Unlocking Success
This strategy is a simple but powerful way to pick out winning trades. With this strategy, you can trade The Dow, Gold, and forex. It can also be used to trade in bitcoin. This strategy is focused on big moves and is most suitable for position and swing traders.
This article is for educational purposes, and you should practice using your demo account before applying it to your real account.
Note: Past results do not guarantee future results.
The strategy is designed to weed out fake moves and also includes a feature to remove low-quality trades while letting you ride the “big moves” long term. This process enhances your win ratio by up to 91%. With this setup, you can ace 100, 200, and even 1000 point moves in the market.
Now let’s get to work.
Moving Averages (20-Day and 50-Day Simple Moving Averages): If you understand the basics of math, you will understand moving averages, which are simply the average of closing prices on a price chart over a specific period. There are about 3 types of moving averages, but we will use the simple moving average for this strategy. Most traders have used moving averages as support and resistance zones but do not know that they can be turned into powerful, usable trading strategies.ADX (average directional index): This technical indicator helps in weeding out fake or weak signals, as it is the secret weapon that improves our winning ratio up to 91%.Trading view: This is the most popular charting platform that most beginner and experienced traders use to have access to live price charts of various trading instruments and commodities. There is a free and paid version as well.
How do we combine this content to create this strategy?
Head over to Tradingview.com, open a free account if you do not have one, and then go to the indicators tab to add your moving averages (20 and 50 simple moving averages).
Click on “moving average” twice, and then you can start editing the moving averages individually here.
Leave the method to “SMA” for both while changing the style colors and periods to 20 and 50, respectively.
Next Step:
Add ADX (average directional index) using the indicators tab as well. The ADX is designed to measure the strength of a trend; therefore, it helps to weed out weak trades based on the direction of the prevailing trend. It is the secret weapon that helps confirm our moving average trade signals.
The benchmark for the ADX based on this strategy is 20 (using a horizontal line) to mark this value.
When the ADX is greater than the 20 mark, it signals that the trend is strong, while when the ADX is below the 20 mark, it signals a weak trend.
When the price closes above the 20 SMA and the 20 SMA is above the 50 SMA (buy signal),When the price closes below the 20 SMA and the 20 SMA is below the 50 SMA (sell signal),The ADX must be above the 20 mark.
How to buy or sell
Enter a buy or sell position on the opening of the next candle once all rules are met.Set your stop loss at 100 pips.Set your initial TP at 100 pips and a trailing stop to ride the big move.
This strategy can be applied to trading any instrument, but it should be used in combination with other technical pointers like previous support and resistance zones, economic events, Fibonacci levels, and pivot levels.
To learn more about simple or basic trading and technical analysis, you can check out this trading e-book for almost free.
