Light forex system is a forex trading strategy which is actually a money printing machine if you really follow the rules of the system with complete self discipline. As the name of the strategy suggests, the system consists of a rainbow like figure on the main price chart. Although the system looks quite advanced and messy at the first look, you will realize later that how easy the system is. Thatrainbow like indicator seen on the main chart is simply the collection of many moving averages with different colors with different periods. This is a trend following strategy so the light forex system works best on the trending market rather than in the sideways or flat market. In short Light Forex system is a trading strategy which is simply a trend following strategy and the signals generated by the rainbow is confirmed by the RSI and the MACD indicators.
To be precise the total numbers of technical indicators used by Light Forex System is 17 among which 15 are the moving averages used to create a rainbow. Do not worry; we will not study all those moving averages. We will just focus on the green moving average. When the Light Forex System is correctly installed on your metatrader platform your trading chart should be like this:
- Rainbow: Rainbow is a technical indicator which is actually a group of many moving averages. We will use this indicator as a signal generator indicator in this forex trading strategy.
- RSI: RSI stands for relative strength index. It consists of an oscillator that moves between the level of 0 and 100. It is mainly used for trading the divergence, to measure the strength of the RSI and to know the overbought and oversold conditions.
- MACD: MACD is a popular indicator used by many technicians all over the world. It consists of a red moving average and a histogram. We will mainly use this indicator to know the direction of the market.
Buying Conditions Using Light Forex System.
- Price should be above the green light of the rainbow.
- RSI should be trending higher than the level of 50.
- MACD should be in the positive territory.
- Place your stop just below the recent swing low.
- You should take your profits when you see the MACD histogram falling down.
Selling Conditions Using Light Forex System.
- Price should be below the green light of the rainbow.
- RSI should be trending lower than the level of 50.
- MACD should be in the negative territory.
- Place your stop just above the recent swing high.
- You should take your profits when you see the MACD histogram rising higher.
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