Question Regarding a Trading System

QUESTION:

Afternoon Toni,

I am looking forward to the arrival of your CD series, to compliment my existing knowledge and experience in the markets. In the meantime, I am paper trading a chart pattern that seems to be working ridiculously well, and I want to see what your thoughts are about it.

I am using an 5 minute intraday chart, with a 5 & 10 period EMA.
When the 5 crosses the 10 to the upside, with uptrending RSI, go for the long scalp.
When the 5 crosses the 10 to the downside, with RSI lacking, go for the short scalp.

I have applying the study to a lot of different stocks, and the results are almost always the same, trending in the correct direction. I also generally wait for a second or third bar to confirm direction, as the first bar or two can display too much chop.

Just looking for some feedback.

Thanks in advance.

ANSWER:

Hey!

I hope that you are doing well! Moving average cross-overs are a popular way to trade. As to whether your system works long term, I am not certain. I don't use an RSI at all and do not use the same moving averages. It sounds like you are employing a scalping strategy to focus upon short momentum bursts. Many systems will last for several weeks to several months on end before failing or leading to substantial losses before they begin to perform again. As such, it would take awhile to prove. It will also depend upon your stop and target parameters.... I would suggest printing out a chart on each trade and starting a journal. You can track the progress of this system that way. Use the traits that I teach in the CD course to form list of pros and cons. This will help you refine your system.

All my best,
Toni