I always prefer simple systems. Ones I can explain to my 8-year old niece and she gets it within 10 minutes. One such system is the lazy system. A system developed by Simon Brown. It is a trend-based system that uses 3 Exponential moving averages, 15, 30 & 60.
It first identifies the direction of a trend and trades in that direction. It tries to ride on trends for as long as possible and allows for pyramiding(re-entries). Works best in low volatility markets.
Which markets to use it on
Major Fx pairs
Identifying a trend
When the 30 is above 60 EMA the trend is up. Inversely when the 60 is above 30 EMA the trend is down. After identifying the direction of the trend, we only take trades in the direction of the trend.
Now that we have the direction of the trend. We wait for the price to revert to the 15 EMA. When the market cuts through the 15 EMA in the direction of the trend we have a buy/sell signals. For example, if we are in an uptrend when, the price cuts from below to above the 15 EMA this triggers a buy signal. Inversely on a downtrend.
The lazy system is a 2-step entry system. As a result, every signal needs to confirm first. After the price cuts through the 15 EMA. We wait for the market to close above(below in the case of a sell signal) the candle that cut through the 15 EMA.
The signal fails if the price closes below (above in case of a sell signal) the 15 EMA before it the signal confirms. Once a signal fails it’s no longer valid. If the price cuts through the 15 EMA again. That’s a new signal and needs to confirm first before we enter.
The lazy system only exits at stop loss. It doesn’t have a Take profit target. The exit/stop loss is a close below the 30 EMA.
The 2-step entry process provides a bit of protection against over-trading. This doesn’t mean it has no drawdowns. At times the system does give trades that end quickly with a small loss.
The system has horror drawdowns during a sideways market. Unfortunately, it has no filter to distinguish between a trending & a sideways market. You just have to show up for every trade.
The system works well across all timeframes. Works better for longer time frames than shorter ones, because longer timeframes turn to be less noisy than the shorter timeframes. I prefer daily and weekly timeframes.
This system is incredibly lazy as the name suggests and boring. As they say, good trading is boring.