"The Trend is Your Friend" Trading System

I always hear people talking about the trend being your friend so I thought I’d come up with a system that does just that. 

(Disclaimer: This is coming from a total newbie.)


From everything that I have read, I thought I would combine a couple of trend-following indicators. 


I picked EMA (100) and RSI (9) and applied them to the 1-hour timeframe. 

I've read in some forums that a lot of traders pay attention to moving averages especially on the daily timeframe. But because making a system based on the daily timeframe generates only very few signals, I thought I'd put it on the 1 hour instead. 

I also saw that price reacted well to the MA, finding support/resistance from time to time. As for the RSI, I intend to use it as a "filter" to confirm if the trend is strong or not.
Here's my idea for an entry:

Sell if price is below the 100 EMA, RSI is coming from 70 or 70+ and now below 50. 


Buy if price is above 100 EMA, and RSI is coming from 30 or 30- and now above 50. 
 
The stops for the trades should be beyond the EMA, or recent high/low, or 50 pips. 


The profit should be taken when the RIS is overbought/oversold.

Here are a few sample trade setups:






 

I haven't tried this system before so please feel free to let me know what I can improve on it! Thanks!

Popular posts from this blog

“Moving Average MACD Combo” Trading System

“The Holy Grail” Trading System

3 Little Pigs Trading System