Pathway - trend following forex strategy

 

Pathway is a more complex solution for trend identification and postion entry. It heavily relies on immediate chart formation. Those, together with accuracy of trend identification, have made this strategy succeed in historical test. The strategy is fundamentally sound and precise. The risk reward ratio is balanced and system doesn't take any unnecessary risks.

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At all time, position is protected by SAR based trailing stop loss. The main advantage of this approach is, that winning trade will almost never turn to loser. Trailing stop loss placement, is the matter of historical data test, experience and intuition in this trading system. Furthermore, SAR parabolic is one of the best ways to approach the profit/loss puzzle.

 

The strategy is provided by theforexkings.com, together with fully functional expert advisor suitable for testing. You can use it to adapt this forex strategy according to your needs, time frame and chosen currency pairs.

 

Our test were run solely for 1H EURUSD tick data since 2003. Following setting were used to achieve results that are published on screenshots.

 

Used tool and forex indicators

 

Exponential moving averages (EMA 500 and 250). Combination of two EMA lines is used to effectively identify current trend. We do so by simply comparing the position of fast and slow EMA relative to each other. This is one of the most common method of trend identification. It works very well in our forex strategy.

 

Parabolic SAR (max 0,15, step 0,01). SAR will identify current price swing (minor trend, correction) we want to enter in the direction trend just at the correction end. Various tests have shown that SAR works almost surprisingly well in fulfilling this task. Modify indicators step and max to apply it across other instruments.

 

Big candle formation: 6 candle chart formation. Sixth candle of the formation has larger body than previous five candles. It is also surpassing 1. Candle of the formation, closing in the direction of trend.

 

Big candle size (10 to 150 pips in test): To narrow down the search for suitable entry. We define the min/max size of our signal candle. Bigger candle inherently bring more momentum therefore it is most suitable for this type of entry. We will avoid entering the trend on narrow, hesitant candles. We want the price to move rapidly so trailing stop can be adjusted immediately upon the entry.

 

Trailing stop (extra deviation 30 pips) Trailing stop is adjusted and placed with last SAR dot close. According to standard trail stop rules, it is adjusted only in the direction of profitable trade, never to the negative direction.

 

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

 

EMA fast trending below EMA slow. This signalizes general downtrend. We will be looking for a short entry on SAR swing down.SAR dot closing above the price. This confirms the major and minor trend direction are aligned. We start looking for a short entry.

 

Signal: 6 candle formation. Candle 6. Has a body wider than any of previous 5 candles. Once it closes below the low of 1. Candle of the formation, we enter the trade short.

 

Trailing stop is placed at the last closed SAR to + extra distance of pips.

 

BUY

EMA fast trending above EMA slow. This signalizes general uptrend. We will be looking for a long entry on SAR swing up.

SAR dot closing below the price. This confirms the major and minor trend direction are aligned. We start looking for a long entry.

 

Signal: 6 candle formation. Candle 6. Has a body wider than any of previous 5 candles. Once it closes above the high of 1. Candle of the formation, we enter the trade long.

 

Trailing stop is placed at the last closed SAR to - extra distance of pips.

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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.

 

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THEFOREXKINGS

“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

—  Marian, Proprietor of TheForexkings.com