“So Easy It’s Ridiculous” Swing Trading Strategy

Introducing the “So Easy It’s Ridiculous” swing trading strategy, a meticulously crafted approach designed to capitalize on daily price swings in the forex market. This strategy combines the power of fundamental technical indicators, including Simple Moving Averages (SMA), Stochastic Oscillator, and Relative Strength Index (RSI), to identify and navigate potential trade opportunities with precision. The utilization of daily charts ensures a comprehensive analysis of market trends, while the risk management component establishes a disciplined approach, with a fixed risk of 100 pips per trade. By employing systematic entry and exit rules based on SMA crossovers and additional confirmations from Stochastic and RSI, this strategy aims to strike a balance between simplicity and effectiveness. Traders utilizing the “So Easy It’s Ridiculous” system are guided by a commitment to meticulous record-keeping, rigorous backtesting, and unwavering discipline, creating a framework for successful and confident decision-making in the dynamic forex environment.

Swing Trading Strategy: “So Easy It’s Ridiculous”

Trading Timeframe:

• Daily charts for swing trading.

Indicators Used:

1. Simple Moving Averages (SMA): Used to identify new trends early.
2. Stochastic Oscillator: Helps confirm trade entries, avoiding oversold and overbought conditions.
3. Relative Strength Index (RSI): Additional confirmation tool for trend strength.

Risk Management:

• Risk per Trade: Willing to risk 100 pips on each trade.
• Risk Tolerance: Adjust risk based on the timeframe; higher timeframes allow for larger risk due to potential larger gains.

Entry Rules:

Long Entry:

1. SMA Crossover: Enter a long trade when there is a bullish crossover of the simple moving averages.
2. Stochastic Confirmation: Confirm the trade by checking that the Stochastic is showing upward momentum and not in overbought territory.
3. RSI Confirmation: Ensure that RSI is greater than 50, indicating strength in the upward trend.

Short Entry:

1. SMA Crossover: Enter a short trade when there is a bearish crossover of the simple moving averages.
2. Stochastic Confirmation: Confirm the trade by checking that the Stochastic is showing downward momentum and not in oversold territory.
3. RSI Confirmation: Ensure that RSI is less than 50, indicating weakness in the downward trend.

Exit Rules:

Long Exit:

• Exit the long trade when the simple moving averages cross in the opposite direction.

Short Exit:

• Exit the short trade when the simple moving averages cross in the opposite direction.

Trade Examples:

Long Trade:

1. Entry Signal:
   • SMA crossover to the upside.
   • Stochastic showing upward momentum.
   • RSI above 50.
2. Exit Signal:
   • SMA crossover to the downside.

Short Trade:

1. Entry Signal:
   • SMA crossover to the downside.
   • Stochastic showing downward momentum.
   • RSI below 50.
2. Exit Signal:
   • SMA crossover to the upside.

Trade Management:

• Record Keeping: Document entry price, stop loss, and exit strategy for each trade.
• Backtesting: Conduct manual backtests by moving the chart one candle at a time to evaluate trade outcomes.
• Discipline: Stay disciplined and adhere to the trading system rules even if some trades do not perform well.

This strategy is a trend-following system, taking advantage of moving average crossovers and using additional indicators for confirmation. Remember to thoroughly backtest the strategy with historical data and consider using risk management tools and simulator platforms before implementing it in live trading.

RECOMMENDED INDICATORS SETTINGS

Determining the optimal settings for indicators involves a balance between responsiveness and smoothing. The recommended settings for the indicators in the “So Easy It’s Ridiculous” swing trading strategy are provided below, along with the rationale for each choice:

1. Simple Moving Averages (SMA):

• Setting: 50-period and 200-period
• Rationale: The 50-period SMA is used for shorter-term trend identification, while the 200-period SMA provides a longer-term perspective. The crossover of these two averages helps identify potential trend changes, offering a balanced mix of sensitivity and smoothness.

2. Stochastic Oscillator:

• Settings: %K: 14, %D: 3, Slowing: 3
• Rationale: A standard setting for the Stochastic Oscillator, these values strike a balance between responsiveness and smoothness. The 14-period %K provides sensitivity to short-term price changes, while a 3-period %D smoothens the signals. The slowing parameter adds an additional smoothing layer.

3. Relative Strength Index (RSI):

• Setting: 14-period
• Rationale: The 14-period RSI is a commonly used setting that balances responsiveness and smoothness. It measures the magnitude of recent price changes, helping to confirm the strength of a trend. A shorter period makes it more responsive to recent price changes, while a longer period smoothens the readings.

Additional Considerations:

• Daily Chart Timeframe: The use of daily charts allows for a comprehensive analysis of market trends while reducing noise associated with shorter timeframes. This aligns with the swing trading approach, capturing shorter- to medium-term price swings within the context of a broader trend.
• Risk Management (100 pips): The fixed risk of 100 pips per trade is a conservative approach, allowing for consistency in risk exposure. This can be adjusted based on personal risk tolerance and market conditions.
• Backtesting: Before deploying the strategy in live trading, conduct thorough backtesting with historical data to assess its performance under various market conditions.

It’s crucial to note that these settings are a starting point, and traders may need to fine-tune them based on their preferences, risk tolerance, and the characteristics of the specific forex pairs being traded. Additionally, staying informed about market conditions and adapting the strategy as needed is essential for long-term success.