once price crosses the Smoothed 5 period, 5 shift moving average (Not shown on the chart). When the EA triggers and enters the order automatically, it will suspend itself, so it will only enter one order in that direction. Once suspended (you will see "EA is Suspended" on the upper left of your screen), you can remove it from the chart and follow the Exit Rules.

Ranging Exit Rules (Recommended when TMS Slope is Ranging at the moment of exit):

Conservative: Close 1/2 of the position after price moves 20 pips in your favor, move the stop of the remaining half to break even and close the other 1/2 when either PA touches the opposite outer band OR the TMA Slope indicator closes one bar in the opposite direction of the previous trend.

Normal: Move Stop to break even after 20 pips in your favor. Close the position when PA touches the opposite outer band. Trail the stop at 1/2 the TMA size (distance between bands in pips). Example: If the TMA size is 40 pips, set a trailing stop at 20 pips.

Aggressive: Move the stop to break even after 30 pips in your favor. Close the position when PA touches the opposite outer band, or trail the stop at 1/3 the TMA size (distance between bands in pips). Example: If the TMA size is 60 pips, set a trailing stop at 20 pips.

Trend Exit Rule (Recommended when TMA Slope is Buy Only or Sell Only at the planned moment of exit): If upon reaching your Exit Target, the TMA Slope indicator has changed to Buy Only if you are long or Sell Only if you are short, it is recommended that you remain in the trade until the Slope indicator signals Ranging again at the close of a bar, at which point you must close the trade or trail a stop, 1 pip below the last closed Heiken Ashi candle if in a long position or 1 pip above the last closed Heiken Ashi candle if in a short position, until you are stopped out.

Concept behind the Trend Rule: All trends start in a Ranging market. When a Trend begins, it can go a long way. It is intelligent to ride it until it becomes a ranging market again.

Example of  how the chart should look after installing the stuffs

Attachments: I am enclosing Templates, Indicators, Documents and 3 EAs, compressed as a Packet.zip file. Extract it and as usual, place the indicators (.mq4 and .ex4 files) in the Experts/Indicators folder of your MT4 installation. Place the 2 EA (5x5) files and the CaveManager file in the Experts folder, not in the Indicators folder. Place the Templates (.tpl files) in the Templates folder. The Extreme TMA Large templates are designed to follow one currency pair on one screen. The Extreme TMA Small templates are designed to follow 4 pairs on one screen. The CaveManager EA is a fantastic money management 

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