The trend (Which is the base of this strategy) is the most important element in the technical analysis elements, therefore it is important to draw it correctly as the following:
- The trend has to predicate on 3 candles, more distance among candles means more powerful trend.
- Concentrate on the trend angle as it should be between "30-70" degrees, acute angle or an obtuse angle outside 30-70 degree range is not considered a trend and is not included in the strategy.
1- Moving average Indicator:
We will use EMA9 and EMA30 for an hour frame.
2- Momentum Indicator:
Momentum is being used with the strategy to illustrate the market position, whether it's with the buyers or sellers, an indicator above Zero line refers to a market at the buyers' side, and vice versa so if the indicator below Zero line refers to a market at the sellers' side.
Entering is via opening a candle after a broken trend. Inviolably trend has to be found in order to be able to draw a trend. Inviolably here means no closed candle/s outside the trend, candles tails do not affect the strategy or the trend. The price should be observed so it doesn't move away much from the trend breaking point or the moving average.
There are two essential conditions for entering; each condition has rules and basics which have to be applied in order to avoid fake opportunities as much as we can:
- First Condition is Momentum line:
To confirm the Momentum direction, we choose one of the frames (in a buying process for example) and select the Momentum, then check another frame, if it's above Zero and matches the first frame it means more assurance of the Momentum direction. For example if we have a Momentum for an hour frame and it is above Zero line then we check another frame such as quarter, half, four or day frames, the more frames above zero the more reliable Momentum direction we get.
- Second Condition is crossed Moving averages:
It is a simple method used to commit to a deal and it relies on two strong and simple points:
Waite if the moving lines are crossed until it forms a 30 degree angle and above, preferably opening a candle after crossing to confirm it.
Crossing is preferred before breaking the trend, and this is the usual used method.
The strategy relies on 1:1 average in risk management, the target and the stopping are 40 points as a start (or at least). We also exclude pairs which are known of its rapid moves so we assign 50 points as a target and stopping for these pairs.
In addition, the profitable deals average in the strategy is more than the loss deals, approximate profitable deals is not less than 70% and it can reach up to 100% if the dealer is fully aware of the strategy and an expert in avoiding fake signals.
It is recommended to draw the trend after the indicators crossed to be able to recognize the correct trend instead of drawing multiple trends in the same chart.
The target starts with 40 points, after entering, if we found the deal is in the market direction (especially with the long period frames) then we can make profits up to 150 points, that doesn't mean to relay on the long period frames as the hourly frame is sufficient but we just review longer frames after entering to estimate profits.
Exiting and returning to the stopping are the most important parts in the strategy as they enable the trader to exit any deal at the right time to secure profit or decrease loss to the minimum instead of waiting to the stop hit.