Another Wealth Building technique

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Here is another very good system which seems to be working quite well especially with pairs like GBPUSD and GBPJPY, however we are going to use the GBPJPY in our example. This system is very simple and easy to setup. We are going to work on the 1 Hour timeframe and nothing lower or higher for this method.

Setting up the chart

We need to setup the chart as follows:

1.Open a 60 minute (H1) GBP/JPY bar chart

2. Place a 25 Period HIGH Linear Weighted Moving Average

3. Place a 25 Period LOW Linear Weighted Moving Average

This is the only 2 indicators that we need to place on the chart. You can save a template which will become handy if you want to setup any other chart like this one in the future.

Place the trades

Now we need to know where we are going to place the trades. We are going to OPEN A LONG position if the price is 50 PIPS ABOVE the HIGHER moving average and we are going to OPEN A SHORT position if price is 50 PIPS BELOW the the LOWER moving average.

As you can see, we are using a buffer of 50 pips on this method. So, as soon as the price has filled this buffer, then we OPEN a MARKET order. We are not going to use pending orders. If you did a quick eyeball on the chart with the 2 moving averages on it, you will see that there is possibility of catching some huge moves. The only problem will be the occasional whipsaws.

Stoploss

You can use a fixed stoploss of 50 pips or 75 pips depending on the money management method which you will be using. The method alone without a good money management technique will not work on the long run. Also, you should close and reverse trades as soon as we have an opposite trade trigger signal. For example, if we had a buy order open and we get a sell signal, then we need to close the buy order and open a sell order. This can happen a few times during whipsaws. However, most of the time, you would have get enough time to break even your trade.

Catching the pips

You can catch the pips by using a fixed takeprofit level and once that level is reached, the trade is closed in profit automatically. However, you can get out from the market quite early if you will be using a tight takeprofit level as we are working on the H1 timeframe. Therefore, you should put a high take profit value and use a trailing stop to secure the pips in the meantime. If you dont like fixed trailing stops, then you can trail the stoploss manually by moving them to the most recent low or the most recent support/resistance level.

Thanks...

This is a very simple and pips generating method. All thanks goes to TKimble for sharing this method with us. Good luck with the trades.

NOTE: Template file added... the pink line is the end of buffer zone of 50 pips

[ForexNaija]

Thanks for template