ADX forex indicator is useful tool for determining trend direction and its strength (momentum). This scalping forex strategy employs it, together with RSI to find suitable scalping entry in the direction of market flow – trend.
Tight stop loss is placed on logical price levels and offers great risk reward ratio with possibility of adding to the winner and riding a trend on lower timeframes. Strategy works very well in 15 minutes timeframe, but can be also used in 5 min chart of any major forex instrument.
Used forex indicators:
ADX (average directional movement index) 50. ADX is used to effectively filter out trades that would go against general flow of the market. Thanks to ADX we will be trading on the right side of the market most of the time. Additional 15 line is added in indicators window.
RSI (relative strength index) 2. Fast RSI is used to mark the entry, that is short and rapid swing against the direction of major trend. Entry is further based on following candle that will confirm general trend direction
Strategy is traded in 15 min chart of any major currency pair.
For the best results, trade with professional ECN/STP broker with MT4. If you can't trade with profit. Automatically copy the traders that are already profitable.
Forex strategy rules
SELL
Red ADX line is trending above green ADX line, signalizing downtrend. Blue ADX line is trending above yellow (horizontal) line and it is not declining. This will signalize downtrend with sufficient momentum for us to enter the trade securely.
Entry signal: RSI rises above its 70 line. On price chart we wait for first bearish candle to close to enter our position short. Stop loss is placed above the high of our signal.
Take profit: ADX red crossing ADX green downwards. We liquidate all opened positions.
Adding to the winner: Next position can be opened only on lower price. Stop loss of all opened positions is placed above the high of most recent signal.
BUY
Red ADX line is trending below green ADX line, signalizing uptrend. Blue ADX line is trending above yellow (horizontal) line and it is not declining. This will signalize uptrend with sufficient momentum for is to enter the trade securely.
Entry signal: RSI falls below its 30 line. On price chart we wait for first bullish candle to close to enter our position long. Stop loss is placed below the low of our signal.
Take profit: ADX red crossing ADX green upwards. We liquidate all opened positions.
Adding to the winner: Next buy position can be opened only on higher price. Stop loss of all opened positions is placed above the high of most recent signal.
