The 3SMA

The 3SMA "Trend-Riding" System
http://www.learnforexlive.com/members-area/3SMA-system/index-new.php

Please visit the link The 3SMA "Trend-Riding" System and PLEASE watch the videos to learn about this beautiful system.

I will update this page now and then with the summery of the system.

Videos are must watch, not once but atleast 3 times.
Thanks to Hector DeVille for this interesting system.

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Video No. 1:

Introduction Video:

1. Simple Moving Averages: 30, 50, 100 (core elements SMA)

2. Trend-Riding System (trade only in the direction of TREND)

3. Works on any time frame.

4. Conservative in nature.

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Video No. 2:

How to read and use 3SMA

• Please note that these are SIMPLE Moving Averages
• It is easy to read the Direction & health of trend with Simple Moving Averages
• For a healthy trend, SIX trend Conditions must be met.

The 6 conditions are:

1. All 3 SMA are in order
2. Pointing in the same direction (Up / Down) – no curling
3. All are parallel (No Crossover)
4. Price on the correct side of 50 SMA – below 50 SMA for down trend & above 50 SMA for Uptrend – occasionally price may breach 50 SMA but that is OK, as long as price doesn’t on 50 SMA for more than 3 or 4 consecutive candles.
5. Price never touches 100 SMA – if it does, then there is break of trend.
6. Harmonic Bounces of DASR – Dynamic Area of Support or Resistance – The area between 30 SMA & 50 SMA. – When trending on and on, price tends to bounce off that area, giving new swing; we are going to search that area for the bounces in order to trigger new trading opportunities.

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Video No. 3:

More on Harmonic Bounces of the DASR* DASR is only valid as long as the other 5 conditions are in place.

1. Harmonic Bounces – the swings in harmonic pattern.More harmonic the swings / bounces the better – easier for us to pin point the bounce point / our entry point – We profit from consequent swings.
2. The time frame the trend belongs to – trade on the accurate time frame where the harmonic bounces occur on DASR
3. The ideal entry point – depends on the bounces on DASR

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Video No. 4:

The End of a Trend

In this video Hector teaches on how to read the price action and how to read the 3 SMA in order to determine when the trend comes to an end.

The trend comes to an end when,

1.           30 SMA is not pointing in the direction of the trend - moving FLAT / Curling against the trend direction.

2.           More than 3 or 4 candles breaking above 50 SMA  

3.           Final swing, the price doesn’t take previous swing price / bounce low or high.

Pay attention to long candle with full body and no/short wicks (momentum bars) – This is a SOLID BREAKOUT.

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Video No. 5:

Searching for Trends:  to broaden up the range of options as far as different pairs.

• The Majors 8 currencies & 28 crosses
• Trends develop on any time frame
• Two ways of spotting these trends.

Majors	28 Crosses
USD	EUR/USD	EUR/JPY	GBP/CHF	NZD/CHF
EUR	GBP/USD	EUR/GBP	GBP/CAD	AUD/CAD
GBP	USD/JPY	EUR/CHF	GBP/AUD	AUD/CHF
JPY	USD/CAP	EUR/CAD	GBP/NZD	CAD/CHF
CHF	USD/CHF	EUR/AUD	NZD/CAD	CHF/JPY
CAD	AUD/USD	EUR/NZD	AUD/NZD	CAD/JPY
AUD	NZD/USD	GBP/JPY	NZD/JPY	AUD/JPY
NZD

Even though you can trade on any time frame - M30 to weekly are better to work with.

Two ways of spotting those trades:
Make a note of the trending pairs & the time frame
Make a note best looking currency pairs - as far as the 3SMA formation.

Focus on one time frame per currency pairs.
Concentrate on Very best looking of all (Optimal Setups)
BE VERY SELECTIVE
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Video No. 6:

The Setup & Trigger Charts:  

Setup Chart: Trading opportunity

Trigger Chart: Entry

Setup chart – is the one where we follow the trade.

Trigger Chart – shorter time frame to place the trade.

Setup Chart	Trigger Chart
Monthly	Weekly
Weekly	Daily
Daily	H4
H4	H1
H1	M30
M30	M5
M15	M5

3SMA are not significant on trigger chart – i.e.,  3SMA are significant on setup chart.

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Video No. 7:

Types of Setups:  Trading in the direction of the trends

• Swings
• Breakouts – Vertical trust

Look for both or mix of both types.

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Video No. 8:

Swing Patterns:

Swing Setups:

• -    Confluence of S/R
• -    Retracement trend lines
• -    Entry: the BPC pattern (Breakout Pullback Continuation)
• -    Targets & Stop Loss

Confluence of Support / Resistance:

Confluence – Area in the chart where multiple different elements of Support / Resistance come together within few pips of each other.

Confluence of Support / Resistance:

• -       Trend lines
• -       Counter trend lines
• -       Fibonacci retracements
• -       Previous High / Low

Trend lines: The line linking swing lows / swing highs

Counter trend lines: a trend line drawn to link swing lows / highs on the opposite side.

Fibonacci retracement: Check the link

 http://www.babypips.com/school/fibonacci-retracement.html

38%, 50% & 61% to touch is not important. In between 38% & 61% is ok.

Previous swing high / low:

Mark only previous swing high or swing low.

A horizontal line in the area of DASR is healthy.

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Video No. 9:

Enterning the Trade:

-       Entering off trigger chart

-       Entering off the setup Chart

BPC – pattern is the confirmation of a breakout from a technical point of view.

Stop Loss – 2 – 3 pips below pullback.

Entering off the Setup Chart: Straight from the setup chart

Wait for the price to retrace within the area of DASR or a little bit further and when the price bounces up / basically finds rejection at DASR around that area. Trigger at the first candle close, in the setup chart that closes above (in uptrend) the DASR – you buy. SL either few pips below the bounce point or a few pips below the 50 SMA.

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