The M.A.P trading system is designed to help traders identify valid trading signals, determine the optimal entry points, and minimize the risk of false signals. This system uses multiple technical indicators to provide a clearer picture of market conditions. Here is a comprehensive guide on how to use the M.A.P system:
Steps to Using the M.A.P System
Choose Your Preferred Currency Pair
- Select a currency pair that you are familiar with or regularly trade. For this example, we will use GBP/USD.
Add Indicators to Your Chart
- Parabolic SAR (Stop and Reverse): This indicator helps determine the trend direction and potential reversal points. No need to change its default settings.
- Moving Average of Oscillator (MAO): This tool helps measure trend strength and momentum. Use the default settings.
- Average True Range (ATR): This indicator measures market volatility. Change the period to 4 to get a more responsive reading to market volatility changes.
Entry Rules
- Entry for BUY:
- Ensure Parabolic SAR and MAO indicate a bullish direction (upwards).
- Make sure the ATR value is below a certain level, indicating low volatility (ATR must be lower than the considered threshold).
- Entry for SELL:
- Ensure Parabolic SAR and MAO indicate a bearish direction (downwards).
- Make sure the ATR value is below a certain level, indicating low volatility (ATR must be lower than the considered threshold).
When Not to Trade
- Avoid trading if the signals from Parabolic SAR, MAO, and ATR are not aligned.
- Wait until all conditions are met before opening a position to avoid false signals.
Setting Take Profit and Stop Loss
- Adjust Take Profit (TP) and Stop Loss (SL) settings according to your trading style and acceptable risk level.
- For example, you can use a specific risk/reward ratio or technical levels like support/resistance to determine TP and SL.
Example of Applying the M.A.P System
Analyzing the GBP/USD Pair:
- Parabolic SAR: The SAR dots are below the price, indicating a bullish trend.
- Moving Average of Oscillator: Shows bullish momentum.
- ATR: The ATR value is below the level considered as the lower volatility threshold.
Entry for BUY:
- If all indicators show bullish signals and ATR is below the threshold, open a BUY position.
- Set TP and SL according to your technical analysis and risk preference.
Entry for SELL:
- If Parabolic SAR and MAO show bearish signals and ATR is below the threshold, open a SELL position.
- Set TP and SL according to your technical analysis and risk preference.
The M.A.P system combines multiple indicators to help determine entry points and reduce the risk of false signals. By following these steps, you can improve the accuracy of your trading decisions and better manage risk. Always remember to adjust TP and SL settings according to your own trading style and risk tolerance.