This system is easy to understand and is surprisingly pretty accurate. However I believe that the twist I put on this system happens to be even more accurate. Unfortunately there is not one trading system out there that is 100% correct. If that was the case we FOREX traders would all be rich by now!
I haven't come up with a name yet for it but I'll try to explain what my system is:
First of all, I have a screen set up that shows 4 different charts at once. If your trading platform does not allow you to do so, make sure you have quick access to the following charts;
- * a 1 minute chart with MACD showing 12,26,9 values and RSI enabled set to 14
- * another 1 minute chart with a EMA showing set to close @ 10 and close @ 5 (both must be showing and if you're able to color code it do so since it's easier to read on the chart), I also have a MVA showing of 20 showing on the same chart, however I don't use this in my strategy (yet).
- * a 5 minute chart with SSD showing (Slow Stochastics with values 5,5,3)
- * a tick chart (this for a better entry or exit, but you can leave it off)
1. Enter long if;
- the 5 EMA crosses above the 10 EMA and both stochastics are heading up (use caution if the SSD is already in overbought territory)
- RSI = greater then 50
2. Enter short if;
- the 5 EMA crosses below the 10 EMA and both stochastics are heading down (use caution if the SSD is already in oversold territory)
- RSI = less then 50
- when the 5 EMA crosses the 10 EMA in the opposite direction of your trade. (or RSI crosses back to 50)
I'm short in this trade, whether I entered a short at the 1st, 2nd (ideal) or 3rd circle, with my stop-loss set to 30 I'd have a profitable trade.
Remember, this trading system is short-term, that's why you need the 5 minute chart open to see what the general direction of the trend is. If the 5 minute chart shows a bullish trend, use caution selling the currency short.
The same is for the MACD (this is on the 1 min chart), this shows you what trend is forming in the current setup.
This is my trading system for now although I'm still working out a few flaws (maybe find a better use to the MVA).
Stick to the system, trading rules can be broken but doing so you will a) most likely lose, and b) you will never figure out what you did wrong in your system so you can correct it.
Also try to develop your own system and apply it in a demo account, and see what happens :)