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Applying IRSTS Swing Trading Rules

The IRSTS seven-part series has provided the components of the indicator rules for a swing trading strategy, from color-coding candlesticks to smoothing oscillators to creating an expert system. Now that all of the components have been detailed, here's how you can put this swing trading strategy to use in your trading. This seventh and final part of my series on indicator rules for a swing trading strategy (IRSTS), I will show you how you can apply the IRSTS rules to make trading decisions. But before diving into it, I'll first review some general trading guidelines and principles. General trading guidelines

IRSTS Trading Rules

Enter a trade when these eight conditions are met:

1. The closing price breaks above or below the eight-day exponential moving average (EMA)
2. A valid candle pattern is visible at the last turning point
3. The turning point is close to the volatility band or an average
4. The expected zigzag wave is a wave 1 or 3
5. The expected price move is supported by oscillators
6. Support & resistance levels are in favor of the planned trade
7. Closing price breaks through the last possible trendline
8. The risk of the trade is within acceptable limits.

The basic Chart template

I use the following elements on my charts:
A standard candlestick chart with candlestick patterns at selected turning points
A 50-day simple moving average (blue)
A 100-day simple moving average (green)
A 200-day simple moving average (red)
A dotted orange eight-day exponential moving average (EMA)
An upper and lower volatility band (dotted magenta line)
A percentage- and volatility-adjusted high-low zigzag (light blue)
A Bollinger Band %b indicator in the lower subwindow (light blue)
A standard stochastic oscillator in the lower subwindow (dotted red).

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A full description can be found in the Stocks & Commodities November 2013 publication. All indicators are available under the NinjaTraders formulas.

Special offer: "BBS Band Indicators" DVD

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