Forex System Rules: Triple SMA Crossover Version 2.0

Phew! I think I’ve got it, ladies and gents! After spending a few days in my pod and tweaking the Triple SMA Crossover forex system, I came up with this second version. Check out these new rules:

Indicators:

5 SMA (yellow)
10 SMA (blue)
20 SMA (red)
ADX 15 (green)

Currency Pairs:

This mechanical forex system can be applied on the major pairs, such as EUR/USD or GBP/USD, using the 4-hour time frame.

Entry conditions:

Buy on the open of the next 4-hour candle when the 5 SMA is above the 10 SMA, which should be above the 20 SMA. ADX should be greater than or equal 50.

Sell on the open on the next 4-hour candle when the 5 SMA is below the 10 SMA, which should be below the 20 SMA. ADX should be greater than or equal 50.

It doesn’t matter which SMA crosses down or up first, entry signals are valid when the three SMAs are arranged in an ascending or descending order.

Exit conditions:

Use a 200-pip trailing stop to lock in profits and reduce risk along the way. This is a little wider than EUR/USD’s typical weekly ATR of around 150 pips. Close the current position and switch sides when an opposite signal takes place.

Example:

EUR/USD 4-hour Forex Chart

EUR/USD 4-hour Forex Chart

I’ve been scanning the past few months on EUR/USD’s 4-hour chart to get an idea of how my backtests might fare and so far I’m seeing a bunch of good entry signals. I won’t get ahead of myself though so y’all have to tune back in next week to see the results.

Have an awesome weekend, forex fellas!

  • ForExchange

    Hi Robopip,

    it is funny, you asked for suggestions in the last two weeks, you collected them in your last post and in the end you ignored them all.

    This is not a problem, I am sure, but it is unusual as most of the suggestions were clear: the original system is just way too slow for signals in the current market conditions. Most readers wanted to see this week a faster crossover system.

    The one you presented is basically the same as the last one. You ADX and instead of the 150 trailing stop you have now 200 pips.

    I do not know why this should change anything. Your backtest results might be good because EUR/USD droped like a stone this past months but I do not expect too much better results.

    There is not much done to believe that we will see another outcome. I guess in a couple of weeks we come to the conclusion of a maximum of 25 points for this systems.

    I hope to be wrong of course and wish good luck to you!

    FE

    • Robopip

      Hi FE! I actually used your 5-10-20 SMA suggestion and I got more signals. That’s why I thought of adding ADX to filter signals that occur in a trending environment. Hope this works!

    • Hi FE! I thought of widening the trailing stop to accommodate larger price swings while staying in the trend, but I did use your suggestion to use shorter SMAs to generate faster signals

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