Simple Profitable Forex Trading Strategy
The simple profitable Forex trading strategy is a volatility based trend-following forex trading system that is designed to trigger profitable buy/sell market signals in the trend.
In order to achieve this, we have formulated a crossover mechanism that utilizes the moving average middle line of the Bollinger Bands as its core.
We’ve gone a bit further to consolidate on the strategy’s trend-seeking ability by adding a key component to this system i.e. the Trend indicator.
Additionally, the entire setup accommodates both smaller and bigger time frames, thus making it a versatile tool in the hands of short- and long- term traders.
MetaTrader 4 Indicators: Bollinger Bands.ex4 (Default Setting), TMA.ex4 (Inputs Variable Modified; Periods=36, Apply To=6, Colors Modified; #0=Red, Colors Width Modified; #0=2), Trend.ex4 (Inputs Variable Modified; Bands_Period=45, Power_Period=37, CountBars=30000)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day, 1-Week, 1-Month
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the red line of the TMA custom indicator crosses below the medium sea green middle line of the Bollinger Bands Metatrader 4 indicator as shown on Fig. 1.0, bulls are said to be driving market sentiment, therefore a buy alert will suffice.
- If the blue line of Trend custom indicator breaks and stays above its red line as seen on Fig. 1.0, the overall market sentiment is said to be bullish i.e. a trigger to go long on the designated currency pair.
Stop Loss for Buy Entry: Place stop loss below key support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the red line of the TMA custom indicator intersects the medium sea green middle line of the Bollinger Bands indicator while a bullish trend is ongoing (see Fig. 1.0), bulls are said to be closing their positions increasingly, therefore an exit or take profit stance is recommended.
- If the blue line of the Trend forex indicator falls below its red line during the course of a bullish signal, it is pointing to diminishing bulls power, as such an exit or take profit stance will suffice.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the red line of the TMA custom indicator crosses above the medium sea green middle line of the Bollinger Bands indicator as illustrated on Fig. 1.1, bears are said to be dragging price lower, thus a signal to go short on the forex pair of focus.
- If the red line of Trend custom indicator breaks and stays above its blue line as depicted on Fig. 1.1, the general market sentiment is said to be bearish i.e. a trigger to go short on the stipulated forex pair.
Stop Loss for Sell Entry: Place stop loss above key resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the red line of the TMA custom indicator intersects the medium sea green middle line of the Bollinger Bands indicator during the course of a bearish trend (refer to Fig. 1.1), more and more bears are said to be leaving the market, therefore an exit or take profit stance is advised.
- If the red line of the Trend forex indicator falls below its blue line while bearish trend is running, bears power is said to be weaning, as such an exit or take profit stance will do.
Sell Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart
About The Forex Technical Indicators Used
The Bollinger Bands is a tool that gauges volatility in the forex market, alongside other vital information like sessions of market consolidation, direction of trend, possible tops and bottoms along with price targets.
The Bollinger Bands are actually plotted two standard deviations away from a simple moving average.
TMA or Triangular Moving Average defines the main weight that goes into the average part of the price series.
The TMA forex indicator is simply a double smoothed simple Moving Average.
The length of the simple Moving Average is dependent on the oddness or evenness of the selected number of periods
The Trend custom indicator is a trend following system that is wrapped in an indicator window, comprising of two lines (red and blue), where both are seen to overlap each other to yield trend signals.
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