A forex system using three different tools to identify and confirm the trend. Each with its own weaknesses and strengths. Together they create accurate entry model. The signal therefore remain simple and therefore fundamentally robust so it can be applied on any pair and timeframe. Signal - a simple candle clearly closing in the direction of trend.
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Our main goal here is to identify trend. We do so by using three independent indicators (EMA – main trend, SAR – price in a trend, no correction, and CCI- avoid trading range, momentum). Each has its own functions and works well in filtering out unsuitable entry.
To keep the trading frequent enough a simple candle signal is used. All position are liquidated using advanced trailing stop based on SAR indicator. The system was tested for profitability on historical data since 2003 with profitable results. Strategy is provided together with free expert advisor trading it.
Used tools and indicators
Exponential moving averages (250,500) Standard method used. Position of fast EMA compared to slow EMA will establish the trend. We try to focus more on long term trend present in the market.
Commodity channel index (20) CCI is used to find us market moving rapidly in the direction of trend – high momentum. This position are most likely to move into profit fast. This suits as well as we want our trail stop to protect profits soon after the entry.
SAR parabolic (step 0,03, max 0,05): Trend filter and trail stop lead.
MAX open trades (1 in test): Number of opened trades allowed per side at the same time.
Trailing stop is adjusted with each closed SAR dot. Extra distance (90 pips in test) can be applied to cover the volatility.
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Forex strategy rules
EMA fast trending below EMA slow. Downtrend
CCI falling below -100 line (sell below line). Price closing below SAR dot. Downtrend is fully confirmed and unanimously identified. We will be looking for short entry only.
Signal: Bearish candle with body range between 40-150 pips. We enter the trade short on its close. Trailing stop is placed according to last closed SAR dot + extra distance 90 pips above it. Position is only closed at SAR dot.
EMA fast trending above EMA slow. Uptrend
CCI rising above 100 line (buy below line). Price closing above SAR dot. Uptrend is fully confirmed and unanimously identified. We will be looking for long entry only.
Signal: Bullish candle with body range between 40-150 pips. We enter the trade long on its close. Trailing stop is placed according to last closed SAR dot - extra distance 90 pips below it. Position is only closed at SAR dot.
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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.