Emas with Trading Range Trading System For MT4
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 Emas with Trading Range Trading System For MT4 is using the daily range of the trading instruments. The system evaluates the daily range of the currency pairs and identifies the potential zone in which we might see a major breakout.
Though the system uses the concept of a breakout, we can use the system in a conservative way. Lets get into the details of this trading strategy.
The Emas with Trading Range Trading System For MT4
If you intend to use a system that holds the potential to find the trade signals in any asset, you should know about the importance of a trading session. Without taking the trades during the active hours, it will be hard to reach your profit target as the market volatility will be low.
Moreover, this system uses the concept of a breakout, so, it is important to trade the asset during the active market hours only.
Let's have a look at the main indicators used to develop this trading strategy.
- Exponential Moving Average (EMA) 5, 10, 20, 50
- Relative Strength Index (RSI) 14
- Stochastics 5, 3, 3
- Zig Zag: 12, 5, 3
After installing the necessary indicator, the chart should look like this:
The EMA is more reactive than SMA as it focuses on the most recent price change. Since the system will identify the potential breakout zone by using the market momentum, the inventor of this trading system prefers to rely on the EMA.
Besides, RSI and Stochastic indicators will be used to determine the endpoint of retracement. If the signal lines move above the 70 levels of RSI or Stochastic, it is an indication that the buyers are losing their strength. So, we may experience a sharp drop in the price. On the contrary, if the signal lines fall below the 30 levels, we should be expecting a decent bullish rally since the market is trading at the oversold zone.
Emas with Trading Range Trading System For MT4 - Bullish Trade Setup
Since this system deals with breakout factors, we can emphasize multiple time frame analyses to find more reliable signals. But to learn about multiple time frame analysis, a trader needs to spend some time in the demo environment.
Bullish Trading Conditions
- Go to the D1 timeframe and draw a horizontal line from the nearest high, low, and middle of the previous daily candle.
- We will consider the context as bullish as long as the prices trade above the middle of the last day’s candle.
- Go to the H4 or H1 chart, and check the position of the price. It should be above 5 EMA.
- The stochastic Oscillator is reading should be below the 30 levels.
- MACD Histogram bars should be above the zero Lines.
Entry
You should enter the long trade as soon as a candle closes above the 5 EMA. Try to trade with low risk since you don't know whether the breakout is valid or not.
Stop Loss
The stop loss should be set below the nearest support level. In some cases, you can also use the most recent swing low, to place a conservative stop. Avoid taking the trades if the stop-loss price exceeds 30 points.
Take Profit
The take profit is set to the nearest resistance line. In case the breakout takes place after an extended consolidation zone, you may use the trailing stops after the trade moves 30 pips in your favor. And close the profitable trades 5 minutes prior to the release of the high-impact news.
Emas with Trading Range Trading System For MT4 - Bearish Trade Setup
To execute the short trade, we have to check 4 simple conditions. Once these 4 conditions are filled, we can take our short trade with low risk.
Bearish Trading Conditions
- Go to the D1 timeframe and draw a horizontal line from the nearest high, low, and middle of the previous daily candle.
- We will consider the context as bearish as long as the prices trade below the middle of the last day’s candle.
- Go to the H4 or H1 chart, and check the position of the price. It should be below 5 EMA.
- The stochastic Oscillator is reading should be above 70 levels.
- MACD Histogram bars should be below the zero Lines.
Entry
After checking all these 4 conditions, we have to calculate our lot size. The risk exposure should not exceed 2% of the account balance while taking the short trade.
Stop Loss
The stop loss is set by using the nearest resistance level. For a more conservative approach, we can analyze the swing high in the market to set our stop-loss price.
Take Profit
The take profit is set to the nearest swing low. But if you want to book a quick profit from the market, set the TP level by setting a 1:3 risk to reward ratio.
Emas with Trading Range Trading System For MT4 - Conclusion- Trade Management Idea
If you intend to use this trading strategy to trade with real money, try to follow the below-mentioned rules.
- Draw major support and resistance areas in the higher time frame
- Do not take risks that you cannot afford.
- Use the MACD and stochastic indicator to filter the trade signals.
- Don’t lose hope after making some consecutive loss.
- If you lose 3 trades in a row, take the day off.
Note that, no system in the Forex market is perfect. You have to follow a strong risk management plan to keep your funds safe in this dynamic market. Instead of using a new system to trade with real money, it is better to know about the INS and OUT of the system by using it in the demo account. So, make yourself comfortable with this system by using the virtual trading account.
Download the complete system description and the files here:
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
