***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 (Rising ADX) and give poor returns in trading range
market (Decreasing ADX).
