The basic version of the SRDC objective is to filter out false move or signal created by the market. From the Daily chart, we need to add Bollinger Band (Period 21 with Deviation 3) and SMA 84 at Close.
As part of filtration technique, the SRDC rules require a trader to use multiple time frame say 1-hour and 15 minute chart. The daily candle support and resistance will act as guide for trend breakout.
In order to enter for a trade a simple rules must be obey, i.e. as follows:
Long : Price must be above the 84 SMA
Short : Price must be below the 84 SMA
Price must not be touching either the 84 SMA or the middle band of Bollinger Band.
The Outer Band (Upper & Lower) must point in the direction of the trade or price movement. If price going low the Outer Band must be pointing down not up. If price going high the Outer Band must be pointing up and not down.
A trade must ensure the he/she have enough room between entry point and the Outer Band to allow the trade to develop a suitable exit point. The exit point is when the price touch the Outer Band.
The stop loss for this technique will be the point where the middle band of the Bollinger Band currently position.
I will show this technique in real market condition as it happens. Happy trading guys ;)
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