Simple Price Based Forex trading system — an interesting system that was developed by one of the Forex traders recently. It works for any pair (though, EUR/USD is recommended) and in all market conditions. No indicators are required to trade using this system. All you need is the ability to set up the pending orders.
Features
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Position-based trading for any state of the market.
Trailing stop protects profit.
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Lack of statistical proof.
How to Trade?
- Higher timeframe chart is recommended as each trading setup requires some calculations based on the latest bar.
- Key number should be calculated first. It's based on the current price. For the quotes with 4 digits after a dot the key value is the current price multiplied by 10 and then rounded. For the quotes with 2 digits after a dot the key value is the current price divided by 10 and the rounded.
- Place pending Buy order at Current Price + (2 * Key value).
- Place pending Sell order at Current Price - (2 * Key value).
- Place stop-loss for pending Buy order at Open Price - (2 * Key value).
- Place stop-loss for pending Sell order at Open Price + (2 * Key value).
- Take-profit for both orders is calculated similarly to the key value but the current price should be multiplied by 100 for the quotes with 4 digits after a dot and shouldn't be divided for the quotes with 2 digits after a dot. In both cases the values should be rounded.
- Trailing stop is also applied to the orders and is set to 2.5 * Key value.
- Don't forget to cancel the untriggered orders after the timeframe period ends.
- If this sounds too complicated, see the example below.
Example
Simple Price Based Trading System
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Let's calculate the entry conditions and parameters for an example presented on the chart:
- It's a EUR/USD H4 chart.
- The current price is 1.4810, the current bar's open price is 1.4832.
- There are 4 digits after a dot in the quotes for EUR/USD. That means that the Key value is calculated as 1.4810 * 10 = 14.8. Rounding it results in 15 pips.
- Pending Buy order level is calculated as 1.4810 + (2 * 15) = 1.4840.
- Pending Sell order level is calculated as 1.4810 - (2 * 15) = 1.4780.
- Stop-loss for pending Buy order is calculated as 1.4832 - (2 * 15) = 1.4802.
- Stop-loss for pending Sell order is calculated as 1.4832 + (2 * 15) = 1.4862.
- Take-profit for all pending orders is calculated as 1.4810 * 100 = 148.1 or, after rounding, 148 pips.
- Take-profit for pending Buy order is set to 1.4840 + 148 = 1.4988.
- Take-profit for pending Sell order is set to 1.4780 - 148 = 1.4632.
- Trailing stop for both orders is set to 2.5 * 15 = 37.5 or, after rounding, 38 pips.
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