The Red Dragon Trend Trading System

Red Dragon is a simple and understandable strategy, thanks to which you can make a profitable and effective trade. The Red Dragon strategy includes several indicators that help accurately determine the current trend and indicate entry and exit points from trades.

The indicators included in the strategy are basic tools on the MT4 and MT5 platforms, and their combination in the Red Dragon strategy is a great advantage in trading. The strategy is used on any timeframe, with any currency pairs.

Strategy indicators

The Red Dragon strategy consists of four indicators. Each of them plays an important role in shaping the strategy.

• -EMA14 (high) - exponential moving average with a value of 14, which is applied to the high price.

• -EMA14(low) - exponential moving average with a value of 14, which is applied to the low price.

• -Parabolic SAR indicator that determines the direction of the trend using points. Its parameters remain unchanged, except for the Step parameter, which is set to 0.01.

• -Awesome Oscillator-an indicator that is a histogram. It consists of growth and fall columns. The indicator settings remain unchanged.

It can be also changed the colors and width in the indicator parameters at the own discretion.

Making trades using the strategy

To make a trade, it is important to consider the direction of the points of the Parabolic SAR indicator, the location of the signal candle, as well as the direction and color of the Awesome Oscillator bars.

Conditions for Buy trades

• -The signal candlestick is located above the moving EMA (low) and closes above the moving EMA (high).

• -The Parabolic SAR indicator dots are below the price.

• -At least three columns of the Awesome Oscillator histogram have a growth value and have crossed the zero level from the bottom up, which determines an uptrend.

A stop-loss order is set below the previous local low. At the same time, it is not important to set a take profit, since it is set depending on the selected currency pair or timeframe. A buy trade should be immediately closed manually under the following conditions:

• -A downtrend has been determined on the market, that is, the Awesome Oscillator columns have a fall value.

• - Identification of divergence. That is, the discrepancy between the direction of the price chart and the conditions of the indicator.

Conditions for Sell trades

• -The signal candle is located below the moving EMA (high) and closes below the moving EMA (low).

• -The Parabolic SAR dots are above the price.

• -At least three bars of the Awesome Oscillator histogram have a falling value and have crossed the zero level upwards, which determines a downtrend.

A stop-loss order is placed above the previous local maximum. At the same time, it is not important to set a take profit, as it is set depending on the selected currency pair or timeframe. A sell trade should be immediately closed manually under the following conditions:

• -An uptrend has been determined on the market, that is, the Awesome Oscillator columns have a growth value.

• - Identification of divergence. That is, the discrepancy between the direction of the price chart and the conditions of the indicator.

Conclusion

The Red Dragon trend trading system is great for making quick and profitable trades. Due to its ease of use, it is also suitable for beginners. If  follow all the rules of trading on this system, it can be achieved good results. And before using the strategy, it is recommended to check it on a demo account to make sure the system is suitable for you.