We will consider a well known forex trading strategy which basically relies
on the use of a set exponential moving averages in order to explain the price
movement and to identify forex signals which could lead to profitability by
simultaneously taking up the least possible risk .
The forex trading strategy can be used in all forex pairs.
You can apply this methodology to all timeframes with satisfactory results.
However the timeframe of the thirty minutes chart and above is more preferable.
The forex trading strategy includes the following indicators:
Although we have four different exponential moving averages will study them
at two different groups.
The first group will put the EMA (5), EMA (10), EMA (15) and in the second group the EMA (65).
EMA (5), EMA (10), EMA (15)
Whenever there is a crossover between the EMA (5), EMA (10) and EMA (15) will wait until there is clear separation - distance between the three exponential moving averages so as to have buy or sell forex signal according to the direction of the cross. In the case where exponential moving averages are all together means that we have accumulation.
EMA (65)
Check the slope that has the EMA (65). An upward slope means a buying indication.
A downward slope means a selling indication. A flat slope means a accumulation.
MACD
The zero line separates to buy area and to sell area. If the signal line of MACD is above the level of zero means buying indication. But if the signal line of MACD is below the zero line means selling indication.
If the MACD histogram is above the zero line means that we have buying indication. If the histogram is below the zero line means that we have selling indication. If the signal line is located inside the MACD histogram and above the zero line, this means that we have buying indication. If the signal line is inside and below the zero line of the MACD histogram it means that we have indication for sale. If the signal line of MACD is located outside the histogram and above the zero line, this means that we have an upward accumulation. If the signal line of MACD is located outside and below the histogram zero line, this means that we have a downward accumulation.
The exponential moving averages EMA (5), EMA (10), EMA (15) form between them
an upward cross and they start to separate.
The price is above the EMA (65) which must have upward slope.
The signal line of MACD is above the zero level and enters the MACD histogram.
We will close our position when the signal line of MACD go outside from the
histogram, and if we had placed on the market for a short period of time.
In addition, we will close our trading position when the signal line of MACD cross the zero level to the opposite direction of our position, if the trading order that we had was placed for a longer period of time.
We can place stop loss level at the nearest low point before the cross of EMA
(5), EMA (10), EMA (15).
We can determine the level of take profit either using support and resistance
levels, or using a trailing stop loss level.
The exponential moving averages EMA (5), EMA (10), EMA (15) form between them
a downward cross and they start to separate.
The price is below the EMA (65) which must have a downward slope.
The signal line of MACD is below the zero level and enters the MACD histogram.
We will close our position when the signal line of MACD go outside from the
histogram, and if we had placed on the market for a short period of time.
In addition, we will close our trading position when the signal line of MACD cross the zero level to the opposite direction of our position, if the trading order that we had was placed for a longer period of time.
We can place stop loss level at the nearest high point before the cross of
EMA (5), EMA (10), EMA (15).
We can determine the level of take profit either using support and resistance
levels, or using a trailing stop loss level.
Important : All investors should know that any forex trading strategy before implementing in a real account needs to be tested in a demo account in order to be fully understood.
Also, all traders should be aware that extraordinary events occurring in the forex market very often, and is likely to alter the financial results of a forex trading strategy.
The forex trading strategy can be used in all forex pairs.
Timeframe
However the timeframe of the thirty minutes chart and above is more preferable.
The forex trading strategy includes the following indicators:
- EMA (5) - Exponential Moving Average
- EMA (10) - Exponential Moving Average
- EMA (15) - Exponential Moving Average
- EMA (65) - Exponential Moving Average
- MACD (12, 26, 9)
The first group will put the EMA (5), EMA (10), EMA (15) and in the second group the EMA (65).
Explanation of indicators
Whenever there is a crossover between the EMA (5), EMA (10) and EMA (15) will wait until there is clear separation - distance between the three exponential moving averages so as to have buy or sell forex signal according to the direction of the cross. In the case where exponential moving averages are all together means that we have accumulation.
EMA (65)
Check the slope that has the EMA (65). An upward slope means a buying indication.
A downward slope means a selling indication. A flat slope means a accumulation.
MACD
The zero line separates to buy area and to sell area. If the signal line of MACD is above the level of zero means buying indication. But if the signal line of MACD is below the zero line means selling indication.
If the MACD histogram is above the zero line means that we have buying indication. If the histogram is below the zero line means that we have selling indication. If the signal line is located inside the MACD histogram and above the zero line, this means that we have buying indication. If the signal line is inside and below the zero line of the MACD histogram it means that we have indication for sale. If the signal line of MACD is located outside the histogram and above the zero line, this means that we have an upward accumulation. If the signal line of MACD is located outside and below the histogram zero line, this means that we have a downward accumulation.
Buy Rules
The price is above the EMA (65) which must have upward slope.
The signal line of MACD is above the zero level and enters the MACD histogram.
Exit from a Buy Position
In addition, we will close our trading position when the signal line of MACD cross the zero level to the opposite direction of our position, if the trading order that we had was placed for a longer period of time.
Stop Loss
Take Profit
Sell Rules
The price is below the EMA (65) which must have a downward slope.
The signal line of MACD is below the zero level and enters the MACD histogram.
Exit from a Sell Position
In addition, we will close our trading position when the signal line of MACD cross the zero level to the opposite direction of our position, if the trading order that we had was placed for a longer period of time.
Stop Loss
Take Profit
Important : All investors should know that any forex trading strategy before implementing in a real account needs to be tested in a demo account in order to be fully understood.
Also, all traders should be aware that extraordinary events occurring in the forex market very often, and is likely to alter the financial results of a forex trading strategy.
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