Trading set up:
Plot 12 moving average indicator and 24 period moving average indicator. This is very simple trading system using moving average trend technical indicator.
Then we set 15 minutes time frame chart or 1 hour time frame chart as default period.
But you can choose any time frame you like, because this trading system can be used on any time frame chart.
This moving average indicator calculates the average of market price according on the time frame period of moving average indicator. For example, 24 period moving average indicator means this moving average is using previous 24 candlesticks data, 12 period moving average indicator means this moving average is using previous 12 candlesticks data. We use exponential moving average indicator in 12 period MA indicator because we need detail information about market price movement. But in 24 moving average indicator we use simple moving average indicator, its because we only use 24 moving average to read trend direction in the market price.
How to read the market price movements (trend direction)? If the Moving average indicator technical moves above the market price then we can assume that the market price is in bearish trend. And if the moving average indicator technical trades below the market price then we can assume that the market price is in bullish trend.
This simple trading system is based on moving average price.
1. we decided first the current trend in the market, is it bullish trend or is it in bearish trend?
If the market price is in bullish trend, wait until the market price touch 12 period moving average or 24 period moving average and bounce, then you can open buy trading position. And set your stop loss order below 24 period moving average line indicator.
If the market price is in bearish trend, wait until the market price touch and bounce the 12 moving average indicator or 24 moving average indicator, then you can open sell trading position. Set your stop loss order above the 24 moving average line indicator.
You can set your stop loss order based on risk and reward ratio or you can use the opposite trading signal to close your trading position. You can use any pair you like for this trading system.
This trading system usually only good in the trending market and currency pair with wide range movement.
Trending market usually occurs in the beginning London market session to the end New York market.
Make a note for your all trading activities and review about how many loss transactions, how many win transaction, loss factor, etc.
Just remember, there are few things that you should remember about :
- Make sure follow the rules of Forex moving average trading system.
- Always use money management in all of your transactions.
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