Before entering the trading principles section, traders should note a few things when setting up a trading chart:

  • Trading Market: Forex
  • Time frame: M15, H1, H4.
  • Technical indicators: SMA 3, SMA 11, SMA 34 and Bollinger Bands (20, 2).

Note that our strategy is multi-timeframe so staying on timeframes like H1 and H is mainly for us to capture the overall context. And the M15 time frame is the main time frame to find the entry signal. This is the rule when trading multiple time frames that you need to remember.

Trading principles

For buy setup

  • The most important condition for us to open a buy order is when the trend in all 3 time frames H4, H1 and M15 is in an uptrend. By checking the 3 moving averages in all 3 frames, if SMA 3 is above SMA 11 and SMA 11 is above SMA 34 (SMA 3 > SMA 11 > SMA 34), then we can open a buy order.
  • Move to the M15 time frame and open a buy order when the price corrects to the 11 SMA. At this point, the 11 SMA acts as a dynamic support and traders can trade when the price approaches it.
  • Place stop loss on M15 frame. Stop loss is placed about 3 pips from the lower band of the Bollinger Bands indicator.
  • Profit target from about 20 to 30 pips. An RR ratio of about 1:1.3 or higher is fine.

As shown below are the time frames H4, H1, M15 respectively for the buying strategy:

Frame H4


Frame H1

Frame M15 


For sell setup
  • The most important condition for us to open a sell order is when the trend in all 3 time frames H4, H1 and M15 is in a downtrend. By checking the 3 moving averages in all 3 frames, if SMA 3 is below SMA 11 and SMA 11 is below SMA 34 (SMA 3 < SMA 11 < SMA 34), then we can open a sell order.
  • Move to the M15 time frame and open a sell order when the price corrects to the 11 SMA. At this point, the 11 SMA acts as a dynamic resistance and traders can trade when the price approaches it.
  • Place stop loss on M15 frame. Stop loss is placed about 3 pips above the upper band of the Bollinger Bands indicator.
  • Profit target from about 20 to 30 pips. An RR ratio of about 1:1.3 or higher is fine.
Note, when the price returns to the 11 SMA line, we can open the trading position as well. Or, if you are more careful, you can also open a candlestick order there but you will likely miss the opportunity.

This is a trend trading strategy, so identifying the trend is an important factor that should not be overlooked. All 3 timeframes must ensure the same trend. If a timeframe is trending in the opposite direction then there is a high chance that the strategy will fail.