The Forex Code

Cracking The Forex Code

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Cracking the Forex Code – System 1 (CFC1)

• Indicators used in CFC1: Exponential Moving Average 5-period (EMA5, Black color in the illustrations) Exponential Moving Average 15-period (EMA15, Blue color in the illustrations) Exponential Moving Average 60-period (EMA60, Green color in the illustrations) These are standard, common indicators and are included in every charting program. You can use any charting software program you like: E-signal, MetaStock, TradeStation, MetaTrader…. This system is used for 1-hour timeframe. You can also use it for 4-hour and daily timeframes. But in that case, you have to tweak the stop loss, profit target, trailing stop appropriately.

• Rules for Buy Signals (Long Trades): We must first establish that we’re in a strong uptrend using these 3 rules:

1. EMA60 and EMA15 are both pointing up.
2. EMA5 is above EMA15.EMA15 is above EMA60.

When we have these three conditions, we know that we’re in an uptrend.

We then wait for the price to fall back, and touch the EMA60. When that happens, we enter with two lots.

1. Stop Loss: We place a protective stop loss at -40 pips.
2. Profit Targets: When we have 40 pips in profit we exit one lot.

Move stop loss to break even for the second lot. We then use a trailing stop of 40 pips for that lot. That means, when we’re 80 pips in profit, we move stop loss to 40 pips. And so on… We can also move stop loss to the recent high each time price break that high. That way, we can follow the trend until the end

• Rules for Sell Signals (Short Trades):

We must first establish that we’re in a strong downtrend using these 3 rules:

1. EMA60 and EMA15 are both pointing down.
2. EMA5 is below EMA15.
3. EMA15 is below EMA60.

When we have these three conditions, we know that we’re in a downtrend.

We then wait for the price to retrace, and touch the EMA60. When that happens, we enter with two lots.

1. top Loss: We place a protective stop loss at -40 pips.
2. Profit Targets: When we have 40 pips in profit we exit one lot.

Move stop loss to break even for the second lot. We then use a trailing stop of 40 pips for that lot. That means, when we’re 80 pips in profit, we move stop loss to 40 pips. And so on…

We can also move stop loss to the recent low each time price break that low.

That way, we can follow the trend until the end.

Source : Kevin Adams www.TrendForexSystem.com