Double Exponential Moving Average (DEMA) Forex Strategy

As such the strategy employs the Double Exponential Moving Average (DEMA) and 100pips Power custom indicators in defining sell and buy points in the market.

We implement a DEMA crossover, using the DEMA (12) (red) and DEMA (14) (purple) on the chart window.

Chart Setup

MetaTrader4 Indicators: 100pips Power.ex4 (default setting), Double Exponential Moving Average.ex4 (DEMA) (default setting)

Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly

Recommended Trading Sessions: Any

Currency Pairs: (USD/CHF, EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, NZD/USD, EUR/CHF)

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Download Double Exponential Moving Average (DEMA) Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Place a buy in the market if the following rules or conditions holds sway:

  1. If the DEMA custom indicator lines crosses over i.e. the red DEMA (12) line crosses the purple DEMA (14) line upwards, it is an indication that price is being pressured upwards (a buy is advised).
  2. If the 100pips Power indicator forms blue vertical strokes within its indicator window, it is a signal that suggests that price is in an upward push i.e. a bullish trend is in focus.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position(s) when the following chart or indicator patter are in display:

  1. If the red DEMA (12) line crosses the purple DEMA (14) line, it signals the end of an existing trend, as a new trend comes into focus.
  2. If the color of the vertical strokes of the 100pips Power indicator changes to yellow (range bound market) or red (an imminent sell signal), it is a signal to exit or take profit.

Sell Entry Rules

Enter a sell in the market if the following conditions hold true;

  1. If the DEMA custom indicator lines crosses over i.e. the red DEMA (12) line crosses the purple DEMA (14) line downwards, it is a signal to sell (a bearish trend is in focus).
  2. If the 100pips Power indicator forms red vertical strokes within its indicator window, it is a signal that says “sell on the currency of interest.”

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit on position(s) if the following chart or indicator patterns are in displayed:

  1. If the red DEMA (12) line crosses the purple DEMA (14) line, it signals the end of our current trend, with a new trend about to begin.
  2. If the color of the vertical strokes of the 100pips Power indicator changes to yellow (range bound market) or blue (an imminent buy signal), it is a trigger to exit or take profit.

Fig. 1.1

Free Download

Download the Double Exponential Moving Average (DEMA) Forex Strategy

About The Trading Indicators

The double exponential moving average (DEMA) is a technical study that was developed by Patrick G. Mulloy in 1994 as an extension of the simple moving average formula.

It offers a smoother and faster MA with the core aim of reducing time lag present in traditional moving averages.

The 100pips Power indicator deploys a simple color visualization in defining trend i.e. red, blue and yellow which represents sell, buy and a range bound respectively.

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