The “So Easy It’s Ridiculous” Trading System

 

Trading Setup

Build Your Forex Trading System

Trading Rules

Entry Rules

Enter long if:
  • The 5 SMA crosses above the 10 SMA and both Stochastic lines are heading up (do not enter if the Stochastic lines are already in the overbought territory)
  • RSI is greater than 50
Enter short if:
  • The 5 SMA crosses below the 10 SMA and both Stochastic lines are heading down AND (do not enter if the Stochastic lines are already in oversold territory)
  • RSI is less than 50

Exit Rules

  • Exit when the 5 SMA crosses the 10 SMA in the opposite direction of your trade OR if RSI crosses back to 50
  • Exit when trade hits stop loss of 100 pips
Okay, let’s take a look at some charts and see this baby in action… 
Here’s an example of a long trade setup:

Long Entry Signal
If we went back in time and looked at this chart, we would see that according to our system rules, this would be a good time to go long.
To backtest, you would write down at what price you would’ve entered, your stop loss, and your exit strategy. Then you would move the chart one candle at a time to see how the trade unfolds.

Long Exit Signal
In this particular case, you would’ve made some decent pips! You could’ve bought yourself something nice after this trade!
You can see that when the moving averages cross in the opposite direction, it was a good time for us to exit. Of course, not all your trades will look this sexy. Some will look like ugly heifers, but you should always remember to stay disciplined and stick to your trading system rules.
Here’s an example of a short entry order for the “So Easy It’s Ridiculous” system.

So Easy It's Ridiculous System Short Entry Signal
We can see that our criteria is met, as there was a moving average crossover, the Stochastic was showing downward momentum and not yet in oversold territory, and RSI was less than 50.
At this point we would enter short. Now we would record our entry price, our stop loss and exit strategy, and then move the chart forward one candle at a time to see what happens.


So Easy It's Ridiculous Forex System Short Exit Signal
Boo yeah baby! As it turns out, the trend was pretty strong and pair dropped almost 800 pips before another crossover was made! Now isn’t that ridiculously easy?
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 that’s simple.
In fact, there is an acronym that you will often see in the trading world called KISS.
It stands for Keep It Simple Stupid!
It basically means that forex trading systems don’t have to be complicated. You don’t have to have a zillion indicators on your chart. In fact, 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!
If you have tested your forex system thoroughly through back testing and by trading it live on a demo for at least 2 months, then you should feel confident enough to know that as long as you follow your rules, you will end up profitable in the long run.
Trust your system and trust yourself!


Location: Bangladesh

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