This is a very good trend following trading system. It uses simple moving averages and the CCI. Simple moving Average is used to determine the trend and to observe the crossovers in this strategy whereas CCI used to measure the momentum.
Simple Moving Average
A Simple moving average is a statistical calculation to analyze data points by creating a series of averages of different subsets of the full data set. A Simple moving average is commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly. For example, it is often used intechnical analysis of financial data, like stock prices, returns or trading volumes. It is also used in economics to examine gross domestic product, employment or other macroeconomic time series. Advantages of MA:
- The greatest advantage of SMA is it fixes the irregular fluctuation in a Time series.
- SMA is easy to understand and does not require any complex mathematical calculation.
In this Lindencourt MX method, we use four simple moving averages. They are SMA 7, SMA 21, SMA 84 and SMA 336. Shorter SMAs like 7 and 21 are highly sensitive to the price, they move way faster than those 84 and 336 SMAs.
Commodity channel Index (CCI)
CCI stands for commodity channel index. Generally this tool is used to help identify the price reversals, price extremes and trend strength. In this strategy we will use CCI indicator to know the strength of the trend. When the CCI is above the zero level it indicates the stronger bulls scenario while when the CCI is below the zero level it indicates the stronger downtrend scenario.
Time frames and Currency Pairs Compatibility for Lindencourt MX Method
Time frame: 15 minutes
Pairs: All
Buy Condition Using Lindencourt MX Method
(Note: You should place a buy order when following conditions are exactly met. If any of the following condition does not meet you should not enter in to the market.)
- Price should be above the 336 simple moving average (SMA 336).
- Price should be above the 84 simple moving average (SMA 84).
- Price should be above the 21 simple moving average (SMA 21).
- Price should be above the 7 simple moving average (SMA 7).
- CCI should cross above from the negative territory to the positive territory.
Sell Condition Using Lindencourt MX Method
(Note: You should place a buy order when following conditions are exactly met. If any of the following condition does not meet you should not enter in to the market.)
- Price should be below the 336 simple moving average (SMA 336).
- Price should be below the 84 simple moving average (SMA 84).
- Price should be below the 21 simple moving average (SMA 21).
- Price should be below the 7 simple moving average (SMA 7).
- CCI should cross below from the positive territory to the negative territory.
Stop loss and Take profit
Stop loss should be placed 10 pips below/above the recent swing low/high. You should take profits when the 7 SMA is crossed below/above by the price.
Open demo account to test this system.