5 minute FOREX trading strategy

When trading forex, standard signals and formation will become very unpredictable in lower timeframes. Chart formation that is reliable in 4 hour chart will provide no statistical edge in 5 minutes graph. Chaotic and volatile nature of this chart can be used in another way. Volatility can be employed as a helping factor with great results. 

This forex strategy works in 5 minutes chart. It can be also learned in under 5 minutes.It also takes the same time to set the Virtuosity A expert advisor to trade it automatically. 


5 minutes forex trading strategy aims to identify general and immediate momentum in 5 minutes chart. We we decide trading direction and we will use averaging for scalping purposes. While not looking for perfect entry point, averaging ensures that we get better overall price for our entry. 
 
MACD histogram is used to define current trend and make sure that momentum is growing. Bollinger bands tunnel is also employed to gauge immediate price momentum. If Initial entry fails, it will be averaged (max 5 trades). 
 

Aggression is increase on consecutive averaging trades (0,01 lot x 1,3,5,7,9). As a result the price correction necessary for successfully closing the trades in profit gets more narrow. 
 
Due to the system aggression, trading frequency and the fact that it increases lot size on consecutive trades, excellent ECN/STP broker is necessary ( spread around 0,2 pips on EURUSD). 
 
Strategy was tested using Virtuosity A MT4 Expert advisor. This trading robot developed by our team can be used for testing, optimization and trading of this forex strategy (and many more) on any currency pair and any timeframe. 
 
Used tools and indicators

  • System was tested for 5 minutes chart of EURUSD. Using the Virtuosity A expert advisor it can be optimized for any pair and any timeframe.

  • MACD histogram: 150,50: We will be trading only in the direction of MACD defined trend. Momentum must be confirmed by histogram bar growing in the direction of this trend.

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

  • Positions: We open up to five positions. Averaging logic is used on each consecutive trade (if trade exists). Distance between trades is set to 100 points (10 pips). We increase the leverage on consecutive trades in this day trading forex strategy: (0,01 lot x 1,3,5,7,9) in EA set the increase factor to 2. 

  • Target profit: Target profit is 0,5 USD for each 0,01 of lot size used. It is further multiplied by the number of currently opened trades (1 - 5). 

  • Closing of losing trades: We close all existing trades at equity loss greater than 60 USD (per 0.01 lot size used ) or at the MACD defined trend reversal.

  • 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

 

  1. MACD histogram closing below zero. Last histogram bar closed below previous histogram bar. Trend momentum confirmed. 

  2. Price closing below BB tunnel - immediate momentum confirmed.

  3. We enter the trade short. 

  4. If price moves against our initial entry we average the existing trade according to averaging logic (max 5 trades, increase lot size by increase factor of 2, BB and MACD momentum is not considered when opening averaging trades). 

  5. Target profit: All existing position are closed in proportional profit (number of trade multiplied by the target profit of 0,5 USD per 0,01 of lot. 

  6. Max loss: All existing trades are closed in loss once the MACD trend reverses ot at max equity loss of 60 USD per 0.01 lot size used. 

 
BUY

  1. MACD histogram closing above zero. Last histogram bar closed above previous histogram bar. Trend momentum confirmed. 

  2. Price closing above BB tunnel - immediate momentum confirmed.

  3. We enter the trade long. 

  4. If price moves against our initial entry we average the existing trade according to averaging logic (max 5 trades, increase lot size by increase factor of 2, BB and MACD momentum is not considered when opening averaging trades). 

  5. Target profit: All existing position are closed in proportional profit (number of trade multiplied by the target profit of 0,5 USD per 0,01 of lot. 

  6. Max loss: All existing trades are closed in loss once the MACD trend reverses ot at max equity loss of 60 USD per 0.01 lot size used. 
     

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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