107# Trend or Range Forex Trading System
Submit by Janus Trader (Written by S.A:Ghafari)
- 3 Moving Averages of 13, 21 and 55 EMA (exponential moving average) in green, blue and red.
- Relative Strength Index (RSI) of 21 period with a line of 50.
# EXIT when the value line of RSI breaches the given Trend Line downward.
@Go SHORT when a new candle opens below triple MAs + MACD make second bar below zero line + Value line of RSI moves below RSI Trend Line.
# EXIT when the value line of RSI breaches the given Trend Line upward.
How to Draw the RSI trend line?
you simply have to connect at least two turn points of RSI value line which can interpret into drawing a line which connect the last value line top (the last value line Top is the one that formed much closer to your current signal than the others and match better to correction on the price chart) to next line top with is normally lower than the first top in a Short trade and higher than the first top in a Long trade.
The Top of RSI value line is the hump that formed because of a correction (Fibo ratios for correctional pullbacks), so try to filter the useless RSI Tops with the real chart formation as you may get it wrong when a hump has formed on the RSI while there is no correction on the price chart.
Also, if you realized that you actually took the wrong Top for the trade and you already entered the market, please and for god sake, exit the trade and open another one on the true direction of the market (As I said always there will be some wrong trades. So assume it as a lesson and exit immediately and run with the trend).
- In fast moving market situations (when the signal confirm after one or two long
candles) wait till the price bounce back to correctional level of % 23 Fibo and then
enter the trade.
- Most reliable signal confirms when the RSI running Above / Below 50 line when you
go for a Long / Short.
- A break of RSI Trend Line confirms when the second candle opens on the suggested
- Don't ever take the trade unless the second bar opens Above / Below MACD zero
line for a Long / Short trade while the MACD signal line will just give you an in
advance alert to be ready for the trade.
- Once again, the cross over of MACD Value and the Signal Line will warn of a
potential trade but don't ever take it unless you have your own reasonable reasons to
- If you get out of a Buy trade upon an Exit signal, you can go for an immediate SHORT
trade with a 50 point Target (Take Profit) and if the trade hit 50 point target while another
SELL signal confirms, just follow the signal and go for the second SHORT. And vice
versa, if you get out of a SHORT trade.
- Don't ever take second trade of LONG / SHORT in line with the first trade order
type unless a FRESH signal of aforementioned conditions confirm to trade.
- Don't ever risk more than % 5 of your account balance unless you have your
reasonable money management rules that suite you.
- Avoid the side markets by observing a narrowed Bollinger Bands or flat RSI line.
- Place the Stop Loss 10 pips Above / Below of Bearish / Bullish Parabolic SAR first
appeared dot or 10 pips Above / Below the current Resistance (R2) / (S2) Support
- Most of the false signals come when you trade against the major trend of the market.
To know how to define the major trend use bigger time frame like daily or even
weekly chart and apply the same setup on that chart to know what is probably the
right direction of the market. Sometimes when the price touch the 55 EMA line react
as a support or resistance level and at the same time you may have a trading signal
against this fact. In this case you are probably against the major trend.( Pic.3)
- Exit the trade as soon as you see the clear signals (Don't be too optimistic when the
market tell you another story. Exit the trade if you want to win)
- Don't hesitate to apply what the system show you while an over guess trader normally lose money.
Share your opinion, can help everyone to understand the forex strategy.