WMA Trading System ~ forex trading hours south africa
WMA trading system what technical indicators do you need?
• 1 hour (or 30Mins) candlesticks/bar charts. (If you use 30 Min chart, you might see more
whipsaws than using 1 hour chart).
• 18 EMA & 28 EMA (put them in red color in the chart).
• 5 WMA (put it in blue color in the chart) & 8 WMA (put it in yellow color in the chart).
These are standard, common indicators and are included in every charting program. You can use any charting software program you like: E-signal, MetaStock, TradeStation, MetaTrader 4, Ninjatrader, Visual Trader,Metatrader 5. I will explain how to get these technical indicators to appear in the chart later.
• The 18 EMA & 28 EMA are two red lines which form a tunnel, these will help you to determine the start of a trend and the end of a trend. => This is used for Long term
• The WMA & 8 WMA will show you when to enter a trend, they will also help you to see the strength of the trends. This is used for Short term
2. Entry Signals
You should only open a position, when the red tunnel (formed by 18 & 28 EMA) is extremely narrow or crossed !
LONG: Open a long position when 5 WMA & 8 WMA cross the red tunnel upwards. If the 5 WMA also crosses the 8 WMA upwards, then the signal is extra strong.
SHORT: Open short position when 5 WMA & 8 WMA cross the red tunnel downwards.
If the 5 WMA also crosses the 8 WMA downwards, then the signal is extra strong.
3. Exit Signals
Signals that show the end of the chosen trend:
LONG: Close your existing long position when The price has reached a top and 5 WMA dives
under 8 WMA
SHORT: Close your existing short position when The price has reached a bottom and 5 WMA
jumps above 8 WMA
4. Stop Loss:
Use a 10-15 pip stop loss (for manual trading). Always use a stop loss to secure your account.
(However in the tradingEA software I purposely set the stop loss to 45 because the software works
better with that setting. It is too long to explain in detail why but that the way it is).
5. Recommended Currency Pairs:
The best pair is EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, AUD/JPY, NZD/USD.
The system is rather short, simple and down to the point. Yet it is very profitable if you implement it right. If you can do manual trading, it would be the best because you can have control on everything. However if you don’t have trading experience or don’t have time to monitor the market, you can use the software coming along with this manual, it can automatically trade for you.
Always close your position when boundary’s of the red tunnel cross each other or when they become so narrow that they merge into one! This is a clear sign of a trend reversal. After you see this, close your position and open a new position in the other way (For example, If you opened a long position and now you see that sign of trend reversal, close that long position, open a short position.)
When in a trade and the 5 WMA & 8 WMA cross the red tunnel -> Pay attention! As long as the red tunnel boundary’s doesn’t cross each other there is no problem( but often this is a sign that they will!) In this case, just keep the position, don’t close or open a new trade. |
| WMA Trading System |
Point 1: First, focus on the entry short at point 1. You can see at this point, the red tunnel is very
narrow and actually the 2 red EMAs cross each other here.
Things to notice here are: the red tunnel is heading downward and the 5 WMA(blue) & 8WMA
(yellow) cross the red tunnel downwards. This signal is very strong because the 5 WMA also
crosses the 8 WMA downwards. The bearish signal here is very clear. So we enter a short order.
Point 2: Here, you can see the tunnel is narrow and the EMAs cross again. We open an order
which is the opposite of the previous order. At point 1, we already opened a short order, now we
need to close that order, and open a new opposite order, which is a long order right at point 2.
(Another way to confirm we need to close the short order right here, is that the 5 WMA jumps
above 8 WMA).
The long signal is even stronger here because 5 WMA & 8 WMA cross the red tunnel upwards.
Point 3: The EMAs cross again, so we know we need to close the existing order and open an
opposite order. We close long and open short order here. You also can notice that 5 WMA dives
under 8 WMA. It is time to exit the long order.
We apply the same rules at Point 4, 5, 6, 7 and have the long/short orders correspondingly.
Just one thing I want to emphasize: there is one point of attention here.
At that point, the tunnel is quite narrow, but there is no tunnel cross, so we don’t need to close the
existing order, just continue ride the trend.
In this example, I want to emphasize about the importance of placing StopLoss order. You must place Stop Loss all the time. At point 1, it seems we need to open a short order (as of the rules of the system), however due to some good political news released at that time, the price continued going up. We can get burned if we don’t place StopLoss. Using Stop Loss properly, we only lose a little meanwhile following the system we can make tremendous profit.
The system is rather short, simple and down to the point. Yet it is very profitable if you implement
it right. If you can do manual trading, it would be the best because you can have control on
everything. Always close your position when boundary’s of the red tunnel cross each other or when they become so narrow that they merge into one! This is a clear sign of a trend reversal. After you
see this, close your position and open a new position in the other way (For example, If you opened
a long position and now you see that sign of trend reversal, close that long position, open a short
position.)
When in a trade and the 5 WMA & 8 WMA cross the red tunnel - Pay attention! As long as the
red tunnel boundary’s doesn’t cross each other there is no problem( but often this is a sign that
they will!) . In this case, just keep the position, don’t close or open a new trade
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