This forex strategy is all about letting the profits roll. This is achieved by using advanced trailing stop, that is following the SAR indicator. As many forex traders observed, when it comes to trailing stop, SAR is one of the best options. We will be using it also as a filter for our entry. The signal is based on 6 candle chart formation consisting of five flat candles and one aggressive candle closing in the direction of trend.
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Strategy was tested on high quality data since 2003, showing profitable results. Strategy is proved freely together with capable expert advisor used for testing (by theforexkings).
Used tools and indicators:
Results in screen shots were achieved in tick data test since 2003 (EURUSD,1H)
SAR parabolic (step 0,03, 0,1): All actions are based on closed indicators dot. Entry is performed on candle close and we also adjust trailing stop only on candle close. This is a fundamental rule of this forex strategy. Adjust SAR inputs to modify it for other currency pair and time frames.
Chart candle signal: 6 consecutive candles. First 5 are relatively flat and indecisive. All of them with body that is smaller than a body of last (sixth) candle. The candle number six surpasses the 5 candle formation in the direction of trend.
Trailing stop: TS is adjusted after each candle close, based on SAR dot position. Extra distance can be applied to cover the market volatility (trailing stop extra deviation 200 points).
Forex strategy rules
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Price closing below the SAR.
We look for 5 consecutive candles followed by sixth (signal) candle. Sixth candle is bearish and is larger than any of previous 5 candles. It closes below the low of last candle, and also below the low of first candle of the formation. The signal is also closing below the SAR.
Once we enter the trade short we place trailing stop at last closed SAR dot (above signal candle) + extra distance of 20 pips.Trailing stop is the only way of closing the trade win or lose.
Price closing above the SAR.
We look for 5 consecutive candles followed by sixth (signal) candle. Sixth candle is bullish and is larger than any of previous 5 candles. It closes above the high of last candle, and also above the high of first candle of the formation. The signal is also closing above the SAR.
Once we enter the trade long we place trailing stop at last closed SAR dot (below signal candle) - extra distance of 20 pips.
Trailing stop is the only way of closing the trade win or lose.
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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.