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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!