The trading system is the prerequisite foundation before you settle down and learn about the capital management strategy. A full trading system will help stabilize the mentality - that's for sure.
The 3 piglet strategy is:
- A trend follows strategy.
- A swing trading strategy.
- Based on the multi-timeframe analysis (MTF).
Use 3 timeframes:
- Week (Weekly)
- Daily
- 4 hours (H4)
About the trend we will use:
- Long-term trend.
- Trends Mid-term.
- Short-term trend.
Use 3 piglets to:
- Determine your entry point.
- Limit the risks.
- Identify long-term, medium-term, and short-term trends.
Strategy Invented in 2001 ...
The strategy has undergone 3 years of adjustment and return testing for optimal profit.
In 2013, an independent BabyPips review gave this strategy a 40/50 maximum score ...
- The current rules have not changed since 2004
- Can be used for any financial market ...
- Use the 3 Piglet MTF Trading Strategy to primarily trade 8 currency pairs in the market. In theory, it can be applied to any financial market
- Takes less than 10 minutes per day to trade 8 currency pairs.
This strategy has been proven, bro. Maybe you will need 1 more demo or back-test time to track the effectiveness. If you feel effective, no-hassle, please boldly use it in your daily trading.
1. The 1st piglet:
Purpose of 1st Piglet: To ensure we trade in the direction of the long term trend based on the average closing price for the year.
To do this, we use:
- Weekly chart.
- 55-period simple moving average - SMA (55): The SMA (55) uses the parameter of closing price - Represents the average closing price over the past year.
The long-term trend is considered as follows:
- UP trend when the price is ABOVE (55)
- DOWN TREND when prices are BELOW SMA (55)
Input criteria - Based on the first piglet:
- A Long trade is only executed when the Long Term Trend (weekly chart) is UP, meaning the price is ABOVE the SMA (55).
- The short trade is only done when the Long Term Trend (weekly chart) is DOWN, meaning the Price is BELOW the SMA (55).
2. The 2nd piglet:
Purpose of 2nd Pig: To ensure we trade in the direction of the mid-term trend based on the average closing price for the past month.
To do this, we use:
- Daily chart.
- 21-period Simple Average - SMA (21): SMA (21) uses the closing price parameter - represents the average closing price over the past month.
The mid-term trend is considered as follows:
- TURNS UP when the price is ABOVE (21)
- DOWN TREND when prices are BELOW SMA (21)
Input criteria - Based on 1st & 2nd piglets:
- Only perform Long trading when:
- The long-term (annual) trend is UP, meaning Price is ABOVE the SMA (55) for the weekly chart, and:
- The medium-term (monthly) trend is UP, meaning that Price is ABOVE the SMA (21) for the daily chart
- Short trading is only executed when:
- The long-term (annual) trend is DOWN, meaning Price is BELOW (55) for the weekly chart, and:
- The medium-term (monthly) trend is DOWN, meaning that Price is BELOW (21) for the weekly chart.
3. The third piglet:
Purpose of Pig 3: To ensure we trade in the direction of the short-term trend based on the average closing prices for the past week.
To do this, we use:
- 4-hour chart.
- 34-period Simple Average - SMA (34): SMA (34) uses the closing price parameter - represents the closing price for the past week.
Short-term (weekly) trends are considered:
- UP trend when a candle hits and closes ABOVE (34)
- DOWN DOWN when a candle hits and closes BELOW SMA (34)
Input criteria - Based on 1st, 2nd & 3rd little pigs:
- Only perform Long transaction when:
- The long-term (annual) trend is UP, meaning Price is ABOVE the SMA (55), and:
- The medium-term (monthly) trend is UP, meaning Price is ABOVE the SMA (21), and:
- The short-term (weekly) trend is UP, which means A candle hits and closes ON the SMA (34)
Important Note:
- The long and medium-term trend is confirmed UP when the price is ABOVE the SMA (55) and SMA (21).
- The short-term trend is confirmed UP only when the candlestick touches and closes ON the SMA (34).
Short trading is only executed when:
- The long-term (annual) trend is DOWN, meaning Price is BELOW (55), and:
- The medium-term (monthly) trend is DOWN meaning Price is BELOW the SMA (21), and:
- The short-term (weekly) trend is DOWN, meaning A candle hits and closes BELOW the SMA (34).
Important Note:
- The long and medium-term trend is confirmed DOWN when the price is BELOW the SMA (55) and the SMA (21).
- The short-term trend is confirmed DOWN only when the candlestick touches and closes BELOW (34).
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