Trend Following System.....
Story......
I have searched for many holy grails and tried a lot of different systems. I want to share with you this simple strategy which could get you a very good return if you follow all of the rules.
The Components of a Complete System
A Complete Trading System covers each of the decisions required for successful trading:
.Markets - What to buy or sell
.Position Sizing - How much to buy or sell
.Entries - When to buy or sell
.Stops - When to get out of a losi9ng position
.Exits - When to get out of a winning position
.Tactics - How to buy or sell
Chart Set Up....
Daily charts ( you can trade any currency with this strategy)
EMA 89 to close
EMA 34 to high
EMA 34 to low
EMA 34 to close
Average True Range to 21
Entry Rules....
Price above EMA 89
As soon as it crosses above 34 EMA high you put a buy stop above the day's high. Buy another lot every 1 ATR ( see money management)
You take profit when price crosses down 34 EMA low.
Opposite to sell.....
Put stop loss 2 ATR.
Money Management.
Money management is very critical in this business. Most people think if you have a good strategy you are golden, but without money management you can loose money even with the most profitable system. You have to learn how to control your risks and get out of the winning position in time. We only risk up to 5% of our capital per trade.
We are going to use ATR (Average True Range Indicator) to manage our position sizing. Lets use this example:
EUR/USD
ATR=0.0114 or 114 pips (each pip =$1)
Account Size $10,000*.05=$500 of risk
Stop = 2ATR or 224 pips
We can trade 2 units because each unit equals to $228
Adding Units
We would add another unit as soon as the price move 1ATR in our favor.
Example:
N=112
89 day break out =1.3385
Two Units added 1.3385
Stop 2ATR or 1.3161
Third unit 1.3385+.0112 or 1.3497
Stop on all moved to 1.3273
Fourth unit 1.3497+.0112 or 1.3609
Stop on all moved to 1.3385
We would only trade maximum four units per trade. By snowballing you are able to maximize your profits and still keep the 5% risk on your whole portfolio.
Story......
I have searched for many holy grails and tried a lot of different systems. I want to share with you this simple strategy which could get you a very good return if you follow all of the rules.
The Components of a Complete System
A Complete Trading System covers each of the decisions required for successful trading:
.Markets - What to buy or sell
.Position Sizing - How much to buy or sell
.Entries - When to buy or sell
.Stops - When to get out of a losi9ng position
.Exits - When to get out of a winning position
.Tactics - How to buy or sell
Chart Set Up....
Daily charts ( you can trade any currency with this strategy)
EMA 89 to close
EMA 34 to high
EMA 34 to low
EMA 34 to close
Average True Range to 21
Entry Rules....
Price above EMA 89
As soon as it crosses above 34 EMA high you put a buy stop above the day's high. Buy another lot every 1 ATR ( see money management)
You take profit when price crosses down 34 EMA low.
Opposite to sell.....
Put stop loss 2 ATR.
Money Management.
Money management is very critical in this business. Most people think if you have a good strategy you are golden, but without money management you can loose money even with the most profitable system. You have to learn how to control your risks and get out of the winning position in time. We only risk up to 5% of our capital per trade.
We are going to use ATR (Average True Range Indicator) to manage our position sizing. Lets use this example:
EUR/USD
ATR=0.0114 or 114 pips (each pip =$1)
Account Size $10,000*.05=$500 of risk
Stop = 2ATR or 224 pips
We can trade 2 units because each unit equals to $228
Adding Units
We would add another unit as soon as the price move 1ATR in our favor.
Example:
N=112
89 day break out =1.3385
Two Units added 1.3385
Stop 2ATR or 1.3161
Third unit 1.3385+.0112 or 1.3497
Stop on all moved to 1.3273
Fourth unit 1.3497+.0112 or 1.3609
Stop on all moved to 1.3385
We would only trade maximum four units per trade. By snowballing you are able to maximize your profits and still keep the 5% risk on your whole portfolio.
Attached Image (click to enlarge)
