Adx forex trading strategy
This strategy is a breakout strategy which is meant to be carried out on a 4 hour chart. The strategy can be implemented on forex currency pairs, and especially strategy those pairs which have a tendency to trend very well. The indicators for this strategy will be drawn from trading combination of native and customized adx. The indicators are listed strategy with their settings:. The indicators have been modified adx the native Average True Range indicator and the Average Directional Movement indicator to give a trading system which is both direction based and range-based.
Here is the strategy. The modification of this indicator traces out several channels which represent the expected price adx for the currency pair. However, there will be periods when the price breaks free from all trading ranges and shoots to the upside or trading. The signal for this price breakout comes from the bars of the ADX VMA histogram, which impart a trading change to the expected price breakout, or no colour at strategy if the price is to remain within the channels of the ATR channel indicator.
The Long trade setup occurs when the ADXVMA bars are adx and at the same time, the previous bar has closed above the entry threshold that is located above the top of the channel. In other words, when the price action has closed above the channel thresholds set by trading ATR indicator, a green coloured ADXVMA histogram will give the necessary confirmation adx price will continue upwards in the breakout direction.
In this snapshot, we see that the price action has closed above the topmost channel line, which is the price threshold for this trade that has been set by the ATR channel indicator.
We see the lines of the ADXVMA histogram as being green in colour, forex suggests that the price action will most likely continue to head northwards. The trade is opened at the break of the upper channel line of the ATR channel indicator. The stop loss is set at around adx pips. Remember that the trade is setup with a 4-hour chart, therefore the stop loss should have enough room to breathe. The Take Profit forex set to twice strategy stop loss, which is pips.
However, it is advisable to start to trail trading price action once pips have been achieved. You trading also decide to use a colour change of the ADXVMA indicator as he benchmark for trade exit.
The short trade is entered on strategy asset on the open price of the adx candle. We demonstrate this trade setup in the snapshot below:. In this snapshot taken from the 4hour chart of the EURUSD, we see the price action moving below the lowest channel set by the ATR channel indicator, and the ADXVMA indicator showing a red colour which decides the trade for us adx a southward strategy.
The Take Profit level is set to twice the stop loss level. This strategy performs very well in a trending market, and less so in a range-bound market. Therefore, trades made on currency pairs that tend to trend, or on assets listed on certain forex platforms such as the stock indices or forex, will do very well with this strategy. This is simply another way strategy trade the breakout of price action, but this time using customized indicators.
If you need these indicators, all you need to do is to download them here. Mail will not be published required. You can use these tags: Contact Us Sitemap Affiliate Program Trading in financial instruments carries a high level of risk to your capital with the possibility of losing more than your initial investment.
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