So Easy It’s Ridiculous” Trading System
- First, we’ve decided that this is a swing trading system and that we will trade on a daily chart.
- Next, we use simple moving averages to help us identify a new trend as early as possible.
- The Stochastic helps us determine if it’s still okay for us to enter a trade after a moving average crossover, and it also helps us avoid oversold and overbought areas.
- The RSI is an extra confirmation tool that helps us determine the strength of our trend. After figuring out our trade setup, we then determined our risk for each trade.
- For this system, we are willing to risk 100 pips on each trade.
Usually, the higher the time frame, the more pips you should be willing to risk because your gains will typically be larger than if you were to trade on a smaller time frame. Next, we clearly define our entry and exit rules.
We know you’re probably thinking that this system is too simple to be profitable. Well, the truth is that it is simple. You shouldn’t be scared of something simple. There is an acronym that you will often see in the trading world called KISS. It stands for Keep It Simple Stupid! It means that forex trading systems don’t have to be complicated. You don’t have to have a zillion indicators on your chart. Keeping it simple will give you less of a headache. The most important thing is discipline. We can’t stress it enough. Well, yes we can.
YOU MUST ALWAYS STICK TO YOUR TRADING SYSTEM RULES!