Super System Trading

Super System trading is a trend-momentum strategy based on exponential moving averages and momentum indicators.

Time frame 5 min or higher.

Currency pairs: majors.

Indicators

1. 3 EMA (Exponential Moving Average) set to the close price.

2. 5 EMA (Exponential Moving Average) set to the open price.

3. 34 EMA (Exponential Moving Average) set to the close price.

4. 89 EMA (Exponential Moving Average) set to the close price.

5. 3 RSI (Relative Strength Index) with levels at 20 and 80.

6. Stochastic (5,3,3) with default settings and levels at 20 and 80.

7. 14 ADX (Average Directional Movement Index) with +D and –D line only.

Rules Super System Trading

Buy

1. The 34 EMA must be above the 89 EMA.

2. The 3 RSI must cross above the 80 level.

3. The Stochastic must be above its Signal line.

4. The +D ADX line must be above the –D line.

5. The 3 EMA must cross above the 5 EMA.

6. When all the rules mentioned above are met, in whatever order, we can open a buy

trade.

7. Set the Stop Loss below the 34 EMA or the last swing low point.

8. Set the Take Profit at double the amount of the Stop Loss, or close the trade when

there is an opposite signal given by the 3 and 5 EMAs, 3 RSI or ADX indicators. The

opposite signal here means the 3 EMA falls below the 5 EMA, the 3 RSI falls below

the 20 level and the +D line falls below the –D line.

Buy example

First, the 34 EMA is above the 89 EMA showing that the long term trend is up at the

moment and we look only for long entry opportunities. The ADX confirms this because

the +D line is above the –D line for a while. Then the 3 EMA crossed the 5 EMA

upwards on the previous candle and in the same time, the Stochastic has moved above

its Signal line. The last signal was given by RSI crossing above the 80 level.

At the close of the signal candle, a buy position was opened at 103.572 (B).

After the opening of the long position, a Stop Loss of 8 pips was set below the 34 EMA

at 103.492 (C).

Then, a Take Profit of 16 pips was set at 103.732, which is twice the Stop Loss amount

(D).

As you can see, the 16 pips profit was gained less than an hour after we entered the

trade, when there wasn’t much movement on the market. This trade was taken prior to

the open of the Asian session.

Sell

1. The 34 EMA must be below the 89 EMA.

2. The 3 RSI must cross under the 20 level.

3. The Stochastic must be below its Signal line.

4. The –D ADX line must be above the +D line.

5. The 3 EMA must cross under the 5 EMA.

6. When all the rules mentioned above are met, regardless of the sequence, we can

open a sell order.

7. Set the Stop Loss above the 34 EMA or the last swing high point.

8. Set the Take Profit at double the amount of the Stop Loss or close the trade when

there is an opposite signal given by the 3 and 5 EMAs, 3 RSI or ADX indicators. The

opposite signal here means that the 3 EMA crosses above the 5 EMA, 3 RSI

crosses above the 20 level and the –D line falls below the +D line.

Sell example

First, the 34 EMA is below the 89 EMA showing that the long term trend is down at that

moment and we look only for short entries. The 3 EMA has moved below the 5 EMA 2

candles ago. The Stochastic fell below its Signal line at the previous candle and almost

simultaneously, the –D ADX line crossed above the +D line. The actual entry signal was

given by the RSI crossing under the 20 level.

Immediately after all the conditions were met and the signal candle closed, a short

position was opened at 1.04959 (Bs).

Then a Stop Loss of 36 pips above the entry was placed at 1.05319, which is just above

the last swing high point (C).

Lastly, a Take Profit of 72 pips was set below the entry, which is double the Stop Loss

amount, at 1.04239 (D).

The Take Profit Target was hit 11 hours later and again, this was a short trade taken

during the Asian session when there isn’t much movement on the market.