***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 (When ADX is rising )
and give poor returns in trading range market (When ADX is falling ).
