This has to be one of the simplest manual trading systems in existence. The Magic Ribbon system is just about perfect for someone that does not want to have his chart filled with indicators and wants to catch the trend changes.
A very easy setup.
Bollinger Bands 15, 0.05
Bollinger Bands 50, 0.05
Ribbon Indicator
The two sets of Bollinger Bands indicate the trend, the 50 for a longer trend and the 15 for the shorter trend.
The ribbon changes colour as the trend within the shorter trend changes… an easy indicator.
There is an alert built into the ribbon indicator, a trader can have a slew of charts open and be trading all of them.
For the trader that has little time to spend observing the market, he/she can use a 240 minute chart or a daily chart, the indicators work perfectly on fast charts or slow charts.
A GBPJPY 240 minute chart. You can see how well the trends and trend changes are illustrated.
Here is a daily chart for GBPJPY.
You can see the versatility of the Magic Ribbon system.
I mentioned that there is an alert built into the Ribbon Indicator.
You can see in the picture below that the alert appears as soon as the colour of the Ribbon changes.
Terrific for the trend trader!
No trading system is going to be completely perfect. Using this Ribbon will take some practice, a good amount of screen time perfecting entries and exits.
A Stop Loss is a must, and that has to be determined by the individual as entries are practiced.
Personally, I like the idea of a trailing stop for this system, especially if someone is away watching the charts for an extended period.
There are several trailing stop EA’s available, some free and some paid.
Actually, MT4 has a built in trailing stop which is easy to use.
In addition to the indicators described above, I like to have a CCI on each chart to observe the momentum. It is not necessary to have the CCI on the chart, I find that when the CCI gets to the extremes we can expect a reversal in trend, a warning signal.
Below are some examples of the Ribbon on several pairs from today.
A very easy setup.
Bollinger Bands 15, 0.05
Bollinger Bands 50, 0.05
Ribbon Indicator
The two sets of Bollinger Bands indicate the trend, the 50 for a longer trend and the 15 for the shorter trend.
The ribbon changes colour as the trend within the shorter trend changes… an easy indicator.
There is an alert built into the ribbon indicator, a trader can have a slew of charts open and be trading all of them.
Time Frames
This system can be used on the faster charts or the longer term charts.For the trader that has little time to spend observing the market, he/she can use a 240 minute chart or a daily chart, the indicators work perfectly on fast charts or slow charts.
A GBPJPY 240 minute chart. You can see how well the trends and trend changes are illustrated.
Here is a daily chart for GBPJPY.
You can see the versatility of the Magic Ribbon system.
I mentioned that there is an alert built into the Ribbon Indicator.
You can see in the picture below that the alert appears as soon as the colour of the Ribbon changes.
Terrific for the trend trader!
No trading system is going to be completely perfect. Using this Ribbon will take some practice, a good amount of screen time perfecting entries and exits.
A Stop Loss is a must, and that has to be determined by the individual as entries are practiced.
Personally, I like the idea of a trailing stop for this system, especially if someone is away watching the charts for an extended period.
There are several trailing stop EA’s available, some free and some paid.
Actually, MT4 has a built in trailing stop which is easy to use.
In addition to the indicators described above, I like to have a CCI on each chart to observe the momentum. It is not necessary to have the CCI on the chart, I find that when the CCI gets to the extremes we can expect a reversal in trend, a warning signal.
Below are some examples of the Ribbon on several pairs from today.
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