Before I start I would just like to advise you that the following trading system is one I use on a live trading account. It is designed to build your account slowly. It does have some risk to it that some people will have a hard time to stomach. It is very laid back and low stress. If you are looking to make multiple trades a day and be a more active trader I suggest you looking into the Cowabunga systems, or James IB/OB system…they are both very good and this system simply wont be for you.
With that out of the way let me tell you how I set up my charts.
First…i use Interbank FX.
I set my chart to have the following indicators
50 EMA applied to close.
100 EMA applied to close.
200 Ema applied to close.
Stoch setting at 8,3,3
I trade on the daily chart only.
1.Only take long positions. (AKA; only making Buy Orders)
2.I take a position when Stoch is starting to curve in an upward direction from below or very close to the 20 line.
3.I use the EMAs in assistance with stoch to look for a bounce in the market. (you will quickly see that the EMAs work as a type of moving support/resistance level)
Now for the part that most people wont like
I use for following money management when making a trade:
90% of account balance / Current Ask Price
so…if I have a $1000.00 USD account, and I am trading AUDJPY which is at 72.80…it would look something like this:
90% of $1000 = $900.00 divided by 7280 = Lot Sizes of $0.12.
There is no stop loss used, the stop loss is the currency hitting 0.0000
I close trades once I have a profit that I am happy with…usually either 200-500 pips or till stoch starts to level out around the 80+ level.
And that is it…I hope this laid back trading system can help someone.
#1 issue I hear with this system…“but you could loose your whole account” and yes, your right…thats why my account balance is never more than I am willing to loose
'd like to ask what kind og gains and drawdown have you had with this system?
It would be great if you could give us statistics for the last year or two in terms of winning percentage, average winner, average loser, max consecutive winners in a row and the max consecutive losers in a row?
Just a quick backtest on the EUR/USD from start of year and I get around 1800 pips while not taking the full run up in price. It also seems to work with sells as the stoch starts to fall thru the 80 line. Not sure what the EMA’s do for me…the stoch is the only thing I used to set entries. I figured a stoploss of around 200 will keep you safe (no losses) and you can scarf off 100-200 pips pretty easily. Like he said, it’s probably not for everyone. Only generated about 2-3 trades per month…relaxing, I suppose.
I’m a little confused why you would want to only go “long”, when in reality flipping the pairs (USD/EUR vs EUR/USD) upside down would create a “long” going in either direction. Seems to me that you are missing out on half of your trading opportunities doing it that way.