***FIVE AVERAGES---
---The
system uses five averages: 3 day close
average (3 SMA),
3 day high average ( 3 HMA),3 day low average. (3LMA),
8 day close
average. ( 8 SMA), 34 day close average (34 SMA)
***CALL GENERATION---
---Initiate
long when the close is above 3day high average ( 3 HMA) and 3 day close average
( 3SMA) crosses above 8 day close average ( 8 SMA). (stop loss 3 day low
average)
--- Initiate
short when the close is below 3day low average ( 3 LMA) and 3 day close average
( 3 SMA) crosses below 8 day close average ( 8 SMA). (stop loss 3 day high
average)
****SCORING SYSTEM ----
1) When 8 SMA > 34 SMA
then the Trend is UP (score +1)
2) When 8 SMA < 34 SMA
then the Trend is DOWN ( score -1)
3) When 3 SMA > 8 SMA then
the Bias is UP (score +2)
4) When 3 SMA < 8 SMA then
the Bias is DOWN ( score -2)
5) When Closing is above 3
HMA then Momentum is UP ( score +1)
6) When Closing is below 3
LMA then Momentum is DOWN ( score -1)
7) When Closing is in between
3 LMA and 3 HMA then Momentum is NEUTRAL( score 0)
****IMPORTANT POINTS----
1) All averages are simple
moving averages.
2) Stop loss works on closing
basis.
3) Use scoring system for
trade quantity.
-Trade four lots when
score is +4 or -4
-Trade three lots when
score is +3 or -3,
- trade two lots when
score is +2 or -2
- and trade one lot
when score is +1 or -1.
4) Always remember that
trading system works best in trending market and give poor returns in trading
range market.
