This forex strategy is suitable for those of you who enjoy to watch their position grow in trend following position. It uses relatively conservative approach, using multiple moving averages in different variations (also as alligator forex indicator) to pick the best positions within stable, major trends. It has exceptionally favorable risk reward ratio.
Costs of entering trade are reduced by using tight and logical stop loss that is just as tight as necessary for best entry. Relatively conservative trend following strategy suitable for busy, patient and conservative trader.
Used forex indicators
Alligator (130,80,50) Purpose: Alligator- combination of moving averages. In this strategy, they are used with slow calculation period with goal of identifying the main trend. Indicator should be drawn with thick line for better visualization as EMA will be also used.
EMA (exponential moving average) period 20 (red) and period 7 (green). Purpose: entry and exit timing of position in the direction of major trend.
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Forex strategy rules
Alligator will help us to identify downtrend. Alligator line are clearly separated and lined from top to bottom : Blue, red green. While it lasts we will take only short trades.
Entry signal: EMA 7 (green) crossing EMA (21) red downwards. We enter once the first candle after the crossing closes.
Stop loss is placed above the high of signal formation.
Take profit: EMA 7 crossing EMA 21 upwards.
Alligator will help us to identify uptrend. Alligator line are clearly separated and lined from top to bottom : green, red, blue. While it lasts we will take only long trades.
Entry signal: EMA 7 (green) crossing EMA (21) red upwards. We enter once the first candle after the crossing closes.
Stop loss is placed below the low of signal formation.
Take profit: EMA 7 crossing EMA 21 downwards.
Notes: For best results avoid trading in ranging market.