I’m a new forex trader and have been working with my current system. It’s based on the Cowabunga system but I’ve made some adjustments. I’ve only been using it for a couple weeks, but it has given me some nice trades.
I’m in the process of improving and modifying it and am open to suggestions from all of the members.
I currently only use this system on the EUR/USD 15 minute or 30 minute charts.
Trade Plan:
Use 50 EMA indicator to determine trend direction and to get an overall idea of market sentiment.
Analyze recent support and resistance levels to help in the determination of stop-loss levels as well as limit levels.
Indicators:
50 EMA
10 EMA
3 EMA
(10, 3, 3) Stochastics
RSI 9
Signals:
If market is moving above 50 EMA, look for long trades. If market is moving below 50 EMA, look for short trades.
If a cross occurs with the 50, 10, 3 EMAs indicating a trend change, be careful, and put your stop loss below/above the nearest support/resistance level corresponding to the position of the 50 EMA.
Also be very careful when the 50 EMA is flat and market volatility is low. Although I’ve had some occasional trades here, I get a lot of fake-outs and it becomes a game of just trying to break even (waste of time). So I just don’t trade when this is going on.
Long trade:
Take long trade when:
*market is moving above 50 EMA
*3 EMA crosses 10 EMA.
*Stochastics heading up and not in overbough territory (above 80).
*RSI heading up.
*MACD is showing positive divergence.
Short trade is the opposite.
Take trades off of 15 Minute chart.
Place stops and limits at the nearest support/resistance lines. Once there is a ten pip profit, move your stop to break-even level or take profit level. I aim for at least a 10 pip gain on each trade and try to secure my positions as fast as possible. Of course there are different ways you can do this depending on your lot size, trading approach, etc.
Other thoughts:
*Be aware of corrective rallies particularly coming down from strong up/down swings, and this is one reason why I like to use the 50 EMA. Also be aware of current fundamental data hitting the market, particularly the potential relation of this to market volatility which can give you a better sense of how to properly manage your stops and limits.
*Only enter after the cross has fully occured i.e. the second candle.
*My biggest concern when it comes to money-management is to structure my trades so that not losing money is of main importance. That means being aware of my stops and limits.
Hi,