08-14-2014, 02:19 PM
| | Moving Average Bounce
The moving average bounce trading system uses a short term timeframe and a single exponential moving average, and trades the price moving away from, reversing, and then bouncing off of the moving average.
Moving averages smooth the price, so that short term fluctuations are removed, and the overall direction is shown. When the price experiences a strong move, it will have a tendency to retrace back to the moving average, but then continue the original move, and it is this bounce that is used by the moving average bounce trading system.
The default trade uses a 1 to 5 minute OHLC (Open, High, Low, and Close) bar chart, and a 34 bar exponential moving average of the typical price (HLC average). Both the chart timeframe, and the exponential moving average length, can be adjusted to suit different markets. The default trading time is when the market is most active, such as the European open which happens at 8:00 AM Central European Time, or the US open which happens at 9:30 AM Eastern Time, or at 3:30 PM Central European Time.
The following tutorial steps use the EUR futures market, but exactly the same steps should be used on whichever markets you are trading with this trade. The trade used in the tutorial is a long trade, using 1 contract, with a target of 10 ticks, and a stop loss of 5 ticks.