4 SMA’s Rocket Forex Trading Strategy

The 4 SMA’s Rocket forex trading strategy is based on two

channels of 2 simple moving averages.

We use four moving averages:

 A 60-period Simple Moving Average of the HIGHS

 A 60-period Simple Moving Average of the LOWS
 A 240-period Simple Moving Average of the HIGHS
 A 240-period Simple Moving Average of the LOWS

Your chart should now look like this (if it doesn’t then go
through the above steps again! )

The first thing to note is that we trade with the current trend.
We use the MAs (moving averages) to help us with that.

If the red MAs (60) are above the blue MAs (240) – then we
only look to take long positions.
If the red MAs are below the blue MAs – then we only look to
take short positions.

Now, it’s not quite as clear-cut as that, so we have to add a

couple of extra rules to this:

#1 – All four MAs should be angled in the same direction as

the trade direction.

In other words, if the red MAs are above the blue MAs, the
angles of all the MAs should be upwards – like this:

The above rule is the same for short trades – when the red
MAs are below the blue MAs, we also was them all to be
angled downwards too!

#2 – It is fine for the red MAs to ”overlap” the blue MAs – in

other words, only one red MA needs to be above both the
blue MAs for a long trade (or only one red MA needs to be
below both blue MAs for a short trade).
In fact, it’s better to look at the two red MAs together as a
single “tunnel”; and look at both the blue MAs together as a
single “tunnel”.

Here’s an example of what I mean:

So you can see in the above chart that in the inner-box the
pair of red MAs are below the pair of blue MAs (well, they
are overlapping a little, but you can see what I mean,
right?).

Okay, so now you know the direction in which we trade and

when.

We take long entries when the red MA pairs are above the
blue MA pairs (and vice-versa for short entries).

Entry… Okay, so we’re about a third of the way there (I told

you it would be easy!)

– now the specific entry. So, assuming we have the 60 (red)

MAs above the 240 (blue) MAs, we’re looking for long
entries.
We get a long entry when price crosses back down into the
60 MAs (the two red ones) and the first candle closes above
the UPPER 60 MA.

Here’s an example:

You can also see in the above chart where we place our
stoploss – it’s always below the low of the pullback for a long
(or above the high of the pullback for a short).

Let’s take a look at a short entry example:

Exits… I don’t put a huge amount of emphasis on the exits.

Why?

Simply because as long as I stick to the same exit method

(whichever it is) – I get consistent returns and I don’t worry
about missing profits or start going down the “if only…”
path.

Here’s what I do and I find it is a nice balance for me (it’s not

anything special – but it works!): I just take profit at 1.5:1.
In other words I take profit at 1.5 times the initial number of
pips I risked.

So for example, if I risked 100 pips initially on a trade – I’d

take profit at 150 pips.

Now if the market continues on and reaches 300 pips or

more, that’s fine, we have to just accept that – it’s the way
of trading.

Just stick to the same take-profit and it will work out!

Using our previous trade examples for the entries we’ll look
at them again in terms of take-profit.

The long example from earlier:

The short trade example from earlier:

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