Double Exponential Smoothing Forex Trading Strategy

The Double Exponential Smoothing forex trading strategy incorporates three indicators in fine-tuning its buy/sell signals.

This strategy follows the primary trend and can be used on any pair. Learn below how this strategy works.

Chart Setup

MetaTrader4 Indicators: Holt_double_exponential_smoothing_trend.ex4 (default setting), i-AMA-Optimum.ex4 (default setting), HMA_v2.ex4 (default setting)

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

Recommended Trading Sessions: Any session

Currency Pairs: Any forex pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy position in the market if the following indicator of chart patterns are in display:

  1. If the black dots on orange line of the i-AMA-Optimum custom indicator crosses the light blue dotted line of the HMA_v2 custom indicator bottom up, it is a signal that price is being pressured higher i.e. a buy trigger.
  2. If the gray line and the lime green histograms of the Holt_double_exponential_smoothing_trend.ex4 custom indicator crosses and hovers above the 0.00 signal level, it is a trigger to enter a buy on the asset of interest.

Stop Loss for Buy Entry: Place stop loss 3 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following indicator or chart patterns are in display:

  1. If the tomato dotted line of the HMA_v2 custom indicator crosses the black dots on orange line of the i-AMA-Optimum custom indicator top downward, it is a signal to exit or take profit accordingly.
  2. If the gray line of the Holt_double_exponential_smoothing_trend.ex4 custom indicator crosses below the 0.00 signal level, while also forming orange histograms below its signal line, it is a trigger to exit or take profit forthwith.

Sell Entry Rules

Enter a sell in the market if the following price patterns get displayed:

  1. If the tomato dotted line of the HMA_v2 custom indicator crosses the black dots on orange line of the i-AMA-Optimum custom indicator top downward as seen on Fig. 1.1, it is a trigger to go short i.e. a sell signal.
  2. If the gray line and the orange histograms of the Holt_double_exponential_smoothing_trend.ex4 custom indicator crosses and hovers below the 0.00 signal level, it is a trigger to enter a sell on the asset of interest.

Stop Loss for Sell Entry: Place stop loss 3 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following indicator of chart patterns are in display:

  1. If the light blue dotted line of the HMA_v2 custom indicator crosses the black dots on orange line of the i-AMA-Optimum custom indicator bottom up, it is a signal to exit or take profit accordingly.
  2. If the gray line of the Holt_double_exponential_smoothing_trend.ex4 custom indicator crosses above the 0.00 signal level, while also forming lime green histograms above its signal line, it is a trigger to exit or take profit forthwith.

Sell Trade Example

Fig. 1.1

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About The Trading Indicators

The i-AMA-Optimum is an enhanced version of the Kaufman’s Adaptive Moving Average (AMA) that was formerly developed by Perry Kaufman and finds use on short and long periods.

The HMA_v2 custom indicator displays a dotted line on the chart, wherein the color of the dots are altered in relation to buy/sell signals.

The Holt_double_exponential_smoothing_trend.ex4 is a form of an “on-chart average like” custom indicator that can forecast trend.

The indicator oscillates above (buy) or below (sell) its signal level, i.e. the 0.00 level.

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