Cost averaging forex strategy

In this forex strategy we open up to ten averaging trades in the direction of trend. Each consecutive trade is always opened on better price (cost averaging). Opening additional trades improves overall price of the entry and increases size of the position. This also increases the risk. In this strategy we therefore increase the reward proportionally with the risk, to compensate for this fact and tremendously improve risk reward ratio. 

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While doing so, strategy will still be able to close majority of entry series in profit. Winning ratio of this system remains high. System works amazingly well in trending markets but is able to do just as good in trading range at the end of the trend. 

According to strategy rules all trades must be closed on EMA trend reversal. Strategy will work much better when trader anticipates reversals and exits the trend beforehand.

 

This forex strategy requires opening trades at specific price level (in defined averaging distance) and accurate  target profit calculation. It can be traded automatically by Alpha Proportion MT4 EA that was also used for historical data testing. This cost averaging system works best when trader manually choses the direction to trade in, and ceases to trade once trend starts to weaken. 

 

Forex strategy tools and indicators

  • Chart: Daily

  • Currency pair: EURUSD

  • Trend identification: trader can identify trend manually, however it must always be confirmed by EMA pair. 

  • Exponential Moving Averages Filter (EMA slow 100, EMA fast 30): Position of fast EMA in relationship with slow EMA defines trend. Entry must follow the trend. 

  • Closing of losing trades: All trades must be closed on EMA reversal (EMA fast switching position relative to EMA slow).

  • Target profit: 3 USD per 0.01 of lot size used. Target profit is multiplied by the number of opened trades. 

  • Averaging interval: Distance between consecutive averaging trades in points (each new trade opened on better price). 

  • Max number of trades: 10 

 

Forex strategy rules
SELL

  1. Uptrend defined on daily chart and confirmed by EMA fast trending above EMA slow. 

  2. Trade long only according to averaging rules.

  3. Calculate target profit based on number of positions (target profit*number of long trades)

  4. Wait one minute before entering new trade after successfully closing position..

  5. Close all losing trades on EMA reversal. Ideally you should avoid this situation by remaining only in healthy trend.


BUY

  1. Downtrend defined on daily chart and confirmed by EMA fast trending below EMA slow. 

  2. Trade short only according to averaging rules.

  3. Calculate target profit based on number of positions (target profit*number of long trades)

  4. Wait one minute before entering new trade after successfully closing position.

  5. Close all losing trades on EMA reversal. Ideally you should avoid this situation by remaining only in healthy trend.

 

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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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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. ” 

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