HomeForex StrategiesCrosses and Arrows Forex Trading Strategy

Crosses and Arrows Forex Trading Strategy

Many new traders take trades based solely on a single signal. It could either be a simple crossover entry, a pattern breakout or reversal, an indicator-based signal, or something else. They discover about a signal and spam it right away on the forex market. Some lucky traders would have a string of good trades and would start to believe that they have found the Holy Grail of trading. However, most would soon realize that taking trades based on a single signal is not that reliable.

Trading is about probabilities. A good trade signal would have a relatively good probability of a win, which should be higher than 50%. However, emotions and psychology would often mess with the trader and ruin a rather good trade setup. Traders should try to significantly improve their probabilities of winning by not relying solely on a single entry signal.

Trading on confluences is one way of increasing the probabilities of a successful trade. An entry signal that should have a win rate of about 50% could be improved to 60% or more if used in combination with other complementary high probability trade signals. This is because bad trade setups are filtered out more often, and traders are left with mostly good trade setups.

Crosses and Arrows Forex Trading Strategy is a trading strategy that relies on the confluence of three different high probability trade signals. This confluence of signals significantly improves the chances of a trader getting a profitable trade consistently.

Double CCI Woodies

The Double CCI Woodies is an oscillating indicator which is a modified version of the Commodity Channel Index (CCI) indicator.

The Commodity Channel Index is an oscillator used to measure the variation of the current price compared to its statistical mean. The CCI computes for the difference between the Typical Price and a Simple Moving Average (SMA), divided by the mean absolute deviation of the typical price. The Typical Price is basically the average of the high, low and close of a candle. The CCI is typically used to identify trend direction and possible trend reversals.

The Double CCI Woodies indicator duplicates the CCI computing for two different CCI lines. One is referred to as the Trend CCI and the other is the Entry CCI. This provides traders an earlier signal of a probable trend reversal and a confirmation of the trend reversal. Positive lines indicate a probable bullish trend while negative lines indicate a probable bearish trend. The indicator then confirms the trend reversal by plotting a gold bar to confirm the trend reversal.

EMA Crossover Signal

EMA Crossover Signal is a simple entry signal indicator that helps traders identify trend reversal entries. It is derived from the crossover signal of a pair of Exponential Moving Averages (EMA).

The EMAs are excellent moving averages to use for entry signals because it is a very responsive moving average line. It manages to reduce lag significantly thereby providing timely entry signals for traders. At the same time, it is also smooth enough to avoid most false signals.

The EMA Crossover Signal places an arrow pointing the direction of the trend whenever it detects a trend reversal. This could be used as an entry signal or as a confirmation of other trend reversal indications.

This indicator is also very malleable. Traders could tweak its settings allowing traders to identify either short-term trend reversal entries or longer-term trend reversal entries.

Trading Strategy

As mentioned earlier this strategy trades on the confluence of multiple indicators. It mainly uses the Double CCI Woodies, EMA Crossover Signal and the 60 EMA line.

On the 60 EMA line, probable trend reversals are identified by price crossing over and closing on the opposite side of the EMA line. The characteristics of the price candles should show momentum upon the crossover in order to strengthen the thesis that price might reverse its trend.

On the Double CCI Woodies indicator, trend reversals are initially indicated by the two CCI lines crossing over the midline. The trend reversal is then confirmed by the plotting of a gold histogram bar. This will be the main filter on the Double CCI Woodies indicator.

The last trend reversal confirmation should come from the EMA Crossover Signal indicator. This is set at a mid-term trend parameter. Signals are confirmed by an arrow pointing the direction of the trend reversal.

Indicators:

  • 60 EMA (Green line)
  • EMA Crossover Signal
    • Faster EMA: 50
    • Slower EMA: 60
  • DoubleCCI_Woodies
    • Trend CCI Period: 80
    • Entry CCI Period: 36

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

Buy Trade Setup

Entry

  • Price should cross and close above the 60 EMA line.
  • The Double Woodies CCI lines should cross above zero.
  • The Double Woodies CCI indicator should plot a positive gold histogram.
  • The EMA Crossover Signal indicator should plot an arrow pointing up.
  • Enter a buy order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss below the 60 EMA line.

Exit

  • Close the trade if the blue line of the Double Woodies CCI indicator crosses below zero.
  • Close the trade if the EMA Crossover Signal indicator prints an arrow pointing down.

Crosses and Arrows Forex Trading Strategy

Crosses and Arrows Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should cross and close below the 60 EMA line.
  • The Double Woodies CCI lines should cross below zero.
  • The Double Woodies CCI indicator should plot a negative gold histogram.
  • The EMA Crossover Signal indicator should plot an arrow pointing down.
  • Enter a sell order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss above the 60 EMA line.

Exit

  • Close the trade if the blue line of the Double Woodies CCI indicator crosses above zero.
  • Close the trade if the EMA Crossover Signal indicator prints an arrow pointing up.

Crosses and Arrows Forex Trading Strategy 3

Crosses and Arrows Forex Trading Strategy 4

Conclusion

This trading strategy is a robust trading strategy that has a relatively high win rate compared to other trend reversal strategies.

It allows traders gain high yields because it provides trade signals at the beginning of the trend and closes the trade near the end of the trend.

For best results, trade this strategy in a market that has a very high propensity to trend. Avoid using this strategy on choppy markets as it might provide some false signals.

Recommended MT4 Broker

  • Free $50 To Start Trading Instantly! (Withdrawable Profit)
  • Deposit Bonus up to $5,000
  • Unlimited Loyalty Program
  • Award Winning Forex Broker
  • Additional Exclusive Bonuses Throughout The Year

Recommended broker

>> Claim Your $50 Bonus Here <<

Click here below to download:

Save

Save



Get Download Access

Tim Morris
Tim Morrishttps://www.forexmt4indicators.com/
Tim Morris is a work from home dad, home-based forex trader, writer and blogger by passion. He likes to research and share the latest forex trading strategies and forex indicators on ForexMT4Indicators.com. His passion is to let everyone to be able to learn and download different types of forex trading strategies and mt4/mt5 indicators at ForexMT4Indicators.com
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular MT4 Indicators

Most Popular MT5 Indicators