Trading the System

Take trades only when the price breakthrough the EMA lines and closes above the EMA line for buy and below the EMA line for a sell. Dont take trade within the channel or on the EMA line and take trades only when the RVI is crossing or is in an upward or downward trend. See information about the RVI below. About the Relative Vigor Index (RVI) The Relative Vigor Index (RVI) is a technical indicator, which anticipates changes in market trends. How it is used to make trading decisions: The RVI has 2 lines as indicated below: • Green Line The green line is a standard simple moving average of the Relative Vigor Index calculation. Although you can adjust the green line, the default value is 10-periods. • Red line The red line is a 4-period volume weighted moving average. The red line is the “trigger line” because it provides trade signals when it crosses above or below the green line. I use the crossover of these two to make my entry decisions. Thus • Crossovers Entry and exit signals are triggered when the red line crosses the blue line. Therefore, we go long the moment the red line of the relative vigor index tool breaks the blue line in upward direction signaling a new bullish trend. And We go short the moment the red line of the relative vigor index tool breaks the blue line downward signaling a new bearish trend. But others still trade this RVI taking into account the oversold when below the 0 line and the overbought when above the 0 line. ** And some trade it on the basis of divergence. Buying and Selling Signals Buy Trade: When the trend is maintaining an upward trend the signal is to go long. - The candle breakout and closes above the EMA 5 high. Take decision to buy only after the close of the candle. Diagram!! - On the RVI: The red line must be either at the point of crossing the blue line in an upward direction or has crossed already and the two lines are in upward direction as shown below: Note: if the RVI did not give a confirmation signal wait until the close of the next candle but be sure the candle still closed above the 5 EMA high if not don't take the trade Diagram !!! When the two above are in agreement then you can open a market order to buy at the close of signal candle. We place instant order to buy not a pending order. Place your Stop loss and take profit order as we shall explain later. Sell Order: To place order to sell the following condition must be in agreement: - The market must be in a downward trend. Price breakdown through the 5 EMA low line and close below the 5 EMA line as shown below Diagram !!! - On the RVI: The red line must be either at the point of crossing the blue line in a downward direction or has crossed already and the two lines are in a downward direction as shown below: Note: if the RVI did not give a confirmation signal wait until the close of the next candle but be sure the candle still closed below the 5 EMA low if not don't take the trade Diagram !!! When the two above are in agreement then you can open a market order to Sell at the close of the signal candle price. We place instant order to Sell not a pending order. Place your Stop loss and take profit order as we shall explain later. Advert !!! No Trade Candles There are some signal candles that you must not place trade with: 1. Don't take trades that has abnormal candle height because they may lead to heavy loss because the direction may not be sustain. The white candle below is above 10 Pips and its abnormal - see that it did not sustain. The black signal candlestick below is 50 plus pips so we did not take that sell trade. The candle heights depends on you the trader to know what distance between open and close is large for you and it also depend on your risk appetite and what instrument you are trading. Diagram !!! 2. Don't take any candle that is touching the two EMA lines whether the wick or whole body like shown below. The black candlestick below is touching both 5 EMA high and low lines. Diagram!!! Determination of Candle height: Don't take any signal whose candle height from open to close is 10 and above for scalping and any amount for Day trading. The signal may not be sustain. But each trader is at liberty to consider any height appropriate taking into consideration the time frame you are trading on and the trading instruments. Don't take another trade until there is a new signal that 5 EMA and the RVI agreed as a valid signal. Diagram !!! Adverts !!!