This is a solid day trading strategy that can be adapted for any timeframe and currency pair. Relatively conservative approach is used for position entry and management. The system uses alligator forex indicator together with CCI to establish the trend direction and confirm immediate momentum. Once we enter the trade position is managed with trailing stop following the SAR dot.
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This enables the strategy to stay in the winning trade much longer than in the loser. Risk reward ratio is positive and winning trades relatively frequent.
The system was tested on last 13 year of historical data, however the results can and need to be improved by modifying systems indicator periods.
The system comes with automated expert advisor trading it (by theforexkings).
Used tools and indicators
Alligator (50,80,130). All alligator lines must be aligned according to down/ uptrend. Entry is always performed in confluence with the trend.
Commodity channel index (CCI 20) Momentum indication of the entry. Trade signal confirming the momentum. For maximum accuracy, we enter only on candle close (new candle open).
SAR parabolic(step 0,02, max 0,05). Second trend filter, but what is most important the leading force for the trailing stop.
Trailing stop. Based on SAR dot. Additional distance 70 pips can be applied if trader see fit, or based on used instrument.
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Forex strategy rules
All alligator lines are aligned according to the downtrend from slowest at the top to fastest at the bottom. Lines must be untangled, clearly separated. This shows that downtrend is present in the chart.
We will be looking for confirmation of the short entry.
Price closing below the SAR dot.
CCI falling below the -100 line. We enter the trade on new candle open, placing trailing stop at the previous closed SAR dot (extra distance of 70 pips above it).
All alligator lines are aligned according to the uptrend from slowest at the bottom to fastest at the top. Lines must be untangled, clearly separated. This shows, that uptrend is present in the chart.
We will be looking for confirmation of the long entry.
Price closing above the SAR dot.
CCI rising above 100 line. We enter the trade on new candle open, placing trailing stop at the previous closed SAR dot (extra distance of 70 pips below it).
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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.