Two MA’s and ADX Forex Trend following Strategy

August 22, 2016

786

Two MA’s and ADX Forex Trend following Strategy

It is a swing trend following forex strategy that uses moving average crossover. It works on 1 hour and 4 hour timeframe and applicable in all currency pairs.

Forex Indicators:

Moving average (MA smoothed) with period 9 (MA 9).
MA with period 21 (MA smoothed 21).
Average Directional Movement Index default setting (ADX 14). A level of 33 is added.

Rules for Two MA’s ( moving averages smothed) and ADX

Buy Entry:

MA 9 must cross above the MA 21 and the ADX is greater than 33.
Enter when the price comes back down to touch the MA 9.
Set the initial stop loss 15 pips below the MA 21 and after 30 pips in gain move stop loss at the entry price (Time frame 60 min- for time frame240 move initial stop loss after 45 pips in gain)
Profit target with ratio 1:2 stop loss or exit position when MA cross in opposite direction.

Sell Entry:

MA 9 to cross below the MA 21 and the ADX is greater than 33.
Enter when the price comes back down to touch the MA 9.
Set the initial stop loss 15 pips above the MA 21 and after 30 pips in gain move stop loss at the entry price (Time frame 60 min- for time frame240 move initial stop loss after 45 pips in gain).
Take profit with ratio 1:2 stop loss or exit position when MA cross in opposite direction.

This trading system is also good for trading with Options and Binary Options.

Buy Call or Sell Put Options

Wait MA 9 cross above 21 MA and the ADX is greater than of 33.
This event is an alert for Buy Call or Sell Put.
Draw on the chart a line at the level of the previous High swing, this level is the strike or the fixed price.
When the price comes back down to touch the MA 9 Buy Call or Sell Put with the strike at the level of the previous high.

Buy Put or Sell Call Options

Wait MA 9 cross below 21 MA and the ADX is greater than 33.
This event is an alert for Buy Put or Sell Call.
Draw on the chart a line at the level of the previous Low swing, this level is the strike or the fixed price.
When the price comes back down to touch the MA 9 Buy Put or Sell Call with the strike (fixed price) at the level of the previous low swing.