lay on two
indicators, the first of which is the 20-period EMA (Exponential Moving Average). We use the
exponential moving average over the simple moving average because it places higher weight on
recent movements, which is what we need for fast momentum trades.
The moving average is used
to helps us determine the trend. The second indicator that we use is the MACD (Moving Average
Convergence Divergence) histogram which helps us gage momentum.
Convert Indicator to EA - FRZ Indicator Automater EA MT4/MT5
The settings for the MACD
histogram is the default, which is first EMA = 12, second EMA = 26, Signal EMA = 9, all using
the close price.
This strategy waits for a reversal trade but only takes it when momentum supports the reversal
move enough to create a larger extension burst. The position is exited in two separate segments,
the first half helps us lock in gains and ensures that we never turn a winner into a loser.
half lets us attempt to catch what could become a very large move with no risk since we already
moved our stop to breakeven.
Rules for a Long Trade
Look for currency pair to be trading below the 20-period EMA and MACD to be
Wait for price to cross above the 20-period EMA, make sure that MACD is either in
the process of crossing from negative to positive or have crossed into positive territory no
longer than 5 bars ago
Go long 10 pips above the 20-period EMA
For aggressive trade, place stop at swing low on 5 minute chart.
trade, place stop 20 pips below 20-period EMA
High Probability Trading Setups for the Currency Market
Sell half of position at entry plus amount risked, move stop on second half to
Trail stop by higher of breakeven or 20-period EMA minus 15 pips
Rules for a Short Trade
Look for currency pair to be trading above the 20-period EMA and MACD to be
Wait for price to cross below the 20-period EMA, make sure that MACD is either in
the process of crossing from positive to negative or have crossed into negative territory no
longer than 5 bars ago
Go short 10 pips below the 20-period EMA
For aggressive trade, place stop at swing high on 5 minute chart.
trade, place stop 20 pips above 20-period EMA
Buy back half of position at entry minus amount risked, move stop on second half to
Trail stop by lower of breakeven or 20-period EMA plus 15 pips