The Money Dot Trading System applies multiple indicators to present the direction of the trend. In this guide, we’ll mention what the system is all about and how you can trade it.
What is the Money Dot Trading System?
The Money Dot Trading System uses the MoneyDot indicator and the MoneyDot template to tell about the market trend. The MoneyDot indicator plots white and red dots on the chart. These dots appear when there is a strong bullish and bearish momentum.
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The MoneyDot template applies to the upper and lower bands on the chart. These bands look similar to Bollinger Bands, and the break below or above the bands suggests a reversal. However, unlike the traditional Bollinger Bands, the Money Dot system doesn’t have a middle line.
Money Dot Trading System Strategy
There are two ways to trade with the Money Dot Trading System: looking for the white and red dots and looking for price breaks above/below the bands.
When the red dot forms, it suggests a strong bearish momentum, and you can look for a short entry point. Conversely, if the white arrow appears, it signals a strong bullish momentum, and you can look for a long entry point.
The second way is to trade with the bands and use the dots as a momentum detector. When the price trades near the upper band, it is considered overbought, indicating a potential sell signal. However, if there is a white dot, it means it’s an uptrend continuation.
On the other hand, when the price is trading near the lower band, it is considered oversold, indicating a potential buy signal. But if there is a red dot, it’s a continuation of a downtrend.
The good thing is you can use the indicator on all timeframes. However, looking for the trend on longer timeframes is best, as the indicator can be prone to false signals.
Buy Signal
- The price must break below the lower band.
- There shouldn’t be a red dot.
- Wait for the price to go above the lower band.
- Place a stop-loss at the recent swing low.
- Set take-profit at the previous high or exit the trade when the price breaks above the upper band.
Sell Signal
- The price must break below the upper band.
- There shouldn’t be a white dot.
- Wait for the price to go below the upper band.
- Place a stop-loss at the recent swing high.
- Set take-profit at the previous low or exit the trade when the price breaks below the lower band.
Money Dot Trading System Pros & Cons
Here are the pros and cons of the Money Dot Trading System:
Pros
- The system is easy to apply.
- It can present clear entry and exit points.
Cons
- The system may not work in the consolidation phase.
- It may not work on shorter timeframes.
Conclusion
The Money Dot Trading System uses the Money Dot Indicator and Money Dot template to identify the market trend. The template has upper and lower bands, while the indicator plots white and red dots.
I’m a self-confessed Forex geek who spends countless hours researching, testing, and reviewing everything related to trading. With many years of experience in the Forex industry—and thousands of robots, brokers, strategies, and courses put to the test—I’ve seen what works and what doesn’t. My goal is simple: to share that knowledge with you for free, so you can navigate the exciting (and sometimes crazy) world of Forex trading with more confidence.
