Saturday, April 29, 2017

Simple Trend Trading System

August 4, 2014 by  
Filed under Forex, Trading Tools

In this system we use the 10 and 20 period moving averages.

Step 1: Waiting for the MA to become sloped and parralel. This is a sign that the trend is strong. A sloped moving average means that the trend is strong and therefore any retracement will probably lead to a continuation in price, and a good trading signal for us to trade.

Step 2: Wait for price to touch the MA area and reverse. This could be from the area between the two moving averages or from either of the lines.
Wait for a reversal candle.

Step 3: Stop loss is placed
• 5 pips below the lowest low of last 4 candles (for long trades)
• 5 pips above the highest high of last 4 candles (for short trades)

Step 4: Exiting the Trade
The trade is closed when the moving average is no longer sloped = is flat.

Here is an example, GBP/USD, 15 minute chart the red (10MA) and blue (20MA) lines:

 

 

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