BS Trend Momentum Forex Trading Strategy

0
1228
BS Trend Momentum Forex Trading Strategy

In the past, trading often seemed to be exclusively for the intellectually savvy and financially capable individuals. Every now and then there are some renegades who break the mold and make it in their trading careers. However, up until in the past recent years, this narrative has been changing. Easier access to online trading, demo trading and online lessons have made it easier for people to understand what forex trading really is and what it is like to actually be trading. People realized that trading does not necessarily need to be very difficult and that it is not only exclusive for rich and smart people.

Trading can be easy or complex. Either way traders can still profit from the forex market regardless of whether the trading strategy used is easy or difficult. With that said, traders can simply trade based on simple rules that makes sense on a market that is easy to trade on.

Trending markets are some of the easiest market conditions to trade on. This is because price often tends to move in the direction of the trend more often than not, which drastically increases the likelihood of winning.

Momentum is also another market scenario which provides high probability trades which could also have the possibility of resulting in high yield trades. This is because momentum often causes price to continue in the direction of the most recent momentum shift.

MA Ribbon Filled 89.21

MA Ribbon filled 89.21 is a custom trend following technical indicator which is based on moving averages.

One of the most popular ways traders identify trend bias and trend direction is through the use of moving averages. Traders can identify trend direction based on the location of price action in relation to a moving average line, as well as the slope of a moving average line.

Taking it a step further, traders also use the crossing over of two or more moving average lines to identify trend reversals and trend direction. Traders often use this as a basis to enter a trend reversal setup. Traders only need to find the right setup and combination of moving averages.

The MA Ribbon Filled 89.21 indicator is based on this concept. It is a pair of two modified moving averages which tend to be very effective in identifying trends.

BS Trend

BS Trend is a custom momentum indicator which is binary in nature.

This indicator simply identifies the direction of the most recent momentum shift. It then plots bars that could either be -0.0001 or 0.0001. A negative bar indicates that the most recent momentum shift was bearish. On the other hand, a positive bar indicates that the most recent momentum shift was bullish. The bars only shift whenever the momentum shifts in the opposite direction.

Given the nature of this technical indicator. Traders can use this indicator first as a momentum filter. Traders can identify the direction of the most recent momentum shift and trade only according to it.

It can also be used as a momentum reversal entry trigger. Traders can use the shifting of the bars from negative to positive or vice versa as a signal to enter a momentum reversal trade setup.

Trading Strategy

This trading strategy trades in the direction of a mid-term trend, while utilizing the trend reversal signals of the underlying moving averages of the MA Ribbon Filled 89.21 indicator, as well as the momentum signals of the BS Trend indicator.

Trend direction is mainly identified based on the location of price action in relation to the slower moving average of the MA Ribbon Filled 89.21 indicator, as well as the direction of its slope. This moving average is represented by the red line.

The BS Trend indicator acts as a momentum filter and an initial indication of a probable trend reversal, which often occurs after a momentum shift. Trades are taken only in the direction indicated by the BS Trend bars. The momentum shift signal should also be fresh as it is more likely that the trend would continue if such is the case.

Finally, the entry trigger is based on the crossing over of the faster moving average line of the MA Ribbon Filled 89.21 indicator, which is the lime line, and a 36 period simple moving average line.

Indicators:

  • MA ribbon filled.89.21
  • 36 SMA (green)
  • BullBearRSI

Preferred Time Frames: 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action should be above the red line of the MA Ribbon Filled 89.21 indicator.
  • The red line should slope up.
  • The BS Trend bars should shift to positive.
  • The lime line of the MA Ribbon Filled 89.21 indicator should cross above the 36 SMA line (green).
  • Enter a buy order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the support below the entry candle.

Exit

  • Close the trade as soon as the BS Trend bars shift to negative.

BS Trend Momentum Forex Trading Strategy

BS Trend Momentum Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should be below the red line of the MA Ribbon Filled 89.21 indicator.
  • The red line should slope down.
  • The BS Trend bars should shift to negative.
  • The lime line of the MA Ribbon Filled 89.21 indicator should cross below the 36 SMA line (green).
  • Enter a sell order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the resistance above the entry candle.

Exit

  • Close the trade as soon as the BS Trend bars shift to positive.

BS Trend Momentum Forex Trading Strategy 3

BS Trend Momentum Forex Trading Strategy 4

Conclusion

The combination of a trend following strategy and a momentum signal is a very good trade setup.

Trend following strategies answer the question of which direction traders should take which should have the higher probability. However, answering this question is just half the battle. Traders should still ask themselves when and where they would trade.

Momentum signals answer the question of when to trade. This is because momentum signals are precise indications of a momentum shift, which could result to a new trend.

On top of that, the confirmation of the moving average crossover adds another layer of confluence which serves to increase the probability of the trade setups.

Recommended MT4 Brokers

XM Broker

  • Free $50 To Start Trading Instantly! (Withdraw-able Profit)
  • Deposit Bonus up to $5,000
  • Unlimited Loyalty Program
  • Award Winning Forex Broker
  • Additional Exclusive Bonuses Throughout The Year

XM broker

>> Sign Up for XM Broker Account here <<

FBS Broker

  • Trade 100 Bonus: Free $100 to kickstart your trading journey!
  • 100% Deposit Bonus: Double your deposit up to $10,000 and trade with enhanced capital.
  • Leverage up to 1:3000: Maximizing potential profits with one of the highest leverage options available.
  • ‘Best Customer Service Broker Asia’ Award: Recognized excellence in customer support and service.
  • Seasonal Promotions: Enjoy a variety of exclusive bonuses and promotional offers all year round.

fbs broker

>> Sign Up for FBS Broker Account here <<

Click here below to download:

Save

Save



Get Download Access

Get Smarter About Forex Trading Using Indicators

Join 100,000+ subscribers and get our 5 min daily newsletter on what matters in forex.

We do not sell or share your information with anyone.

LEAVE A REPLY

Please enter your comment!
Please enter your name here