Deviation Bands Trading System is a forex trading system. This forex trading system does not use any special custom built forex indicators. All the technical indicators used in Deviation Bands Trading System are well known technical indicators and they are readily available in metatrader 4 platform. Deviation Bands Trading System is a trend following forex trading system. This particular forex trading system can be used to trade on intraday timeframes like 5-minute, 15-minute, and 30-minute. Three technical indicators are used in Deviation Bands Trading System. Two of them are in the main chart window and the remaining one is in the indicator window.
The Deviation Bands Trading System has potential to generate a lot of money for you if you use it with great care. This forex trading system is really easy to understand. While trading, make sure that you don’t trade against the trend; trend is your friend after all.
When the Deviation Bands Trading System is correctly installed on your trading platform, your chart should look like this:
- Envelope
Envelope indicator consists of nothing more than two moving averages. These two moving averages work as a support and resistance levels. Since the smaller period envelops are used here, this envelope might work properly only in the smaller time frames. Generally, market tend to trend within the territory of this envelope.
- 5 SMA
Simple moving average of period 5 is used in this trading system. It is a quite short term moving average. It reacts very fast to the market price changes. The 5 SMA here, works as a signal generator indicator in Deviation Bands Trading System. When the market crosses above this simple moving average, it is a buy signal whereas, if the market crosses below this moving average, it’s a sell signal.
- MACD
The MACD stands for moving average convergence divergence. It is a very popular technical tool. It consists of histograms that move in both positive and negative territories. When the histograms are in positive territory, it’s assumed to be an up trending market and vice versa.
Buying Conditions Using Deviation Bands Trading System.
- Market price should cross above the 5 SMA.
- Market price should test the lower band of the
- The MACD indicator should be in positive territory.
- Place your long position as soon as above conditions are met.
- Place your stop loss just below the recent swing low.
- Take your profit when the MACD moves in to negative territory.
Selling Conditions Using Deviation Bands Trading System.
- Market price should cross below the 5 SMA.
- Market price should test the higher band of the
- The MACD indicator should be in negative territory.
- Place your short position as soon as above conditions are met.
- Place your stop loss just above the recent swing high.
- Take your profit when the MACD moves in to positive territory.
Leave a Reply