Setup Your System in Six Steps

My “So Easy It’s Ridiculous” System

In this section I will give you an idea of what a trading system should look like. This should give you an idea of what you should be looking for when you develop your system.

Trading Setup

• Trade on daily chart (swing trading)
• 5 EMA applied to the close
• 10 EMA applied to the close
• Stochastic (10,3,3)
• RSI (14)

Trading Rules

Stop Loss = 30 pips

Entry Rules

1. Enter long if:
   • The 5 EMA crosses above the 10 EMA and both stochastic lines are heading up (do not enter if the stochastic lines are already in the overbought territory)
   • RSI is greater than 50
2. Enter short if:
   • The 5 EMA crosses below the 10 EMA and both stochastic lines are heading down AND (do not enter if the stochastic lines are already in oversold territory)
   • RSI is less than 50

Exit Rules

• Exit when the 5 EMA crosses the 10 EMA in the opposite direction of your trade OR if RSI crosses back to 50

Okay, let's take a look at some charts and see this baby in action...