Day trading forex strategy

Momentum signal in the forex market acts like a freight train in full speed. It simply cannot stop immediately. This fact is employed as reliable entry signal in this trend following day trading forex strategy. Momentum signal is also combined with conservatively averaged positions. This powerful combination will enable us to close the trades in profit before complete trend reversal. Residual trend momentum will be used to close last trades of the trend in profit whenever is is possible. 

Forex strategy will win almost every entry while trend lasts. Loss at the trend reversal will be avoided by employing momentum signal, together with advanced position liquidation logic. 
 
Multiple filters are used to ensure that we identify trend and momentum correctly. MACD histogram both identified trend and confirms momentum. Volatility dependent Bollinger Bands tunnel confirms immediate momentum and help us avoid late entry before MACD catches up. 
 
Forex strategy was tested with Virtuosity A MT4 Expert Advisor developed by out team. EA works for wide variety of setting, with this strategy being only one of the many. EA can be used for testing, optimization and trading on all currency pairs and timeframes. 
 
Used tools and indicators

  • MACD histogram: 200,50: We will be trading only in the direction of MACD defined trend. Momentum must be confirmed by histogram bar growing in the direction of trend.

  • Bollinger Bands filter (period 20, deviation 1,5): Price must close above BB tunnel for long entry. Below BB tunnel for short entry). Immediate momentum signal. 

  • Positions: We open up to three positions. Averaging logic is used on each consecutive trade (if trade exists). Distance between trades is set to 200 points (20 pips). We increase the leverage on consecutive trades in this day trading forex strategy: first trade lot size x1, first trade lot size x2. first trade lot size x3 (in EA set the increase factor to 1). 

  • Target profit: Target profit is 1USD for each 0,01 of lot size used. It is further multiplied by the number of currently opened trades (1 -3). 

  • Closing of losing trades: We close all existing trades at loss once the MACD crosses 0 value - trend reverses. 

  • Averaging logic: If trade exists, new trade is opened regardless of the BB filter or MACD momentum. Momentum signal is applied only for the initial trade. 

 
Forex strategy rules
SELL

 MACD histogram closing below zero. Last histogram bar closed below previous histogram bar. Trend momentum confirmed. 
Price closing below BB tunnel - immediate momentum confirmed.
We enter the trade short. 
If price moves against our initial entry we average the existing trade according to averaging logic (max 3 trades, increase lot size, BB and MACD momentum is not considered when opening averaging trades). 
Target profit: All existing position are closed in proportional profit (number of trade multiplied by the target profit). 
Max loss: All existing trades are closed in loss once the MACD trend reverses.
 
BUY


MACD histogram closing above zero. Last histogram bar closed above previous histogram bar. Trend momentum confirmed. 
Price closing above BB tunnel - immediate momentum confirmed.
We enter the trade long. 
If price moves against our initial entry we average the existing trade according to averaging logic (max 3 trades, increase lot size, BB and MACD momentum is not considered when opening averaging trades). 
Target profit: All existing position are closed in proportional profit (number of trade multiplied by the target profit). 
Max loss: All existing trades are closed in loss once the MACD trend reverses.
 

Get MT4 expert advisor trading this forex strategy

 

  

For best results, use this forex strategy with one of our trusted forex brokers

(STP/ECN with MT4 bridge).

To win you must trade with broker on your side.

 

 

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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“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

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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