Market Momentum provides a great entry opportunity. Especially so, if we decide to use trailing stop. The trading system that will be revealed in following paragraphs, uses four indicators to establish trend and momentum. It enters the trade aggressively, using multiple entry option with trailing stop applied on each trade. This results in steady and solid performance during our historicala data trial since 2003.
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These features combined are making the system works very well in all time frames above 30 min. It was tested on historical data with positive results.
Used tools and indicators
Exponential moving averages (EMAs 500,250). Slow and fast EMA are used to identify a trend. We enter only with confluence with the trend. This will be our primary filter
RSI secondary filter (200). RSI with high calculation period is used as a combination of long term momentum and trend filter. We will also use the ability of RSI to filter out the range, by applying sell below 45, buy above 55 zone in the middle of indicators window.
RSI signal (RSI period 21). Immediate momentum signal. We wait for signal candle close to enter the trade.
Signal candle (1-150 pips)Confirmation of the momentum. Candle with defined min/max range closing in the direction of trend.
SAR parabolic (step 0,02, max 0,05) each entry must also be confirmed by SAR parabolic.
SAR parabolic trailing stop: After the entry we place trailing stop at last closed SAR dot + (extra deviation 80 pips). It is adjusted with each following sar dot, only in the direction of profitable trade. Trailing stop will remain the only method of how to close the trade.
MAX open trades (10 in test): Strategy can get aggressive by increasing the number of max open trade per side simultaneously. When increasing this input, adjust the lot size accordingly.
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Forex strategy rules
EMA slow trending above EMA fast. This confirms the downtrend. Only short trades are admitted.
RSI secondary (slow) trends below sell below zone.
RSI signal falls below 30 line.
Bearish candle closes with defined body range, closes below the SAR dot.
We enter the trade short on signal candle close, placing trailing stop at last closed SAR dot + extra distance.
EMA slow trending below EMA fast. This confirms the uptrend. Only long trades are admitted.
RSI secondary (slow) trends above buy above zone.
RSI signal rises above 70 line.
Bullish candle closes with defined body range, closes above the SAR dot.
We enter the trade long on signal candle close, placing trailing stop at last closed SAR dot - extra distance.
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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.