Trading this forex strategy manually can be difficult at times. You end up with chart full of lines and it might be difficult , to tell which one is which. The system however offers its rewards, to those who learn to recognize what is going on in the chart. This was proven by automated system tested on historical data since 2003.
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Strategy uses Ichimoku forex indicator to recognize the trend. For the purpose of entry envelopes tunnel is drawn and we will be looking for high/low price to enter into the ichimoku defined trend. As many other systems, this one is also made and unmade with liquidation model.
Trailing stop is used and adjusted with each closed candle, to protect profits and limit the loss. Strategy can get quite aggressive. If decide to do so we simply change the maximum number open trades per side. Trailing stop will still be used for all of them.
Used tools and indicators
Ichimoku kinko hyo (10,40,520,180). Quite complex indicator requiring some experience to be operated we will omit chinkou span from the calculation. All trades will be take in the ichimoku identified trend direction.
Envelopes (period 60, deviation 0,1. We will draw simple price tunnel based on average high/low price. Price closing outside and then back within the tunnel will trigger the entry.
Trailing stop (extra 40 pips deviation). We place immediately as we enter the trade. It is placed above the high, below the low of last closed candle. Additional distance can be applied.
Max open trades in the test : 1
Forex strategy rules
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The upper cloud edge, consisting of span B / A line is above the price.
Span B line is above the span A line.
Kijun sen (blue) trends above tenkan sen (red line).
All of those three conditions must be met to confirm the downtrend and allow for short entry.
Entry. Price closing above the upper envelopes line. Once it closes back below it (within the tunnel). We enter on new candle open. Trailing stop is placed above the high of last closed candle + 40 pips extra deviation for trail stop.
The bottom cloud edge, consisting of span B / A line is below the price.
Span B line is below the span A line.
Kijun sen (blue) trends below tenkan sen (red line).
All of those three conditions must be met to confirm the uptrend and allow for long entry.
Entry. Price closing below the bottom envelopes line. Once it closes back above it (within the tunnel). We enter the trade on new candle open. Trailing stop is placed below the low of last closed candle – 40 pips extra deviation for trail stop.
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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.