Forex trading strategy #14 (5x5 Simple system)
Submitted by Edward Revy on February 28, 2007 - 15:46.
Just look what this trading strategy has to say. It's a simple yet quite promising Forex trading method. Trading strategies like this can only be discovered through a long and determined observation of the price behavior.
To start:
Currency: ANY
Time frame: 1 day
Indicators: 5 SMA, RSI 5
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Hi Lynn,
I'll look at weekly setup and most important, test it. First results will come probably next month.
Regards,
Edward
Hi Fitri,
I would use exit rules from this trading system.
Regards,
Edward
Edward,
Thanks for agreeing to test this strategy on a weekly timeframe. I am curious of its success. Meanwhile, you posted a response concerning Stop Loss Levels: "I would recommend setting a stop loss for a Long position: 5 pips below the candle which closed above 5 SMA for the first time. Same when Shorting - 5 pips above the candle that has closed below 5 SMA for the first time." Is that the first candle to close above/below 5 SMA that also has RSI confirmation, or just the candle that breaches the 5 SMA period? Thanks, Lynn
Hi Lynn,
It is simply the first candle to break and Close on the other side of 5 SMA. No RSI signal required.
Regards,
Edward
Edward:
One more question concerning setting Stop Loss Levels for this strategy. Once the trade closes "in the money", would you recommend moving the Stop Loss to the previous day's low (for a Long Position) or previous day's high (for a Short Position)? I am trying to make sure I capture as much profit as possible before the trend reverses. Would this practice be good for all day or swing trading strategies? Thanks, Lynn
Hi Lynn,
Sure, you can move your stop to protect profits. I'm doing so all the time.
However, if profits are too small, I prefer leaving my stop at break even till I get some decent pips to protect. This way I don't hunt for small profits too soon and make sure that when a big move comes in I will have a position running.
Regards,
Edward
Hi Paul,
From my testes the strategy performs well on weekly charts too.
Summary: For daily charts
Entry rules: Enter Long when the bar crosses and closes above 5 SMA and next daily candle makes +10 pips up, the RSI must be over 50. Enter Short when the bar crosses and closes below 5 SMA and next daily candle makes +10 pips down, the RSI must be less than 50.
Exit: with first candle to break and close(!) on the other side of 5 SMA. No RSI signal required.
For weekly charts:
Entry rules same as for daily.
After the first week of trading set S/L to breakeven.
Exit same as for daily charts.
Regards,
Edward
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