Hello traders,
I originally got this idea from 2MA, 1RSI thread ( http://www.forexfactory.com/showthread.php?t=574065 ) and have been playing around with different MA's trying to find the perfect fit. The MA's in this thread right here ( http://www.forexfactory.com/showthre...00#post8780000 ) caught my attention and after adding the Linear Weighted MA's, the system really improved. The whole idea is based on the 2MA, 1RSI where you attempt to trade in to a trend after a small reversal within it. That system uses an RSI, I've decided to go with an ADX along with a simple money management system which should keep me afloat for decades to come!
Basically you wait for all three MA's to lign up in the same direction, which will define your trend. Then you wait for a simple drawback and for price to cross back over in to your trends direction, all of this with your eyes on the ADX. The ADX must be above 25! This is where things get interesting... I use a fourth MA which is identical to the third (slow) MA, but shifted by 15. This MA serves as your SL and it will trail your position. Your risk will be no more than 2% / portfolio and your TP will be double that.
Here is an example of a long entry:
As you can see, both fast MA's are above the slow MA and the ADX is above 25. You can also see the shifted-slow MA (pink) right below the 60 MA, that is the SL.
Here are three trades, one marked red (which is the loss) and two marked blue. The first trade was stopped out and was booked as a loss of 1%/portfolio, the other two both ran for 2% each.
In the next example, you'll see two long entries (the second is FALSE because the 12MA is below, not above the 25MA), one went for a profit of about .3%/portfolio and the other was stopped out for -1%. Shortly after that all MA's crossed and a short signal was sent. That short position also brought home 2%.
Below you will see two false entries, due to the ADX being under 25 and one legit entry with the ADX over 25.
So, here's a quick summary of the entry and exit rules:
First Long Entry (shortly after MA's cross over):
1) MA12 must be above MA25 and MA25 must be above MA60.
2) The ADX must be above 25.
3) Price must be above all three MA's
Additional Long Entry (12 and 25 MA's are going to be above the 60, this is only when price drops below and retraces above).
1) MA12 must be above MA25 and MA25 must be above MA60.
2) The ADX must be above 25.
3) Price must cross from below MA12 and close above MA25 within three candles.
*Note: The only difference between these two entries is when the trend is not fresh, price will need to clear both fast MA's then retrace, where as when we take our first position, we do not care if price has retraced, it is (hopefully the beginning of a trend and should've shortlyretradced anyway).
First Short Entry (shortly after MA's cross over):
The exact opposite of the above
Additional Short Entry:
The exact opposite of the above
Money Management:
1) Never risk more than 2% of portfolio, your SL is set at the shifted 60MA and will move as price moves.
2) The TP is exactly twice the distance from entry to your SL.
I trade this on a H1 chart, haven't really looked in to what it could do on a slower or faster chart!
With that said, thank you Sis.yphus for introdcing the 2MA, 1RSI system and thank you zefx for showing me your MA's shift system.
Please let me know what you guys think!
Green pips for you all!
I originally got this idea from 2MA, 1RSI thread ( http://www.forexfactory.com/showthread.php?t=574065 ) and have been playing around with different MA's trying to find the perfect fit. The MA's in this thread right here ( http://www.forexfactory.com/showthre...00#post8780000 ) caught my attention and after adding the Linear Weighted MA's, the system really improved. The whole idea is based on the 2MA, 1RSI where you attempt to trade in to a trend after a small reversal within it. That system uses an RSI, I've decided to go with an ADX along with a simple money management system which should keep me afloat for decades to come!
Basically you wait for all three MA's to lign up in the same direction, which will define your trend. Then you wait for a simple drawback and for price to cross back over in to your trends direction, all of this with your eyes on the ADX. The ADX must be above 25! This is where things get interesting... I use a fourth MA which is identical to the third (slow) MA, but shifted by 15. This MA serves as your SL and it will trail your position. Your risk will be no more than 2% / portfolio and your TP will be double that.
Here is an example of a long entry:
As you can see, both fast MA's are above the slow MA and the ADX is above 25. You can also see the shifted-slow MA (pink) right below the 60 MA, that is the SL.
Here are three trades, one marked red (which is the loss) and two marked blue. The first trade was stopped out and was booked as a loss of 1%/portfolio, the other two both ran for 2% each.
In the next example, you'll see two long entries (the second is FALSE because the 12MA is below, not above the 25MA), one went for a profit of about .3%/portfolio and the other was stopped out for -1%. Shortly after that all MA's crossed and a short signal was sent. That short position also brought home 2%.
Below you will see two false entries, due to the ADX being under 25 and one legit entry with the ADX over 25.
So, here's a quick summary of the entry and exit rules:
First Long Entry (shortly after MA's cross over):
1) MA12 must be above MA25 and MA25 must be above MA60.
2) The ADX must be above 25.
3) Price must be above all three MA's
Additional Long Entry (12 and 25 MA's are going to be above the 60, this is only when price drops below and retraces above).
1) MA12 must be above MA25 and MA25 must be above MA60.
2) The ADX must be above 25.
3) Price must cross from below MA12 and close above MA25 within three candles.
*Note: The only difference between these two entries is when the trend is not fresh, price will need to clear both fast MA's then retrace, where as when we take our first position, we do not care if price has retraced, it is (hopefully the beginning of a trend and should've shortlyretradced anyway).
First Short Entry (shortly after MA's cross over):
The exact opposite of the above
Additional Short Entry:
The exact opposite of the above
Money Management:
1) Never risk more than 2% of portfolio, your SL is set at the shifted 60MA and will move as price moves.
2) The TP is exactly twice the distance from entry to your SL.
I trade this on a H1 chart, haven't really looked in to what it could do on a slower or faster chart!
With that said, thank you Sis.yphus for introdcing the 2MA, 1RSI system and thank you zefx for showing me your MA's shift system.
Please let me know what you guys think!
Green pips for you all!
When trading: "Empty your mind, be formless. Shapeless, like water."
