Envelope Trading System is a forex trading strategy. It is a trend following strategy and it might not work effectively in a flat market. Envelope trading system is a very effective and powerful forex trading system. The system is full of genuine indicators that do not give false signals and above all it is a very simple trading system and which makes the job of analysis very easy. The main chart window is very clean having only a linear weighted moving average of period 20. The candle bars used in the chart are Heiken Ashi bars. Heiken Ashi bars are less sensitive to the price movements which help to gain the clarity in the market despite the very random behavior of the market. The Envelope Trading system consists of four technical indicators on the main chart and three others in the indicator window. However it is not important to in depth of all those indicators. We will assume there is a single moving average on the main chart which is thick and white in color.
When the Envelope Trading system is correctly installed on your trading platform your trading chart should look like this:
- 20 MA
It is a weighted moving average of period 20. It is white and thick. This indicator will help to gauze the recent direction of the market.
- Heiken Ashi Bars
Heiken Ashi bars on the chart are available in white and red color. The bullish bars are white and bearish are red. They tend to have different opening and closing price than the normal candlestick bars.
It is a combination of an oscillator and a histogram that moves up and down having its central at zero.
- Pj over RSI
It is a custom made indicator that performs the work of filter. When the bars of this indicator are red it indicates the strong downtrend and light blue indicates the strong uptrend and the tomato color bar represents the indecisive moves.
- Trend 2
Buying Conditions Using Envelope Trading System.
- Price should be above 20 MA.
- CCI should be in positive territory.
- PJ over RSI indicator should be light blue in color.
- Trend 2 indicator should be in positive territory.
- Place your stop just below the recent swing low.
- Take your profits when the price falls back to touch the 20 MA.
Selling Conditions Using Envelope Trading System.
- Price should be below 20 MA.
- CCI should be in negative territory.
- PJ over RSI indicator should be red or tomato color.
- Trend 2 indicator should be in negative territory.
- Place your stop just above the recent swing high.
- Take your profits when the price rises back to touch the 20 MA.
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