Advanced System

In this system, we use the following components:

Timeframe: 1-hour.

1. 5-period Exponential Moving Average (EMA 5) applied to the Close.

2. 12-period Exponential Moving Average (EMA 12) applied to the Close.

3. 21-period RSI (RSI 21)

4. Bullish/Bearish Engulfing Pattern, Hammer, Inverted Hammer candlestick patterns.

Entry Rules for Long Trades

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Two conditions must be fulfilled:

1. EMA 5 crosses EMA 12 to the upside AND our RSI 21 > 50.

2. Weve got confirming candlestick pattern: Either Bullish Engulfing Pattern or Hammer.

Entry Rules for Short Trades

Two conditions must be fulfilled:

1. Enter short when EMA 5 crosses EMA 12 to the downside AND RSI 21 is less than 50.

2. Weve got confirming candlestick pattern: Either Bearish Engulfing Pattern or Inverted Hammer.

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Stop Loss:

For long trades, stop loss should be placed at the nearest support.

For short trades, stop loss should be placed at the nearest resistance.

Exit Rules for Long Trades

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Exit the trade when EMA 5 crosses back below EMA 12 Or RSI 21 < 50.

Or when price stalls at major resistance, trendline, pivot points, Fibonacci projection target.

Or when bearish engulfing patterns or inverted hammer patterns form.

Exit Rules for Short Trades

Exit our short trade when EMA 5 crosses above EMA 12 Or RSI 21 > 50

Or when price stalls at major support, trendline, pivot points, Fibonacci projection target.

Or when bullish engulfing patterns or hammer patterns form.



By: Aneliya Dimitrova

About the Author:

The MACD is a great trending indicator that can be used for many daytrading strategies. A bullish market is indicated by the faster-moving average crossing the slower-moving average on the way up. A bearish market is indicated by the faster-moving average crossing the slower-moving average on the way down. On top of that, the MACD has different periods for the fast- and slow-moving averages. The typical default MACD periods are 8, 17, 9 or 12, 26, 9.

The MACD is based on three moving averages, however, they essentially show up as being only two lines. The 8 period and the 17 period moving averages are combined to form the faster-moving average line. The 9 period exponential moving average forms the slower-moving average. In your daytrading strategy, the MACD moving average lines can be read for three pieces of information to give you the buy and sell signals you need for successful trades.

The first type of buy and sell signal you get from the MACD is called a breakout. This breakout is signified by the faster-moving average crossing the slower-moving average. If you were to examine a MACD chart, you would see a few places where this is happening. Like we talked about earlier, when the faster-moving average line crosses the slower-moving average line on the way up, youve got a bullish signal. Conversely, when the faster-moving average line crosses the slower-moving average line on the way down, youve got a bearish signal. Thats a breakout. There are some traders who will enter or exit a trade based when the line crosses, however, keep in mind that by doing so, you could limit potential profits and take on additional losses.

The second type of buy and sell signal we can get from the MACD is to test for support and resistance. When youre day trading stocks, you might be told to trade on the cross, but here is something you can add to your strategy instead of just blindly trading at the cross. What you can do is check to see if the indicator lines are moving in the same direction and test the indicator line as being a support or resistance line after the cross.

The last type of buy and sell signal we can get from the MACD is divergence information. When the fast- and the slow-moving average lines move away from each other, the mound on the chart expands. As these lines draw near to each other, the mound shrinks. That is called divergence. Divergence is an important day trading tip that can strengthen your position on a trade if read correctly.

Using the MACD is a good way for experienced day traders to get an idea of when to buy and sell based on averages that give you a logical reason to buy or sell at a particular time.



By: Manny Backus

About the Author:

Why 13 pips? Why not some even number like 10 pips or 20 pips? And why only 13 pips? Why not some larger number like 30 pips or more?

Well, I have a good answer for each . . .

Everyone is going after 10 pips or some other even number. By setting your trades up to go after odd numbers, you are not following the crowd. That’s how you do well. You don’t follow the crowd.

Stop running and all those things will affect you if you are where there are bunches of stops and profit targets.

But you won’t place your’s there. Like this . . .

If you would have normally put your profit target say at 1.2140, don’t! Instead place it at 1.2137.

When you place a trade, don’t aim for 10 pips (assuming that’s what you want). Go for 13 pips. You need to be a contrarian.

Not following the crowd. Remember the old Wall Street saying about sheep getting slaughtered. Well, it’s true in currency trading too. If you’re a follower, you won’t make it.

Now, about actually making that13 pips, what is the best way?

I’m a big believer in simple. This simple old method works well. Ready?

Take a 5 EMA (exponential moving average) and a 6 EMA. Also use at 35 EMA. The 35 EMA tells you the direction to trade. If it’s up, trade with buys. If it’s down, trade with sells. However, if it’s flat, then you avoid trading, as this is not a sideways market system.

The 5 and 6 are signal lines. When the 5 crosses thru the 6, you buy. Opposite for sells.

By: Nathan Pennington

About the Author: