This forex strategy is based on fundamental market principle of momentum. Momentum is confirmed by the moving averages (represented by alligator forex indicator). Momentum signal accuracy is therefore further improved by trading in direction of long term trend.
Strategy is extremely profitable during trending market. In price belt (ranging conditions) it is able to survive due to using equal stop loss and profit levels. Therefore, when market moves chaotic, average loss will resemble costs for flipping a coin.
Used forex indicators
Alligator forex indicator (default settings 13,8,5) Indicator will help us to identify and confirm a trend. Momentum trades in the direction of trend are always more likely to end up in profit.
Momentum forex indicator (14). Momentum on wide candle will trigger our entry in the direction of trend and sudden movement. Apply additional lines: 100,45 and 99,65. Those will be our trigger values to enter the trade in 1H chart.
Forex strategy rules:
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SELL:
Alligator lines must be lined accordingly to downtrend from top to bottom (green, red, blue). This will signalize downtrend and we will take only short trades.
Signal: Momentum indicator crossing 99,65 line downwards. Strong bearish candle is closed, ideally reaching new low within our downtrend (or new low was reached before entry).
We place pending sell order at our trigger candle low. Stop loss is placed one pip above the high of a candle. Take profit equals the distance between the entry and stop loss (SL equals TP).
We will open independent positions on each signal we receive.
BUY:
Alligator lines must be lined accordingly to uptrend from top to bottom (blue, red, green). This will signalize uptrend and we will take only long trades.
Signal: Momentum indicator crossing 100,45 line upwards. Strong bullish candle is closed, ideally reaching new high within our uptrend (or new high was reached before entry).
We place pending buy order at our trigger candle high. Stop loss is placed one pip below the low of a candle. Take profit equals the distance between the entry and stop loss (SL equals TP).
We will open independent position on each signal we receive.
