Hot Pips Forex Trading Strategy
Simple forex strategies like the “Hot Pips Forex Trading Strategy” allows you make consistent profits in the fx market.
The strategy is suitable for newbies as well as even experienced forex traders will take a lesson for it.
MetaTrader4 Indicators: HotPips.ex4 (default setting), EMA (10), EMA (25), EMA (50), EMA (200).
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour
Recommended Trading Sessions: London/U.S. Open
Currency Pairs: Majors (EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, NZD/USD)
Buy Example (click the image for full size):
Long Entry Rules:
This strategy triggers a buy entry when the following conditions are set:
- Check for the bullish candle that opens and closes above the EMAs i.e. EMA (10), EMA (25), EMA (50) and EMA (200). Once this is in place, then move to ascertain that:
- The red/blue histogram of the HotPips indicator must be above the zero level, coupled with a yellow arrow pointing upward, for such a signal to be confirmed as bullish.
These conditions set the pace for the bullish trend that was seen on Fig. 1.0 above.
Stop Loss for Long Entry: Buy entry stop loss should be placed 15-20 pips below the most recent support level.
Exit Strategy/Take Profit for Long Entry:
Take a bow from a trade or your positions in the market once these conditions set in:
- Exit your position when a bearish candle opens and closes below EMA lines i.e. EMA (10), EMA (25), EMA (50) and EMA (200).
- Watch out for the aqua colored downward pointing arrow to form on the HotPips indicator window, then exit your position(s).
Sell Entry Rules:
Bearish signals are triggered if the following patterns are displayed by the MT4 indicators:
- A bearish candle opens and closes below the EMAs [EMA (10), EMA (25), EMA (50) and EMA (200)] signaling a bearish trend that is underway.
- The red/blue histogram of the HotPips indicator should be below the zero level, along with an aqua colored arrow pointing downward. Such an indictor pattern is tagged bearish.
Stop Loss for Short Entry: Place stop loss 15-20 pips above the most recent support level.
Exit Strategy/Take Profit for Short Entry:
Exit your short positions upon having the following indicator pattern:
- When a bullish candle opens and closes above the EMA lines i.e. EMA (10), EMA (25), EMA (50) and EMA (200).
- The yellow colored upward pointing arrow on the HotPips indicator window signals an exit/take profit.
About The Trading Indicators
The Exponential Moving Average (EMA) that is being deployed on the “Hot Pips Forex Trading Strategy” uses the EMA (10), EMA (25), EMA (50) and EMA (200).
The various EMAs on different periods are designed to give more weight to the most recent data.
Generally, the 50- and 200- period EMAs are used to confirm long-term trends, while the 10- and 25- EMAs are short term averages.
The HotPips MT4 indicator on the other hand uses red/blue dotted histogram that are aligned below or above the zero level to alert sell or buy signals.
In addition to this, the chart window accommodates either an aqua colored downward arrow or yellow colored upward arrow to confirm the alerts.