Hull iTrend Forex Trading Strategy

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Hull iTrend Forex Trading Strategy 1

There are many ways to trade the forex markets. There are support and resistance traders, breakout traders, mean reversion traders, price action traders, etc. All of these types of strategies do work for different types of traders. One of the best ways to trade the forex markets is through trend following strategies. This is because strong trends tend to produce huge returns compared to other strategies. However, even though trend following strategies have the capacity to produce huge gains, the difficulty lies in identifying market conditions that could result in a trend.

Traders have various techniques to identify trade setups that could possibly result in a trend. One of the ways to do this is by looking for confluences of trade signals. This could be through the use of some technical analysis techniques or through the use of technical indicators. Identifying these confluences give traders a higher degree of confidence that a trade setup could work in their favor since confluences generally results in a higher probability trade.

The Hull iTrend Forex Trading Strategy is a strategy that aims to identify high probability trade setups that could result in trends by taking trades that are a result of a confluence of signals coming from several technical indicators.

Hull Moving Average

The moving average is probably one of the most basic and staple type of moving average available to traders. It is probably because of this that traders are now flooded with a multitude of moving average variations. However, even with its usability and effectiveness, moving averages have one disadvantage, it is a lagging indicator. The Simple Moving Average (SMA) is probably the most lagging of all the moving averages. This is because it puts equal emphasis on former price closes as it does with the most recent price close. For this reason, variations such as the Weighted Moving Average (WMA) and the Exponential Moving Average (EMA) were developed, in order to compensate for the lag.

The Hull Moving Average (HMA) was also developed to address lag. In fact, it is somehow a derivative of the Weighted Moving Average. It is an extremely responsive type of moving average. However, in spite of its extreme responsiveness, the HMA still manages to be very smooth, making it very useful as a moving average indicator.

Gann Hi Lo Activator Bars

The Gann Hi Lo Activator Bars is a momentum indicator which aids traders in identifying the short-term trend. It is an extremely responsive moving indicator, which indicates the direction and reversals of the very short-term trends.

It is somehow similar to the Heiken Ashi Candles. It is overlaid on the price candles themselves. It then changes colors depending on the direction of the short-term trend. Trend signals are generated whenever the Gann Hi Lo Activator Bars change colors, indicating that the short-term trend or momentum has shifted.

iTrend Indicator

The iTrend indicator is a momentum-based indicator which helps traders identify trend direction. It has some similarities with the Directional Movement Index (DMI) lines of the Average Directional Movement Index (ADX) indicator.

It draws two lines which crisscross each other moving according to price movements. The lime green line represents the positive price movements while the red line represents the negative price movements. The trend is considered bullish whenever the lime green line is above the red line, and bearish if the lines are stacked inversely.

Trading Strategy

This trend following strategy is based on a confluence of short-term and mid-term trend reversal signals. These signals are generated by three indicators.

The Hull Moving Average (HMA) indicator is the main mid-term trend indicator. With this particular HMA indicator, dots are plotted to indicate the moving average. These dots change color whenever the indicator detects a change in trend direction. These color changes are the main trend reversal signal.

However, the HMA should also be in confluence with another mid-term trend indicator, which is the iTrend indicator. The iTrend indicator responds faster than the HMA indicator. As such, the iTrend indicator’s crossover signals would usually precede the HMA color change.

Lastly, the Gann Hi Lo Activator Bars, which represent the short-term trend should also agree with the trend direction of the two indicators discussed above. The color of its bars should indicate the same trend direction as the other two indicators.

Indicators:

  • Gann HiLo activator bars
    • Lb: 10
  • HMA_v2
    • HMA Period: 50
  • i_Trend
    • Bands Period: 30

Timeframe: preferably 4-hour and daily charts

Currency Pairs: preferably major and minor pairs

Trading Session: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The lime green line of the iTrend indicator should cross above the red line indicating a bullish crossover signal
  • The HMA dots should change to light blue indicating a bullish trend reversal
  • The Gann Hi Lo Activator Bars should change to blue indicating a bullish short-term trend
  • These bullish trend signals should be somewhat aligned
  • Enter a buy order on the confluence of the conditions

Stop Loss

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

Exit

  • Close the trade if the lime green line of the iTrend indicator crosses below the red line
  • Close the trade if the HMA dots changes to tomato
  • Close the trade if the Gann Hi Lo Activator Bars changes to orange

Hull iTrend Forex Trading Strategy 1

Hull iTrend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The red line of the iTrend indicator should cross above the lime green line indicating a bearish crossover signal
  • The HMA dots should change to tomato indicating a bearish trend reversal
  • The Gann Hi Lo Activator Bars should change to orange indicating a bearish short-term trend
  • These bearish trend signals should be somewhat aligned
  • Enter a sell order on the confluence of the conditions

Stop Loss

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

Exit

  • Close the trade if the red line of the iTrend indicator crosses below the lime green line
  • Close the trade if the HMA dots changes to light blue
  • Close the trade if the Gann Hi Lo Activator Bars changes to blue

Hull iTrend Forex Trading Strategy 3

Hull iTrend Forex Trading Strategy 4

Conclusion

This trend following strategy is one which is based on a confluence of high probability trend reversal signals coming from several indicators. All these indicators do well in indicating strong trends. Both the HMA and iTrend indicator produce signals with great results whenever used in a market which has a strong tendency to trend. In fact, these indicators are both able to catch big trends even as standalone indicators. The Gann Hi Lo Activator Bars also tend to do well in a very strong short-term trend. There are many instances when you could ride a trend from start to finish using just this indicator. Combining these three powerful indicators would result in an even stronger trend reversal indication. This strategy produces great results when used in a market that has a strong tendency to trend.

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