Fisher Cross Forex Trading Strategy

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Fisher Cross Forex Trading Strategy

Trading the forex market does not need to be overcomplicated. In fact, keeping it simple yet still effective is the best way to go.

Traders often have that false sense of security that a trade setup would work because it is based on a complicated trading system. While there are many complex strategies that do work, sometimes overcomplicating a strategy could work against you. At times, even if the complex strategy should have an edge, because it is too complicated, it often filters out most of the opportunities you are presented with. This often causes traders to take trades that are not part of a strategy out of boredom. Also, however complicated the strategy is, not all trade setups would be profitable. At times, if a trade setup turns out to be a bust, it takes a lot out of a traders mental and psychological capital seeing a trade that they waited for so long fail.

Sometimes, simple is better. Crossover strategies are probably one of the simplest types of trading strategies. It provides clear entry and exit points which newbies could follow. With the right moving average setup, traders may find themselves being consistently profitable.

Fisher Cross Forex Trading Strategy is a simple trading strategy based on the confluence of the Fisher indicator and a moving average crossover.

Fisher Indicator

The Fisher indicator is a technical indicator used to help traders identify trend direction or bias. It is an oscillating indicator which plots bars oscillating around a midpoint which is at zero.

This indicator converts historical price movements into a Gaussian normal distribution. This allows the indicator to identify the average movement of price, if price has moved to an extreme, or if price is reversing its current directional bias.

This version of the Fisher indicator is plotted as bars. The bars create waves that oscillate around zero, mimicking the cyclical movement of price. Positive bars are colored lime and indicate a bullish directional bias. Negative bars are colored red and indicate a bearish directional bias.

The Fisher indicator could be used either as a trend filter or as an entry signal. As a trend filter, traders simply use the indicator to avoid trading against the direction of the current trend direction. As an entry signal, traders could use the crossing over of the bars from negative to positive or vice versa as an indication of a trend reversal.

Trading Strategy

This strategy is a simple moving average crossover strategy that trades with confluences using the Fisher indicator.

The Fisher indicator is used to initially indicate if the market is about to reverse. This is based on the shifting of the bars over zero and the changing of its color. This indicator tends to have less lag and somehow predicts trend reversals even prior to the actual reversal of price action. For this reason, this indicator works well as an early trend reversal indicator.

Still, we would have to wait for price action to confirm the trend reversal. Although there are traders who could identify trend reversals based on a naked chart, it is often a bit more difficult for new traders. This is where the moving average crossover comes into play.

This setup uses a 5 bar Exponential Moving Average (EMA) and a 20 bar Exponential Moving Average (EMA). The 5 EMA tends to hug price action quite closely. This moving average line would represent the short-term price movements. The 20 EMA line is a good indication of the short or mid-term trend. This would be our signal moving average line which price action should cross over. Some traders trade based on the crossing of price action over the 20 EMA line. However, at times, price may bounce off moving averages. The crossing over of the 5 EMA line over the 20 EMA line confirms the trend reversal. This would be our entry signal.

Indicators:

  • 5 EMA (gold line)
  • 20 EMA (green line)

Preferred Time Frames: 15-minute, 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 Fisher indicator bars should cross above zero and should start printing lime positive bars.
  • The 5 EMA line should cross above the 20 EMA line.
  • These bullish signals should be closely aligned.
  • Enter a buy order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the swing low below the entry candle.

Exit

  • Close the trade as soon as the Fisher indicator bars crosses below zero and prints red bars.
  • Close the trade as soon as the 5 EMA line crosses below the 20 EMA line.

Fisher Cross Forex Trading Strategy

Fisher Cross Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Fisher indicator bars should cross below zero and should start printing red positive bars.
  • The 5 EMA line should cross below the 20 EMA line.
  • These bearish signals should be closely aligned.
  • Enter a sell order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the swing high above the entry candle.

Exit

  • Close the trade as soon as the Fisher indicator bars crosses above zero and prints lime bars.
  • Close the trade as soon as the 5 EMA line crosses above the 20 EMA line.

Fisher Cross Forex Trading Strategy 3

Fisher Cross Forex Trading Strategy 4

Conclusion

The Fisher indicator by itself is a highly reliable trend following indicator. Because the indicator is based on the Gaussian normal distribution, it tends to be more predictive of trend reversals rather than lagging. If we could confirm the trend reversal anticipated by the Fisher indicator, we should be getting good quality trades.

This strategy should not be taken as a standalone signal. Instead, it should be used as an entry signal that is aligned with other setups on a higher timeframe. Traders could use this strategy on potential trend reversal zones to have an accurate entry.


Forex Trading Strategies Installation Instructions

Fisher Cross Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

Fisher Cross Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this strategy accordingly.

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Click Here for Step By Step RoboForex Trading Account Opening Guide

How to install Fisher Cross Forex Trading Strategy?

  • Download Fisher Cross Forex Trading Strategy.zip
  • *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex strategy
  • Right click on your trading chart and hover on “Template”
  • Move right to select Fisher Cross Forex Trading Strategy
  • You will see Fisher Cross Forex Trading Strategy is available on your Chart

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.

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