Red Tram Trading System For MT4
Table Of Contents:
- Red Tram Trading System For MT4
- Selecting the trading instrument
- Red Tram Trading System For MT4 - Long trade setup
- Red Tram Trading System For MT4 - Short trade setup
- Trade Management
- Red Tram Trading System For MT4 - Conclusion
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Red Tram Trading System For MT4 is designed to provide a straightforward trading method to rookie traders. Since trading requires strong analytical knowledge, the traders are struggling very hard to devise a balanced trading method. Most investors end up with weak trading or they make the strategy too much complex which makes the analytical job nearly impossible. To solve this problem, the highly-trained traders have come up with a relatively easy yet extremely powerful and profitable trading method. The system is constituted of Heiken Ashi candle, FxDD, and 9-period simple moving average. Since the MA has a lower period, we are will be using the system to trade in the minute chart only.
The price movement in the 1-minute time frame is relatively unstable and doesn’t provide the matured signal. That’s why trained professionals analyze the market in the 5 minutes and above time frame only. The Heiken Ashi candlestick will smoothen up the fluctuations in the price and create green and red candles. Along with that, we will see the 9 periods moving average which will tell us about the trend direction. Finally, we have the FxDD indicator, which will be acting as a dynamic filter based on 4 vertical point square dots. Since we have a basic understanding of the Red Tram Trading System, let’s move to the key trading technique.
Selecting the trading instrument
The Red Tram Trading System might provide us a simple path to take the trade but we have to follow each step very carefully. Just like our traditional trading edge, the system can be used to make trades in any currency pairs. But in this system, we have to select the instrument based on some key traits. Firstly, we have to look for the currency pairs based on active trading sessions. Trying to look for the signals in the inactive trading session will force us to take trades in the ranging market. And we all know trending market provides the best potential trade setups to earn our living.
When we speak about the major trend, the identification process is usually done in a higher time frame. But in the Red Tram Trading System, trend identification can be done in any time frame since we will be riding short term movement in the price. So, it’s important the trading asset makes distinct highs and lows in the chart. In the absence of a swing pattern in the chart, we need to look for trade signals in other major or minor currency pairs. Follow these simple techniques and you should be able to pick the perfect asset and thus the timing in each trade will be perfect.
Red Tram Trading System For MT4 - Long trade setup
To identify the potential long trade setup in the main chart, we have to look at the key swings. The market must create a minimum of two higher lows in the chart. After that, we will wait on the sideline for a decent drop in the price. As the price drop to a support level, look for the doji or the bullish pin bar pattern. As the bulls gain momentum, the color of the candles will change to green. Wait till the price moves above the 9 periods moving average. No matter which time frame you use, the 9 periods moving average is going to act as an excellent support level in the main chart.
Once the price rejects the 9 period SMA, we will move to the FxDD indicator. In the FxDD indicator panel, we should see the green signal in the four vertical segments. Red spots in any of the vertical segments will invalidate the long trade signal. And the stop loss for the trade will be placed below the doji or the pin bar. For the take profit, we can set it to resistance level or go for 30 pips Tp. If you manage to evaluate the trade signals in the standard way, you should be able to find trades with a 1:3+ risk to reward ratio.
Red Tram Trading System For MT4 - Short trade setup
Traders often think making a profit by riding the major reversal is a very tough task. Even we have pointed out that the Red Tram Trading System works best when trades are taken with the trend. As you keep on trading, you will slowly learn to deal with the advanced market metrics and thus you gain the ability to deal with the stress associated with the reversal trading method. To take the short trade at the end of a bullish rally, we need to see the high formation. After that, the price should form a consolidation pattern. The buyers will eventually fail to manage to keep up the bullish steam and thus we will have a bearish break in the consolidation pattern.
The consolidation zone is now going to act as the major resistance level for the asset. Bearish pin bar and the doji pattern in the Heiken Ashi candle is going to be triggering element for the short trade. The bearish rejection must take place in the 9 periods SMA and the slope of the SMA must be downward. At the FxDD indicator, we must notice a red square in the 4 vertical lines. After the confirmation, we will take out a short with a stop above the high of the pin bar of the bearish price action signal. The take profit level in the reversal trading method will be 50 pips. But if you take the short trade along with the trend, set the tp to 30 pips.
Experienced traders focus on the risk management policy from the starting of their career. They know the risk exposure in each trade must be handled with great care or else they will blow up the trading account just like most of the retail traders. Usually, investors are asked not to risk more than 3 % of their capital. But this level should be determined based on your risk tolerance and trading experience. People who have more than 3 years of experience can trade with 3% risk. But if you have less than 3 years of experience, you must be taking the trades with only 1% risk.
After using the Red Tram Trading System for six months, you will become confident with your actions. This will help you trade in the most complex state of the market. Increase your risk in the trades to 2% when you have 6 months of experience in using this trading method. But if you see a degradation in the performance, move back to the 1% risk management policy.
Red Tram Trading System For MT4 - Conclusion
You might be thinking that you need to know about all the reliable candlestick patterns to improve your win rate. But this is not true when you trade with the Red Tram Trading System. You need to know about the pin bar and doji pattern. These are the two most powerful pattern which you will see in the Heiken Ashi candlestick. However, those who have strong motivation to learn about the different candlestick patterns can easily make a decent profit without having much trouble. And do not forget, the use of a price action signal is not going to protect your trades from hitting the stop losses.
To succeed in the trading business, you must learn to trade with discipline. Try to limit the emotional attachment as it will drag your performance down. At times, trade in the demo account to revise your skills. Executing trades in the demo account should provide you better insight into the market and you will discover many minor tweaks that will significantly improve your trade timing. Work on your system and do not lose hope if you fail to make a profit in a week. Stick to the trading system and focus on long term goals as it will provide a stress-free trading experience.
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