Hello everyone! I just want to share this simple mechanical trading system I came up with recently. It makes use of just two indicators (EMA & ADX) but I tried to tinker with the settings and the rules so that the system can filter out fakeouts better.
The problem is that the entry signals are a little delayed (sometimes halfway through the trend already) but I figured it’d be fine to miss out on a few pips in order to get more confirmation. But more on that later on! Here are my system rules:
Indicators: EMA (20) and ADX (12) applied on EUR/USD 4-hour chart
Entry signal: Short when EUR/USD is below the EMA once ADX goes above 60. Go long when EUR/USD is above the EMA once ADX goes above 60.
Stop loss: Set a 150-pip stop from the entry order.
Profit target: Close half the position once price goes 150 pips in your favor and leave the remaining half open with a 150-pip trailing stop.
Here’s an example of a valid short trade:
In this case, the first PT got hit but the remaining position got stopped out by the trailing stop. That’d be +150 pips on the first half and +13 pips on the second half. Not bad, huh?