Once we know trend direction, success rate for our position entry will rise. We will then use strong candle signal to enter our trade. What does it mean a strong candle ? Strong candle as understood in this forex strategy, is a candle with big body. It fits defined parameters and it is also larger than three previous candles.
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Our signal candle must also close in the direction of main and short term trend. Such a candle strongly suggests growing market momentum for the trend. It also gives us enough edge to successfully trade it long term.
Once we enter the trade, advanced trailing stop is preferred for position closing. Therefore, there will be no predefined stop loss or take profit target. We will simply look to ride a trade for as long as possible. Strategy comes with free expert advisor, provided to you by theforexkings.com
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Tools for this forex strategy
Moving average convergence divergence (MACD): We will use two histograms with different calculation parameters. Obviously strategy works for wide range of settings. The one we have tested for profitability uses following settings MACD fast 250, MACD slow 500, MACD fast 2 :100, MACD slow 2: 250. Adjust those parameters for different periods and time frames.
Signal candle: Candle with minimum size of 40 pips. Body of the candle is larger that body of any of previous 3 candles. Candle range can be defined as min/max inputs.
Advanced trailing stop: Stop loss is placed upon entry above the high (short trades) and below the low (long trades) of signal candle. It is than trailed above/below each closed candle. Adjust the additional distance with trail stop distance input. Strategy was tested for profitability for additional distance of 20 pips.
Forex strategy rules
Both MACD histograms trending below zero. Downtrend is therefore confirmed.
We enter the trade short on strong bearish candle close. Minimum size of the candle is 40 pips. It is also larger than of previous 3 candles.
Stop loss is placed 20 pips above the high of signal candle. It is than trailed 20 pips above the high of each closed candle. This is the only method of position liquidation for this forex strategy.
Both MACD histograms trending above zero. Uptrend is therefore confirmed.
We enter the trade long on strong bullish candle close. Minimum size of the candle is 40 pips. It is also larger than of previous 3 candles.ň
Stop loss is placed 20 pips below the low of signal candle. It is than trailed 20 pips below the low of each closed candle. This is the only method of position liquidation for this forex strategy.
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.