Forex trading strategy #1 (Simple balanced system)

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)

EA: SimpleBalanced_1_0.mq4

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.

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it would be SSD - slow stochastic.
RSI period = 14, while 70 & 30 are the horisontal levels, which can be set on RSI by default, or yuo can draw horisontal lines at 70&30 manually.

Best regards,
Edward FXCM platform there is only one RSI and can enter only one figure when adjusting the indicator, which means can apply only 14 but not 70 & 30, why is that?

thank you


Thank you for the reply, my live trading is done on FXCM platform, in that there are 2 Stochastic, one is STOCHASTIC other one is SSD (Slow) which one we use here


The indicators are set properly.
You have to enter when 5 EMA crosses 10 EMA + conditions for RSI and Stochastic are met (as described in the original rules).

I'm not sure why the platform gives you different levels for Stochastic. I haven't seen 5, 10 or 15 levels used anywhere. I think it's better to ask your broker about those numbers, and how they refer to 80 (overbought) and 20 (oversold) for Stochastic, the way we normally know it.

Best regards,

hi Edward,

EMA Forex

Thanks for the clear clarification of the above strategy,
The above link is to the screen print of my trading platform after applying the indicators Could you please explain, whether I have done it correct and is the Stochastic correct and its Level 80 is not to be seen any where and also do I have to enter the trade as the EMA crosses.

Hi Shane,

On the 4 hour chart, when you have RSI in the overbought territory, it is still a buyers' area, although we don't know for how long the dominance will last.
(RSI and Stochastic - both are oscillators, so the rules for oversold/overbought trading are the same).
The rule is that in an overall uptrend, when RSI reaches an overbought area - it is expected to hang on there for a while, may be bouncing in and out a bit, but overall, it is just the beginning of an extended up-move. You don't want to miss that, so you should continue trading with new Buy signals coming from 15 min charts.

When in an uptrend, RSI moves into an oversold zone, that's where you expect a quick reversal. It is also a great opportunity to catch some early Buy signals on 15 min charts as RSI exits from the oversold zone.

Same rules (but in reverse) apply to Selling in a downtrend.

Best regards,

Hi Edward

Thanks for the great strategy it makes for good reading - i use a similiar technique i use a 4 hour chart (with 5 EMA, 10 EMA and stochastic 10,3,3) to check the trend based on the signalling of the 5 EMA and 10 EMA and then look at the 15 min charts and wait for a confirmation signal confirming the same direction before entry with the RSI parameters as you specified.

However often when the 4 hour chart is an overbought/oversold position the 15 min chart is mid-range. My query is with regards to whether i should be restricting my trading in the 15 min chart when the 4 hour chart is overbought/oversold (ie not buying when overbought and not buying when oversold on the 4 hour chart)or would this make entry opportunities virtually non-existent?



A larger time frame for 1 hour trading is 4 hour.

Best regards,

Dear Edward,

one of your last post, you wrote that we need to see larger time frame. Im using 1 hour chart so what sholud i check in llarger time frame let say 4 hour and daily chart? Pls answer this as i got very confuse by the signal given by 1 hour usually doent match up with 4 hour and daily chart. thank you.

Thanks Edward i will try it and give you feedback


Hi Godwin,

%K - 14
%D - 3
Slow - 3


i my name is Godwin please i like to know which is 14,3,3 on stochastic is it k,D AND SLOW

in your previous discussion you said you do refer to 4-hour chart and daily chart.what are the conditions that you look in 4-hour chart and daily chart to sync with 1 hour chart?

RSI and Moving averages can dance back and forth, that's why it is important to enter with 1 lot first.
The dilemma for all traders is: we want to get a signal as early as possible - EMAs and RSI give those early signals, but we want those signals to also be accurate every time - this condition is impossible to fulfill with early signals, only seriously lagging tools with late signals can offer more accuracy.

Best regards,

OK I have tried this method for a week, had some winners and some losers but it didn't beat normal odds. My balance kept oscillating from 98,000 to 102,000 back to 98,000. I hope it is because I'm doing something wrong. Particularly I do not know where to enter exactly. Is it when the lines just crossed or do you have to wait for at least a candle. I tried a bit of everything and even today only I got stopped twice. Once I think I entered too late in the trend, second time too early.
It seems these indicators are rather lagging as sometimes you would think it's an entry opportunity as all 3 conditions seem to match, then a while later the lines no longer cross, RSI went back above/under 50, etc...
I use 1 HR time-frame. Is a 20 SL/TP right?


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