Vegas Momentum Cross Forex Trading Strategy

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Vegas Momentum Cross Forex Trading Strategy

Crossover strategies are simple yet effective. It is so simple, almost anyone can trade using a simple crossover strategy. Traders simply follow the trend based on how moving averages interact with each other as they crisscross the price chart.

Yet, even with its simplicity, it is also very effective. In fact, almost all trend reversal strategies which employ an indicator as an entry trigger have its roots on crossover strategies. This is because almost all indicators are based on moving averages and the relationships between multiple moving averages.

Although crossover strategies are still very effective when used with the right setup and the right market, many traders still fail to find success using it. This is because many traders blindly follow crossover strategies without taking other factors into consideration.

One of the biggest factors that could greatly improve trading performance using a crossover strategy is by looking for momentum price movements. This signals that price is moving strongly in the direction of the trend reversal.

Vegas Momentum Cross Forex Trading Strategy is a crossover strategy that is based on two technical indicators. It also incorporates the concept of momentum price movements filtering out crossover signals which has no indication of a strong momentum.

Vegas S P Daily

Vegas S P Daily is a custom trend following indicator developed to identify trend direction and momentum.

The Vegas S P Daily indicator is simply a moving average crossover indicator based on two short- to mid-term moving averages. Trend reversal signals are generated as the two moving average crossover each other.

This indicator also has three sets of outer bands which are based on the moving averages, displaced above and below the moving average lines.

Mean reversal traders would interpret prices beyond the outer bands as an overextended price condition. This would mean that price could reverse back to the average at any time.

Momentum traders on the other hand could use it as a gauge to measure if a price movement has momentum or not. Candles with strong momentum tend to close farther away from the mean.

VR Moving Averages

VR Moving Averages indicator is a custom trend following indicator based on a moving average.

This modified moving average indicator can detect momentum shifts and short-term trend reversals. It then indicates trend reversals by changing the color of the line. For this setup, the moving average line changes color to blue whenever it detects an uptrend bias and red whenever it detects a downtrend bias.

Trading Strategy

This trading strategy is a simple crossover strategy using the two moving average lines of the Vegas S P Daily indicator and the VR Moving Averages indicator.

On the Vegas S P Daily indicator, trend reversal signals are generated whenever the green and blue lines intersect. The green line represents the shorter-term moving average line while the blue line represents a slightly longer-term moving average line.

The VR Moving Averages line should also crossover the two lines of the Vegas S P Daily indicator since the VR Moving Averages line represents a shorter-term moving average line. The color of the line should also confirm the direction of the trend.

Finally, momentum is confirmed using the second outer line of the Vegas S P Daily indicator. Price should close in between the second and third outer line to confirm a momentum price movement.

Since the indicator used is set at the daily chart, this trading strategy should also be used on the daily chart. As such, this strategy should be traded as a swing trading strategy.

Indicators:

  • Vegas_S_P_Daily (default settings)
  • vr_moving_average (default settings)

Preferred Time Frames: daily chart only

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should close above the Vegas S P Daily moving average lines (green and blue).
  • Price should close above the VR Moving Average line.
  • The VR Moving Average line should cross above the Vegas S P Daily moving average lines.
  • The green line of the Vegas S P Daily indicator should cross above the blue line.
  • The VR Moving Average line should change to color blue.
  • Price should close above the second upper outer line.
  • Open 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 price closes below the blue line of the Vegas S P Daily indicator.
  • Close the trade as soon as the VR Moving Average line changes to red.

Vegas Momentum Cross Forex Trading Strategy

Vegas Momentum Cross Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should close below the Vegas S P Daily moving average lines (green and blue).
  • Price should close below the VR Moving Average line.
  • The VR Moving Average line should cross below the Vegas S P Daily moving average lines.
  • The green line of the Vegas S P Daily indicator should cross below the blue line.
  • The VR Moving Average line should change to color red.
  • Price should close below the second lower outer line.
  • Open 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 price closes above the blue line of the Vegas S P Daily indicator.
  • Close the trade as soon as the VR Moving Average line changes to blue.

Vegas Momentum Cross Forex Trading Strategy 3

Vegas Momentum Cross Forex Trading Strategy 4

Conclusion

This trading strategy is a good starting point for traders who are new to momentum trading. This type of strategy where momentum trade signals are based on a band or channel indicator is a working type of strategy.

Often, this method is used in conjunction with other rules and strategies. It is often combined with trend reversal breakout strategies or congestion breakout strategies. Other traders would also use this strategy as an entry trigger to a bigger picture price action trading strategy.

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