You can see that we have all the components of a successful forex trading system.
Previously, we have determined that this is a swing trading method, and we will trade on a daily chart.
Next, we employ simple moving averages to assist with early trend detection.
After a moving average crossing, the stochastic can help us decide whether it’s still okay to place a trade. It can also assist us avoid oversold and overbought situations.
The RSI is an additional confirmation tool that aids in assessing how strong our trend is.
We established our risk for each trade after determining our trade arrangement.
We are prepared to take a 100 pip loss on each trade for this system.
Trade Example: Buy EUR/USD
Here’s an example of a long trade setup:
Looking at this chart in the past would show us that now would be a good time to go long based on the rules of our system.
You would record your entry price, stop loss, and exit plan before performing a backtest.
The chart would then be moved one candle at a time to see the transaction develop.
You would have gotten some respectable pip money in this situation! After this trade, you could have treated yourself to something wonderful!
You can see that it was a good time for us to go when the moving averages crossed in the opposite direction.
Of course, not every trade you have will be this attractive. Some will appear to be nasty heifers, but you should always keep your composure and adhere to the guidelines of your trading method.
Trade Example: Sell EUR/USD
Here’s an example of a short entry order for the “So Easy It’s Ridiculous” system.
Our conditions were satisfied, as seen by the moving average crossing, the Stochastic’s downward trend although not yet reaching oversold territory, and the RSI reading of less than 50.
We would now cut the line short.
We would now note our entry price, stop loss, and exit plan before advancing the chart one candle at a time to observe the results.
Yeah baby, boo! It turned out that the trend was rather powerful because the pair fell by about 800 pip before another crossover occurred!
Now, isn’t that absurdly simple?
We are aware that you may believe our approach is too straightforward to be successful. The basic fact is that it isn’t complicated. You shouldn’t be afraid of something so straightforward.
In essence, it means that trading strategies for forex don’t have to be difficult.
Your chart does not need to have an infinite number of indicators. In fact, keeping things simple will make your headaches less severe. The most crucial factor is discipline. We cannot emphasize this enough. Actually, we can.
YOU MUST ALWAYS STICK TO YOUR TRADING SYSTEM RULES!
If your forex method has been properly evaluated using backtesting and live trading on a DEMO account for at least a month (or two).
Then you should have the assurance that, as long as you abide by your rules, you will eventually turn a profit.
Trust both yourself and your system!