In this section we'll you a rough picture of what a trading system should look like. This should give you an idea of what you should be looking for when you develop your system.
Trading Setup
- Trade on daily chart (swing trading)
- 5 SMA applied to the close
- 10 SMA applied to the close
- Stochastic (14,3,3)
- RSI (9)
Trading Rules
Entry Rules
Enter long if:- The 5 SMA crosses above the 10 SMA and both stochastic lines are heading up (do not enter if the stochastic lines are already in the overbought territory)
- RSI is greater than 50
- The 5 SMA crosses below the 10 SMA and both stochastic lines are heading down AND (do not enter if the stochastic lines are already in oversold territory)
- RSI is less than 50
Exit Rules
- Exit when the 5 SMA crosses the 10 SMA in the opposite direction of your trade OR if RSI crosses back to 50
- Exit when trade hits stop loss of 100 pips
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