Trading Currencies online can be a nightmare when market participants are ill-prepared.
Traders sometimes jump into the market without the right tools, and such levels of unpreparedness are bound to always end in tears.
There have been several discussions on what the best forex strategy should look like, but different theories surrounding this topic makes it even more intriguing.
However, consistent profits is the hallmark for any lucrative trading strategy and the proven Forex Pyramid strategy is designed to offer just that.
The Forex Pyramid strategy is built around the popular Octopus trend-following indicator and works well for scalping and day trading.
There’s a need to further explain the working of this strategy, and by so doing, we intend to give would-be users the necessary information to kick start a profitable journey in the currency market.
MetaTrader 4 Indicators: Moving Average.ex4 (Parameters Modified; Period=28, Style=Yellow), oT_S_Ra-Signal_Line.ex4 (Inputs Parameters Modified; method=2), octopus_2.ex4 (Default Setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour
Recommended Trading Sessions: London, New York
Currency Pairs: Any pair
Buy Trade Example: AUD/NZD (Australian Dollar / New Zealand Dollar), M30 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the yellow 28 SMA Metatrader 4 indicator line crosses below the dual colored (red & lime) oT_S_Ra-Signal_Line custom indicator line in a bottom up manner as shown on Fig. 1.0, bulls are said to be driving price higher i.e. a buy alert will suffice.
- If the green vertical bars of the octopus_2 custom indicator gets aligned within its indicator window as illustrated on Fig. 1.0, price is said to be driven to the upside, therefore a buy alert is said to be on the horizon.
Stop Loss for Buy Entry: Place stop loss below the previous swing low.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the yellow 28 SMA indicator line intersects the dual colored (red & lime) oT_S_Ra-Signal_Line indicator, more and more bulls are said to be exiting their positions, therefore an exit or take profit is duly recommended.
- If the octopus_2 custom indicator displays a red vertical bar while a bullish trend is ongoing (see Fig. 1.0), a bearish reversal is said to be most probable, thus an exit or take profit stance is advised.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the yellow 28 SMA indicator line crosses above the dual colored (red & lime) oT_S_Ra-Signal_Line custom indicator line in a top downward fashion (refer to Fig. 1.1), bears are said to be dragging price lower i.e. a signal to go short on the selected currency pair.
- If the red vertical bars of the octopus_2 custom indicator gets aligned within its indicator window as depicted on Fig. 1.1, bears are said to be pushing for lower prices i.e. a trigger to sell the currency pair of focus.
Stop Loss for Sell Entry: Place stop loss above the previous swing high.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the yellow 28 SMA indicator line intersects the dual colored (red & lime) oT_S_Ra-Signal_Line indicator while a bearish trend is on course, bears are said to be closing their positions increasingly, therefore an exit or take profit stance is duly advised.
- If the octopus_2 custom indicator displays a green vertical bar while a bearish trend is running (refer to Fig. 1.1), a bullish reversal is said to be most likely, thus an exit or take profit stance is apt.
Sell Trade Example: AUD/NZD (Australian Dollar / New Zealand Dollar), M30 Chart
About The Forex Technical Indicators Used
The 28 Simple Moving Average is a technical analysis indicator that smooths out price data by constantly creating an updated average price over 28 periods.
The oT_S_Ra-Signal_Line custom indicator for Metatrader4 is essentially the Hull Moving Average, also known as HMA.
It finds its use in spotting prevalent market trends.
The oT_S_Ra-Signal_Line indicator has the ability to follow price movement much closer, making it a preferred choice for traders wishing to scalp and day trade pairs on the lower time frames.
The Octopus_2 forex trend indicator is a modification of an earlier version (octopus_1) and forms bars or histograms within its main window.
Green bars are indicative of a buy signal, while red bars indicates a sell signal.
Start using this forex strategy in just 5 minutes. Click here to get started now.