The trading technique of Chimpanzee Cross is based on moving averages. These indicators are the most commonly used by many traders to analyze market trends and to identify entry points. Many traders use the moving averages to trade based on crosses (of a moving average with another) or as Resistances/Supports.
Now, What moving average periods should we use? That depends on each trader, his personality and the strategy he prefers to use. For example, if a trader prefers the short term trades, it is better to use moving averages of 1, 5 and 10 minutes for example. For those who like longer-term trades is better to use moving averages of 30, 60 minutes or 1 day.
Now, if we know that moving averages tell us the direction of the trend and that depending on the time scale we are considering, the tendency will be bullish or bearish depending on the scale analyzed, why not combine different time frames to make more complete our analysis? For example, it would be interesting to see the same moving averages on different scales. In fact, this is the basis of The Chimpanzee Cross system. This is a very simple scalping method used mainly to trade with the S&P 500, however, as a scalping strategy it requires an online broker which offers a fast execution (ECN Brokers).
1 minute chart with 2 EMA of 5 a 15 periods
13 minute chart with 2 EMA of 5 a 15 periods
The Chimpanzee Cross is a trading system developed initially to trade with the S&P 500. Basically, it is a scalping system based on the combination of Exponential Moving Averages in different time frames (1 and 13 minutes). In this way the trader can make a more complete analysis of the price.
This trading system was designed to trade with the S&P 500 but its principles can be applied to trade with other instruments such as currency pairs fon example.
- A 13 minutes candlestick chart.
- A 1 minute candlestick chart.
- Exponencial Moving Averages of 5 and 15 periods in each chart.
Trading system rules
In this trading system the operator must follow the signals produced in the 1 minute chart that follow the same trend indicated in the 13 minute chart.
- For example, if there is an uptrend in the 13 minutes chart (the EMA 5 crosses the EMA 15 from below to above or the closing price is above the EMA 15), the trader can open a buy position when the 1 minute chart shows a bullish signal (for example a bullish EMA crossing).
- If this technique is used to negotiate contracts and the trader have enough capital, an idea is to add contracts each time a buy/sell signal is produced until the trend in the 13 minutes chart finally ends.
- We can use a Take Profit objetive of 20-30 points from the entry price.
- Also, we can close the position when there is a moving average crossover againts the trade. For example, in a buy trade we close the entire position if the EMA 5 crosses the EMA 15 from above to below in the 1 minute chart.
- Another option is to use a fixed amount of points as a stop loss. This amount depends on the instrument in which we are trading.
- It is important to note that this strategy should be used between 9:00 and 11:00 and between 15:00 and 17:30 hours.
- If we are trading in a very volatile instrument such as the GBP/JPY, it is better to use a fixed amount of points as a Stop Loss rather than waiting until there is an opposite moving average crossing to close the position. This is because in a volatile instrument the moving averages are usually behind the price. In other words, the closing signal might come too late.