Forex trading strategy #1 (Simple balanced system)
Submitted by Edward Revy on February 28, 2007 - 14:49.
Current Forex trading system represents a well thought and very simple combination of indicators. Knowing what signal to look for with each indicator, provides a strong tip for good entries and exits.
Time frame: Any.
Currency: Any.
Indicators: 5 EMA, 10 EMA, Stochastic (14, 3, 3), RSI (14, 70, 30)
Entry rules: Buy when 5 EMA crosses above 10 EMA and Stochastic lines are heading north (up) and Stochastic is not in overbought position (above 80.00 level) and RSI is above 50.
Read entire post >>>
hi guys I'm wondering if this is still a viable trading strategy
also can someone explain why we use a (14,70,30) relative strenth index, and we are using EMA(Exponential moving average) right?
Also can someone tell me which is %K and %D on the stoch graph and why there are two 3's after the 14 (i knonw why the 14 is there)
It very much is!
That's right, we use EMA - exponential moving average. For RSI we use its Standard settings, which is (14) with horizontal lines/levels set at 70 and 30.
It is in some way beneficial to use standard indicator settings, because we expect that many Forex traders would also use the same settings, thus everyone is going to see the same picture of the market and get the same trading signals.
For Stochastic we use standard settings of 14, 3, 3. That's Full Stochastic. In case your trading platform shows Stoch (14, 3) - that's also fine. Choose Slow Stochastic and it will perform the same way.
If you decide to learn in depth information about variations of Stochastic, try Stochastic Oscillator (Fast, Slow, and Full)
there is also an explanation of K% and D% there.
Regards,
Edward
Hello Edward, in fact you are a solution to what am looking for in trading forex. i want more clerification on stochastic, atimes when it get to oversold or over bought region, it tend to remain there for some times, and other indicators like the EMA will still be moving. Now in these case, how will one apply strategy number 9.
Stochastic may remain in oversold/overbought region for a long time. While Stochastics stays there, the trend is live and going to continue. Trend change will be confirmed when Stochastic exits oversold/overbouhgt area, e.g. crosses 80 level back down or rises above 20 level.
If Stochastic is in oversold/bought region and no entry is made yet, the rules will prohibit any further entries. Our ideal entry should be made before Stochastic reaches oversold/bought region.
Exits are taken based on EMA cross, thus Stochastic is no longer involved.
Please let me know if I missed the point of your question. Also if you decide to read some more info on Stochastic, here is a link to Stochastic indicator explained.
Regards,
Edward
This might be the simplest and most effective system. if would be obliged if someone can get me its EA. thanks
Hi,
I tried this strategy just recently few times. I think that this strategy may give good results only when there is some major trend up/down. I found the strategy not working when prices move sideways.
As the major entry signal results from two moving averages this is more or less a trend-following system. I have been working on the basic idea, and I can say all you have to do is some modification on the timeframe. In my opinion also a strict money management leads to better results, as we have to face many false entry signals.
Regards, Jo
Hi Edward,
Thanks so much for the brilliant website! It is without a doubt one of the best educational sites I've found. I hope that readers support you in the future.
Was curious to know whether any of these strategies would work with single stock futures trading? I've traded SSFs for some time now and only recently dived into the world of forex. I'll be interested to hear what you have to say.
Thanks and regards,
Clint
Post new comment