DPO Forex Trading Strategy

The DPO forex trading strategy is a scalping strategy that combines three technical studies i.e. DPO, Drive and EMA CROSSOVER SIGNAL custom indicator in delivering trading signals on a 1-minute chart.

Chart Setup

MetaTrader4 Indicators: DPO.ex4 (default setting), Drive.ex4 (default setting), EMA CROSSOVER SIGNAL.ex4 (variable value modified)

Preferred Time Frame(s): 1-Minute, 5-Minutes

Recommended Trading Sessions: Any

Currency Pairs: Any low spread pair

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Buy Trade Example (Click the image for full size view)

dpo-forex-trading-strategy

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy if the following conditions or rules holds sway:

  1. If the green upward pointing arrow of the EMA CROSSOVER SIGNAL custom indicator forms below price bars, it indicates a bullish trend.
  2. The Drive custom indicator is added unto the DPO indicator i.e. add the DPO indicator to the chart, then click, drag and drop the Drive indicator into the DPO indicator window. What we now have is two indicators meshed into one window.

If the green and blue line of the Drive and DPO custom indicators respectively both break above the 0.0000 level, it is an indication that price is being pressured upwards i.e. a bullish signal as shown on Fig. 1.0.

Stop Loss for Buy Entry: Place stop loss ~ 7 – 15 pips below entry price.

Exit Strategy/Take Profit for Buy Entry

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

  1. If the EMA CROSSOVER SIGNAL custom indicator forms a red downward pointing arrow, it indicates a possible trend reversal, thereby giving credence to an exit or take profit stance.
  2. If the blue line of the DPO custom indicator breaks below the 0.0000 level, it is a trigger to exit or take profit.

Sell Entry Rules

Enter a sell order if the following conditions or rules are true:

  1. If the EMA CROSSOVER SIGNAL custom indicator forms a red downward pointing arrow aligned above price bars, it denotes downward price pressures i.e. a sell order.
  2. If the green and blue line of the Drive and DPO custom indicators respectively both break below the 0.0000 level, it is an indication that price is pressured lower i.e. a bearish signal is imminent.

Stop Loss for Sell Entry: Place stop loss ~ 7 – 15 pips above entry price.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit on position(s) if the following are true:

  1. If the EMA CROSSOVER SIGNAL custom indicator forms a green upward pointing arrow that is aligned below price bar, an exit or take profit is appropriate.
  2. If the green and blue line of the Drive and DPO custom indicators respectively both break above the 0.0000 level, it is a signal to exit or take profit.

dpo-forex-trading-system

Fig. 1.1

Free Download

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About The Trading Indicators

EMA CROSSOVER SIGNAL indicator is a trend seeking indicator built on the crossover of two exponential moving averages. It will signal forex traders when the fast and slow EMA has crossed each other.  Traders are able to fully adjust FastEMA and SlowEMA input values.

The DPO or Detrended Price Oscillator is built on the difference between the current price and the SMA shifted by (Period / 2) + 1 bars. The indicator depicts the short-term changes in trend and is displayed on a separate chart window.

The Drive custom indicator is a trend reversal signal indicator. If the red and the green line intersect, it is an indication that trend is about to change. The indicator has a fixed minimum of 1.0328 and a fixed maximum of 3.7484.

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