I am back with
another brilliant forex trading strategy: the "Hedging Forex
Strategy". It is a type of forex trading strategy used by hedge fund
traders. You may be surprised that hedge funds use such simple strategies. Yes,
a simple trend tracking strategy works as well as sophisticated automated
trading systems. Most hedge funds use mechanical trading robots. Which means
that this same strategy is used in an automated environment, traders do not
have to perform any manual work. But for retailers like you, doing some manual
work is also worth it. However, you can run an automated version of this
strategy on your MT4 using some Expert Advisor coding. Otherwise, it's still
fine with manual labor.
The strategy has
7 indicators in total. They are all classic indicators. I should always tell
you that you should have a basic concept of the market trend before using any
trend tracking strategy. After successfully installing the Forex hedging
strategy, your chart should look like this:
IMPORTANT Forex
Hedging Strategy Indicators
Moving averages
Three moving
averages are used here. Target is an exponential moving average of 50 periods.
Yellow is an exponential moving average of 100 periods. Red is a 200-period
moving average. When the white moving average is above the rest, it is a good
uptrend. Similarly, when the white moving average is below the rest, it
indicates a good market with a downtrend.
Bbands stop
Bbands Stop are
the blue and red dots you see on the chart. When the market is above this
indicator, it indicates a bull market scenario and vice versa.
MACD
The MACD
indicator here is a combination of oscillator and histogram. The positive
histogram suggests a bull market scenario, while the negative histogram
suggests a downward trend.
ADX
ADX has a signal
line + ve (green) and –ve (red) and a MACD line (yellow). When the + line sees
it is above the line –see, it is an uptrend scenario and vice versa.
Force
The force
oscillator fluctuates in positive and negative space. You should look for long
opportunities only when this oscillator is positive and should be short only
when this indicator is negative.
Purchase
The market trend
should be on the rise.
The white moving
average should be above the rest of the moving averages.
The Bbands stop
indicator should be below the market.
The MACD
histogram must be in positive territory.
ADX should be
increasing.
The force
indicator must be in positive territory.
Buy at the market
price when all of the above parameters are met.
Place your stop
loss just below the recent support level.
Reserve your
profit when the Bbands stop indicator appears above the market.
Sale:
The market trend
should be downwards.
The white moving
average should be below the rest of the moving averages.
The Bbands stop
indicator should be above the market.
The MACD
histogram must be in negative territory.
ADX should be
increasing.
The force
indicator must be in negative territory.
Sell at market
price when all above parameters are met.
Place your stop
loss just above the recent resistance level.
Book your profit
when the Bbands stop indicator appears below the market.
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