HAMA Trend Lord Forex Trading Strategy

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HAMA Trend Lord Forex Trading Strategy

Is it possible to earn a fortune from forex trading? Is forex trading just like an ATM machine where traders could make money from out of thin air? Is it possible to never lose money when trading?

Well, these questions have a myriad of answers depending on who you are talking to. Yes, traders could easily make a fortune trading forex, but it comes with taking big risks. Forex trading is not an ATM machine, although if you are good, then it could sometimes feel like it. Finally, yes and no. It is theoretically possible to never lose money trading forex, however, that would mean trading on the lowest volume possible using a very large capital. That means having profits that are so small, it would be better not to trade. Others use exotic money management strategies such as grid and martingale, which could work most of the time, yet significantly increases the risk. If a trader is hit with a succession of losing trades using these strategies, they could easily wipe out their accounts.

What many people do not understand is that sound trading is simply about probabilities. It is about winning more often than losing and winning bigger than what you are losing. To do this, you would have to let the law of large numbers play in your favor. This means more trades for lesser risk.

One way to tilt the probabilities in your favor is by looking for confluences. This means having two or more different thesis that point the same direction at almost the same time. This could be two indicators producing the same signal. It could also be price action confirming the direction from the indicators.

HAMA Trend Lord Forex Trading Strategy is a strategy based on confluences. It uses two high probability indicators, which if traded on the right market, has a very high chance of resulting in a profit.

HAMA

HAMA basically stands for Heiken Ashi Moving Average. This indicator is a trend following indicator which helps traders identify the general direction of the trend over the mid-term.

The Heiken Ashi Moving Average is a modified version of the Heiken Ashi Smoothed indicator. Still, the two indicators share almost the same qualities. The Heiken Ashi Smoothed indicator is based on an Exponential Moving Average (EMA), while the HAMA indicator is also based on a moving average. Both indicators are geared towards identifying the mid-term trend and both indicators tend to produce accurate signals with very few false signals. This allows traders to stay with the trend until it loses steam. The difference is only that the HAMA indicator has no wicks, while the Heiken Ashi Smoothed indicator has wicks.

Trend Lord

Trend Lord is a custom technical indicator which helps traders identify trend direction.

It indicates trend by displaying histogram bars. The bars change color whenever the trend changes. During an uptrend, the bars become steel blue, while during a downtrend, the bars become crimson.

Trend Lord indicator is derived from a modified moving average and is plotted as a histogram on a separate window. This creates a histogram that would curl up or down whenever the slope of the moving average changes.

Trading Strategy

This strategy is based around the confluence of the HAMA indicator and the Trend Lord indicator.

Both indicators tend to be very good even as a standalone indicator. However, there are instances wherein the indicators could produce a false signal especially when there is no momentum behind the trading signal. Taking trades only when both indicators produce a signal at almost the same time increases the likelihood that momentum is behind the reversal. This means a better chance for the trade to move in your favor right away.

Trades are also filtered based on the direction of the long-term trend. We will be using the 200-period Simple Moving Average (SMA) in order to filter out trades that are not aligned with the long-term trend. Trends will be based on the location of price in relation to the 200 SMA and the slope of the 200 SMA line.

Indicators:

  • 200 SMA (Gold)
  • HAMA (default setting)
  • TrendLord (default setting)

Preferred Time Frames: 5-minute, 15-minute, 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should be above the 200 SMA line.
  • The 200 SMA line should be sloping up.
  • The Trend Lord indicator should change to steel blue.
  • The HAMA indicator should change to blue.
  • The two bullish signals should be closely aligned.
  • Enter a buy order on the confirmation of the conditions above.

Stop Loss

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

Exit

  • Close the trade as soon as the Trend Lord indicator changes to crimson.
  • Close the trade as soon as the HAMA indicator changes to red.

HAMA Trend Lord Forex Trading Strategy

HAMA Trend Lord Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should be below the 200 SMA line.
  • The 200 SMA line should be sloping down.
  • The Trend Lord indicator should change to crimson.
  • The HAMA indicator should change to red.
  • The two bearish signals should be closely aligned.
  • Enter a sell order on the confirmation of the conditions above.

Stop Loss

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

Exit

  • Close the trade as soon as the Trend Lord indicator changes to steel blue.
  • Close the trade as soon as the HAMA indicator changes to blue.

HAMA Trend Lord Forex Trading Strategy 3

HAMA Trend Lord Forex Trading Strategy 4

Conclusion

This trading strategy is a sound trading strategy that could produce profits consistently over the long run.

Both indicators work well individually. Combined together, these indicators work wonders. It could produce high probability trade setups that could produce high yields.

The key to using this strategy efficiently is in identifying a trending market. Once you have identified a trending market that has not shown signs of being overextended or slowing down, then you could use this strategy in the hopes of seeing huge yields on that trade. Use this strategy on the appropriate market condition and you should be seeing profits consistently.

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