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Trading systems based on fast moving averages are quite easy to follow. Let's take a look at this simple system.
Currency pairs: ANY
Time frame chart: 1 hour or 15 minute chart.
Indicators: 10 EMA, 25 EMA, 50 EMA.
Entry rules: When 10 EMA goes through 25 EMA and continues through 50 EMA, BUY/SELL in the direction of 10 EMA once it clearly makes it through 50 EMA. (Just wait for the current price bar to close on the opposite site of 50 EMA. This waiting helps to avoid false signals).
Exit rules: option1: exit when 10 EMA crosses 25 EMA again.
option2: exit when 10 EMA returns and touches 50 EMA (again it is suggested to wait until the current price bar after so called “touch” has been closed on the opposite side of 50 EMA).
Advantages: it is easy to use, and it gives very good results when the market is trending, during big price break-outs and big price moves.
Disadvantages: Fast moving average indicator is a follow-up indicator or it is also called a lagging indicator, which means it does not predict future market directions, but rather reflects current situation on the market. This characteristic makes it vulnerable: firstly, because it can change its signals any time, secondly – because need to watch it all the time; and finally, when market trades sideways (no trend) with very little fluctuation in price it can give many false signals, so it is not suggested to use it during such periods.
This strategy requires you to use discretion trading it. It’s not automated and itdoesn’t “tell” you when to buy or sell.However, as you will see, our rules for trading are easy-to-follow and fairlystrict – so this really limits the amount of decision-making required.If you’ve got a profitable trading strategy then, as long as you’re not silly withyour risk, money-management is very simple.In fact, money management is very simple; it just requires a little commonsense and doing to what to successful traders do.What do successful traders risk per trade? It’s pretty much in the 1 or 2percent area. Risk that amount of your capital per trade and you won’t haveany sleepless nights.
The two indicators we are going to talk about here are found to be very well working when used side by side. This Forex trading system is an another simple discovery; and hundreds of such discoveries can be made when traders are there to learn and experiment. Any currency pair and time frame can be used.Indicators: Parabolic SAR default settings (0.02, 0.2), ADX 50 (with +DI, -DI lines) Entry rules: SELL When the +DI line is below the -DI line, and Parabolic SAR gives sell signal. When the +DI line is above the -DI line, all Parabolic sell signals must be ignored. Entry rules: BUY when the +DI line is above the -DI line, and Parabolic SAR gives buy signal. When the +DI line is below the -DI line, all Parabolic buy signals must be ignored. Exit rules: when +DI line and -DI lines have crossed again. Advantages: allows filtering entries and predicting good exits. Disadvantages: Both Parabolic SAR and ADX are follow-up indicators. Although they complement each other very effectively, the “weakest” in chain is ADX, because during trading it can give one signal, but later change to the opposite. Once given a signal from ADX, waiting for the current price bar to close to avoid such misleading is advised.
Stocks are an asset class of investments where you buy a share of ownership in a publicly traded company. Stocks are equity in a company. Shares trade on stock exchanges through market makers and executed for investors through a stock broker. How do you invest in stocks? Decide you want to own stocks. Understand the risks and rewards possible in the stock market. Research the price action history of the stock indexes and individual stocks. Choose a time frame for stock ownership. Decide what type of investor or trader you want to be. Value or growth investor, day trader, swing trader, trend follower etc. Sign up for a charting service. Open an account with a stock broker (or a 401K account at your job). Transfer money into the account. Choose if you want a margin account with your broker. Be aware that there can be commission costs for each buy and sell you make along with account fees. Decide if you want to invest or trade in individual stocks, exchange traded funds, mutual funds or a combination of these. Add money into your account on a regular basis. Focus on growing your capital and allowing the returns to compound. Be sure to file taxes on your account each year whether you make or lose money. This is an overall basic outline of what you need to know to start buying and selling stocks, this is a good starting place for new investors and traders and then drill down and research the answers for yourself.