Combination of four moving averages is used to determine the trend. Once it confirms the trend, this strategy uses DeMarker signalized momentum to enter the trade. We assume, that rapid price movement will move the price away from its average value. Momentum is large enough for us to remain in trade until the average price reaches current price.
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This anecdotal theory was put to a real test on high quality historical data since 2003. Results of the tests were positive. Strategy succeeded to create a profit. Therefore, at theforexkings.com we bring you a full strategy together with free expert advisor suitable for trading it.
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Used tools and indicators.
Exponential moving averages (EMA 500,250 and 200,100). During the test we have used only this single combination of moving averages. It is apparent that there are countless more combinations to be effectively used across al time frames and currency pairs. Each tandem works independently, identifying trend in its calculation period. For us to consider the entry both tandems must unanimously confirm current trend direction.
DeMarker (DEM 14). Indicator reaching overbought oversold zone, is considered a momentum signal. We do not enter the trade immediately, instead we wait for candle close to enter our trade with precision.
Trailing stop (trigger EMA 50). Momentum of price ensures that it will distance itself from its average value (EMA identified). Trailing stop is therefore tracked with trigger EMA value + additional distance of 90 pips to cover the market fluctuations.
Forex strategy rules:
SELL
EMA slow (500) trending above EMA fast (250).
EMA slow 2 (200) trending above EMA fast 2 (100).
DeM indicator falling below 0,3 line. We enter the trade short on candle close while this condition still exists.
Trailing stop is placed on trigger EMA with additional distance of 90 pips applied. This will be the only way of closing the trade.
BUY
EMA slow (500) trending below EMA fast (250).
EMA slow 2 (200) trending below EMA fast 2 (100).
DeM indicator rising above 0,7 line. We enter the trade long on candle close while this condition still exists.
Trailing stop is placed on trigger EMA with additional distance of 90 pips applied. This will be the only way of closing the trade.
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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.
