The focus of this strategy is to identify trends and determine appropriate entry points through the use of Moving Averages. Long-term averages are employed to establish the general market direction, while short-term averages are utilized to pinpoint potential entry positions.
The tools used for this strategy include 365-period and 150-period exponential Moving Averages for trend identification, and 26-period and 6-period exponential Moving Averages for entry point identification. These indicators can be located in the MetaTrader menu.
Time Frame: H1, H4 or Daily
Pairs: This strategy can be applied to any currency, stock, or commodity, but for consistent profits, it is more effective when used with assets that display consistent price movement patterns. Therefore, we recommend using this strategy with currency pairs such as EUR/USD, GBP/USD, GBP/CHF, and USD/JPY.
Determining the trend:
The key to this trend-trading strategy is to buy when the market is trending upward and sell when it is trending downward.
To determine the current trend, you should plot 365EMA and 150EMA on the chart. If the prices are above both the 365EMA and 150EMA (or if the 150EMA crosses the 365EMA from bottom to top), it indicates an upward trend, and you should buy.
On the other hand, if the prices are below both the long-term MA's (or if the 365EMA crosses the 365EMA from top to bottom), it indicates a downward trend, and you should sell.
Once the trend has been determined, the next step is to identify an entry point. This can be done by plotting 26EMA and 6EMA on the chart.
When the market is trending upward (uptrend):
To enter a long position, wait for the price (or the 6EMA) to cross above the 26EMA. This indicates a signal to open long positions.
When the market is trending downward (downtrend):
To enter a short position, wait for the price (or the 6EMA) to cross below the 26EMA. This indicates a signal to open short positions.
To protect your entry from potential losses, it is recommended to set a stop-loss for your trades. For sell trades, the stop-loss should be placed above the 365EMA, and for buy trades, it should be placed below the 365EMA.
It has been reported that a group of traders were able to achieve significant profits using this strategy on 80 consecutive deals.
While it is possible that this strategy is effective, it is important to note that no single strategy is guaranteed to be successful, and one should not become overly fixated on achieving a specific number of successful deals using this approach.