Professional traders love to use at least 3-4 indicators in their strategies in Forex market. It is believed that this reduces the number of false signals. On the other hand, it also cuts the number of potential profitable points to enter the market, because each defines for himself: to risk, but to earn more or to minimize the risks and have a reasonable profit. Our Forex strategy with one indicator is simple and relatively reliable – it is recommended to use it as learning the basics of trading using technical analysis for beginners.
- If you like this strategy or have any questions, comments, feedback; you want to propose options for its improvement – leave your comments below the article, I will try to answer you!
Forex strategy with one indicator
The only one Trend Filter indicator is used in the strategy, which is rather peculiar – it can hardly be found among the standard Suite of desktop trading platforms. That is why I prefer functional platform MetaTrader 4, where you can download custom indicators.
Trend Filter has two features:
- it defines perfectly flat (dull market characterized by a horizontal trend) and time of price exit from it. The red line of the indicator and finding it below the level of 0.9 means flat in the overbought zone. The green line also means flat, but in oversold zone;
- the indicator shows the direction and strength of the trend outside the flat.
Forex strategy Форекс with one indicator has the following parameters:
- timeframe – 4 hours (the longer the interval, the better. Scalping strategy is not recommended);
- currency pair: EUR/USD;
- parameter of the indicator: Nbars = 50 (the number of bars for calculation); MA_Period = 9 (the averaging period); Levels: 0.899, -0.899. The colors of the lines can be left default.
The conditions for opening a buy trade:
- the red indicator line indicates that he was below the level of 0.9 over 7 bars in a row (no more than 3 weeks);
- the indicator draws a blue line, rising above the level of -0.9;
- enter the market on the next candle with a stop loss 30-60 points from a local minimum.
Conditions of opening of the transaction on the sales of the opposite. The indicator was more than 7 consecutive bars above the level of 0.9 (green cut), then fell below the level of 0.9, drawing the blue line.
The exit from the market in accordance with the strategy of risk management. Once the position is gaining in profit 30 points, stop loss move to breakeven, closing 50% of position. Once the profit reach 50 points, set trailing stop 50 points.
Strategy one indicator is not recommended if the signal appeared on the candle with a big body in front of the news. Be sure to manually close the position if the indicator has returned to the previous area (for a long position in green zone, while short – red).