Nightcrawler Trend Forex Trading Strategy

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Nightcrawler Trend Forex Trading Strategy

Many people who are not into trading have different opinions about trading. Some think that trading is just gambling with price movements. Others think trading is very difficult and is reserved only for the intellectually elite. Others think that trading is an easy money, get rich quick type of job that is too good to be true. Any of these assumptions are a reality for different traders. Trading can be turned into gambling if not done with a proper trading strategy. Trading do not require you to be a genius, yet it is also very difficult. If done right and if you have learned how to trade, trading is the easiest way to earn a lot of money, yet you must pay your dues to get to this point.

Not all traders would get rich quick with trading. However, it is usually those who are willing to put in the work who are able to master the craft. Forex trading is about grinding through your trade process day in and day out from Monday to Friday. Those who are willing to grind could soon be rewarded with the skills to earn money anywhere in the world.

Nightcrawler Trend Forex Trading Strategy is a trend following strategy which can be used by traders to make money out of the forex markets. It uses some technical indicators which could help traders identify trending markets and grind through each wave that the trend makes.

Stochastic Cross Alert

The Stochastic Oscillator is one of the most popular technical indicators that traders could use. It is available in any trading platform and charting software or website. It is also probably one of the simplest indicators to use. Yet, despite its simplicity, it is still a very effective indicator which can provide a ton of information.

The basic Stochastic Oscillator was developed to help traders identify short-term trends, trend reversals and mean reversals. It is composed of two lines which oscillate within the range of 0 to 100. Trend is identified based on how the two lines are stacked. If the faster line is above the slower line, then the trend is bullish. If the faster line is below the slower line, then the trend is bearish. As such, crossovers between the two lines are considered trend reversal signals.

Stochastic Oscillators also typically have markers at 20 and 80. Lines below 20 indicate that price is oversold, while lines above 80 indicate that price is overbought. Reversal signals occurring at these conditions have a strong probability to result in a mean reversal.

Stochastic Cross Alert indicator simplifies these entry signals. It basically plots arrows whenever it detects reversal signals occurring while the underlying lines are either oversold or overbought.

Hull Moving Average

The Hull Moving Average (HMA) is a modified version of a moving average aimed at addressing the usual weaknesses of a Simple Moving Average (SMA).

Moving averages are usually plagued with two common weaknesses. It is either too lagging or is too susceptible to market noise. Traders would usually address this by increasing the number of periods used in the moving average line. This tends to smoothen out the moving average line, yet it also makes it less responsive to price movements. This makes most moving average trade setups either lagging or too susceptible to false signals due to market noise.

The HMA was developed to address these two concerns. It manages to decrease the lag significantly while improving the smoothing effect of its line at the same time. This creates a moving average line that is very useful for identifying trends and trend reversals.

This version of the HMA identifies trend reversals and indicates it with the changing of its color. Green lines indicate a bullish trend, while dark violet lines indicate a bearish trend.

Trading Strategy

This trading strategy produces trade signals based on confluences coming from the Stochastic Cross Alert and Hull Moving Average indicators, while aligning trade signals with the long-term trend.

To identify the long-term trend, we will be using the 100-period Exponential Moving Average (EMA). The trend will be based on the general location of price action in relation to the 100 EMA line and the slope of the 100 EMA line.

Trade signals are generated whenever the Stochastic Cross Alert indicator produces and arrow pointing the direction of the trend while being in confluence with the changing of the color of the HMA line.

Indicators:

  • 100 EMA
  • Stochastic_Cross_Alert
  • Hull-moving-average

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

  • The 100 EMA line should be sloping up.
  • Price action must be generally above the 100 EMA line.
  • Price action must be making higher swing highs and swing lows.
  • The Stochastic Cross Alert indicator must plot an arrow pointing up.
  • The HMA line should change to green.
  • These bullish signals should be closely aligned.
  • Enter a buy order upon confirmation of these conditions.

Stop Loss

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

Exit

  • Close the trade as soon as the Stochastic Cross Alert indicator plots an arrow pointing down.
  • Close the trade as soon as the HMA line changes to dark violet.

Nightcrawler Trend Forex Trading Strategy

Nightcrawler Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The 100 EMA line should be sloping down.
  • Price action must be generally below the 100 EMA line.
  • Price action must be making lower swing highs and swing lows.
  • The Stochastic Cross Alert indicator must plot an arrow pointing dwon.
  • The HMA line should change to dark violet.
  • These bearish signals should be closely aligned.
  • Enter a sell order upon confirmation of these conditions.

Stop Loss

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

Exit

  • Close the trade as soon as the Stochastic Cross Alert indicator plots an arrow pointing up.
  • Close the trade as soon as the HMA line changes to green.

Nightcrawler Trend Forex Trading Strategy 3

Nightcrawler Trend Forex Trading Strategy 4

Conclusion

As a trend following strategy, this strategy does produce a decent win rate and reward-risk ratio. Traders can consistently profit from the forex market because of this.

However, using this strategy in the wrong market condition could be detrimental to an account. Its accuracy depends highly on it being traded in a trending market condition.

As such, the key to profiting using this strategy is in identifying the correct market condition where it could be used.

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