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Renko Moving Average Trading System – Chart Setup

A two moving average crossover trading system is perhaps one of the most simplest and easiest of trading systems that one might come across. The logic behind this trading strategy is to employ two moving averages where one tracks the longer term period, while the other tracks the shorter term period. Because the moving averages depict the average prices over their period, mathematically, when a short term moving average is above the long term moving average, it usually depicts a bullish trend and then the short term moving average falls below the long term moving average, it depicts that prices will continue to fall.

What can be more simpler than that? But despite its simplicity, the moving average crossover system is often underrated and written off by many. Most traders prefer to choose the complex trading systems believing that the more indicators there are, the more the chances of winning.

This Renko based moving average crossover system shows you how simplicity can trump complexity.

Renko based moving average strategy

We make use of two moving averages, 50 and 20 period EMA. But feel free to use any combination, although I would advise to keep the short term moving average 10 periods or higher.

Once the moving averages are set up on the chart, it would show up like this. Simple!

Renko Moving Average Trading system – Chart Setup
Renko Moving Average Trading system – Chart Setup

As for the Pip size, it is up to you. But I advise to use at least 15 pips or higher if you are trading the major currency pairs.

Renko based moving average crossover – Rules

Renko Moving Average Crossover strategy – Ranging markets

You might be wondering how to trade when prices remain sideways. Let’s take a look at a few examples on how this system performs. Read below to see how this system performs when markets are ranging at the very least, how you could manage your trade you find that the markets are moving sideways.

The trading strategy as illustrated is very simple and easy to use. It is nearly mechanical trading system, but requires some subjectivity in terms of plotting the support/resistance levels. The trading system is so simple that even during failed set ups or sideways markets, you will still be able to exit with a small loss.

Renko Moving Average Crossover Strategy – Video

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