Best Forex Trading System Using EMA, RSI, William %R

Forex Moving Average

Check up on this easy forex trading system: This system uses the trend and goes with it. Each trader has to grasp this rule: “The trend is my friend”. But before that let us check some common FAQ on currency trading.

Forex Trading System Common FAQ

What is the best forex trading system?

There is no rule that a particular system is best. Actually there can be no holy grail. But yes the success of any system depends on the accuracy. In my opinion, the system must be simple and easy to follow. After adequate backtest if it is seen that the system is delivering good result it can be implemented in live trading. A system trader needs to believe in the system and take all trades generated. In other words, the trader needs to stick to the system and that will ensure his success in the long run.

How can I trade forex successfully?

First, you need to choose a good forex broker. Most of the brokers will give you the MetaTrader or MT4 platform. Next, develop a simple and easy system. Thoroughly backtest the system and do some demo trades. Once you are confident, use the system in live trading. Always trade with a proper stop loss and use good money management.

How do you make a forex trading system?

First, you need to understand whether you will be an intraday trader or a positional trader. If you are an intraday trader, select a smaller time frame on your chart. We suggest you 5-minute to 15-minute time frame chart. In case you are a scalping trader use a 1-minute chart. Now select some simple but effective indicator. Plan your trade entry and exit. The trading rules must be high probability rules. Backtest the system, do some demo trading too. Congrats, your forex trading system is now ready.

Is trading forex easy?

Trading is never easy for a newcomer. Trading is a profession and like all other professions, in forex too you need to be a master to earn consistent earning. But forex trading has an edge over other trading markets. The currency market is 24 hours open, 5 days a week. So there is no chance of a sudden price gap due to global turmoils. Another big advantage is that forex brokers offer the very high leverage. So a trader can start with a small deposit. Like any other trading platforms, currency trading platforms too, have common indicators. So a trader can also trade forex successfully line any other markets.

Phases of our Forex Trading System

Now let us come to our forex trading system. As we discussed this a high probability system. This means the entries and exits are done when there is a very high probability of making profits.

Phase 1: MAE

To establish the Trend (I name it The Main Trend), We use two moving average exponentials (MAE). This MAE is known as EMA in simple terms though.

  • MAE 14
  • MAE 42

Watch it out, some forex software writes EMA (Exponential Moving Average). An important factor of this forex system: Moving average + exponential.

If MAE 14 > MAE 42, the main Trend is Up. That suggests you need to wait for a long signal. If MAE 14 < MAE 42, the main trend is Down. That suggests you have to wait for a short signal.

Phase 2: RSI

As a Forex indicator, we use RSI or relative strength index which observes the large Trend with extra accuracy. It doesn’t provide many false signals when price performs a little pullback. Our RSI length is 21 on this forex trading system.

Forex trading system

Normally, we use RSI only to find small pullbacks, but sometimes it can help me to find our exit point in intraday. We use it like a pre-signal, we’ll see that later.

Phase 3: William’s %R

For us, William’s %R is the King of forex indicators. We use it to find the turning point of a pullback. In a simple word, William’s %R shows us when the end of a pullback is near. Did you understand that?

William’s %R value are between [-100 ; 0], but for us, when we write we do [0 ; +100]. Why? We don’t know. Maybe we don’t like negative numbers for this system at this point of time.

Forex trading system

The Complete Forex Trading System

When 0 less than or equals to William’s %R <15, that means our small pullback is near dead. And at this moment, we open our eyes, and say to the market: “Show us the money!”. It’s only valuable if the Big Trend is Down.

When 85 < William’s %R less than or equals to 100, and if there is an Up Big Trend, That means the pullback arrived at its end. And we say: “Show us the money!”. In this case, we must have a Long Big Trend. Our William’s %R period is 7 in this system.

Forex trading system

Conclusion

Did you see how MAE could help you to find the right direction? RSI showed us the market was Up even if prices did some little pullbacks. And William’s %R showed us the end of the small downtrend. Isn’t this a simple and best forex trading system? For some more great systems check The foreign currency trading section on our site.

Author: Indrajit Mukherjee

Indrajit is a professional blogger and trading system developer. Amibroker expert, Wordpress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.

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