Forex
Ribbon system is a trend following strategies based on guppy of
moving averages filtered by a momentum indicator the Commodity
Channel Index.
It
is composed of two main indicators:
1.
Ribbon
2.
CCI
The
Ribbon is a seires of 7 moving averages, each one shifted 1 period
farther than the
previous.
It will be the way we determine whether we take a trade or not. In
order for a long
trade,
price must close above the ribbon. For a short trade, price must
close below the ribbon.
The
CCI is composed of 2 parts:
The
CCI Histogram which is the red and blue bars.
The
CCI Signal Line which is the green line that runs through the
histogram.
Ribbon
Signals
When
the Ribbon gives off a signal, it can be at the close of a candle
above or below the
Ribbon
itself.
The
first candle close above the Ribbon is a signal to go long.
The first candle close below the Ribbon is a signal to go short.
The first candle close below the Ribbon is a signal to go short.
Direction
of the market for trading
We
will be guided by the CCI Histogram to tell us what direction to
trade.
When
the CCI Histogram is blue, we will only be looking to take long
trades.
When
the CCI Histogram is red, we will only be looking to take short
trades.
Filtering
The
Ribbon is our main signal generator, but we use the CCI Histogram as
our filter
mechanism.
Not every signal generated by the Ribbon is going to be a good
signal. There are
times
when the market is choppy and could use the assistance of a filter to
help weed out
some
of the bad trades.
This
is where the CCI Histogram comes into play.
In
periods where the market has closed below the Ribbon, we could see a
signal for a short
trade,
but if the CCI Histogram does not agree by turning red, then we
cannot take the trade.
Trading
rules Forex Ribbon System
Ribbon
Long Trade
Setup
Price
must be below the Ribbon.
CCI
Histogram can be either blue or red.
Signal
Candle
must close above the Ribbon.
CCI
Histogram must be blue.
Stop
Loss
Place
initial stop loss below the Ribbon of the signal candle.
If
the Ribbon is flat, you can place stop below recent swing low of the
price.
Target
Place
your target the same distance as the stop loss.
Exit
Close
the trade if price closes back inside, or below, the Ribbon.
Ribbon
Short Trade
Setup
Price
must be above the Ribbon.
CCI
Histogram can be either blue or red.
Signal
Candle
must close below the Ribbon.
CCI
Histogram must be red.
Stop
Loss
Place
your initial stop loss above the Ribbon of the signal candle.
If
the Ribbon is flat, you can place stop above recent swing high of the
price.
Target
Place
the target the same distance as the stop loss.
Exit
Close the trade if price closes back inside, or above, the Ribbon.
Close the trade if price closes back inside, or above, the Ribbon.
CCI
Signal Line Long Trade
Setup
• CCI
Histogram must be blue.
Signal
Line must be below the CCI zero line.
Signal
Signal
Line must close above the zero line.
Candle
must close above Ribbon.
Stop
Loss
Place
the initial stop loss below the Ribbon of the signal candle.
If
the Ribbon is flat, you can place the stop below the recent swing low
of the price.
Target
Place
your target the same distance as the stop loss.
Early
Exit
Close
the trade if price closes back inside, or below, the Ribbon.
CCI
Signal Line Short Trade
Setup
CCI
Histogram must be red.
Signal
Line must be above the CCI zero line.
Signal
Signal
Line must close below the zero line.
Candle
must close below the Ribbon.
Stop
Loss
Place
the initial stop loss above the Ribbon of the signal candle.
If
the Ribbon is flat, you can place the stop above the recent swing
high of the price.
Target
Place
your target the same distance as the stop loss.
Early
Exit
Close the trade if price closes back inside, or above, the Ribbon.
Close the trade if price closes back inside, or above, the Ribbon.
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