Momentum Forex Swing Trading Strategy

Swing traders attempt to grab profits within the currency markets by holding trading positions from 1-3 days up to several weeks.

The Momentum forex swing trading strategy is a swing trading system that bundles together the i-AMA-Optimum.ex4, Bollinger Bands_b.ex4 and the default MT4 momentum forex indicators.

In a manner that allows traders to promptly determine trend direction, price volatility and the strength of the prevailing trend respectively.

Let’s see how to make sense off all of these.

Chart Setup

MetaTrader4 Indicators: i-AMA-Optimum.ex4 (Default Setting), Bollinger Bands_b.ex4 (Inputs Variable Modified; BBPeriod=40), Momentum (Parameter Setting Modified; Period=28)

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

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Momentum Forex Swing Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart pattern gets put on display:

  1. If the black dotted orange line of the i-AMA-Optimum custom indicator forms below the candlesticks as seen on Fig. 1.0, price is said to be drive higher i.e. a trigger to buy the designated forex pair.
  2. If the yellow Bollinger Bands_b custom indicator line and dodger blue line of the momentum indicator both surge above the 100, the general sentiment is said to be bullish, hence a trigger to go long on the forex pair of focus.

Stop Loss for Buy Entry: Place stop loss 5 pips below medium-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If price closes below the black dotted orange line of the i-AMA-Optimum custom indicator during a bullish signal, buyers are advised to reduce their exposure by exiting or closing their open orders forthwith.
  2. If the yellow Bollinger Bands_b custom indicator line and dodger blue line of the momentum indicator both dip below the 100 during a buy signal (see Fig. 1.1), bullish momentum is said to be reversing, as such an exit or take profit is recommended.

Sell Entry Rules

Take up sell position(s) if the following holds true:

  1. If the black dotted orange line of the i-AMA-Optimum custom indicator forms above the candlesticks as shown on Fig. 1.1, price is said to be pushed lower i.e. a trigger to sell the selected currency pair.
  2. If the yellow Bollinger Bands_b custom indicator line and dodger blue line of the momentum indicator both dip below the 100, the overall market sentiment is said to be bearish, hence a trigger to go short on the forex pair of interest.

Stop Loss for Sell Entry: Place stop loss 5 pips above medium-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If price closes above the black dotted orange line of the i-AMA-Optimum custom indicator during a bearish signal, sellers are advised to minimize their risk exposure by exiting or closing their open positions forthwith.
  2. If the yellow Bollinger Bands_b custom indicator line and dodger blue line of the momentum indicator both rises above the 100 during a sell alert (see Fig. 1.1), bearish momentum is said to be weaning, as such an exit or take profit will do.

Sell Trade Example

Fig. 1.1

Free Download

Download the Momentum Forex Swing Trading Strategy

About The Trading Indicators

The i-AMA-Optimum.ex4 is an optimized version of the Kaufman’s Adaptive Moving Average (AMA) that was originally developed by Perry Kaufman and finds use on short and long periods.

The Bollinger Bands_b.ex4 custom indicator shares a lot of similarities with the Bollinger Bands and seemingly gives traders crucial information about price volatility.

The Momentum indicator is an oscillator that compares when the current price is relative to where price was in the past.

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