Moving Average Crossover strategies are probably one of the simplest types of strategies for new traders. It allows traders to trade even with very little analysis of price action, support and resistances and the trends. This is because crossover strategies are rules based. All you to do is answer a couple of questions. “Did the moving averages crossover?” If yes, then on to the next question. “Which direction?” After answering these couple of questions, you may trade accordingly.
However, even with its popularity and simplicity, some traders still seem to find it hard to catch those big trending moves that crossover strategies should be catching. The trick is in taking trades that have a higher probability of trending instead of taking each signal that appears. This is done through filtering using some technical analysis tools which shows the direction of the trend.
The Fisher Moving Average Cross Forex Trading Strategy is a crossover strategy that makes use of custom indicators to show the direction of the trend.
MA Ribbon Indicators
The Moving Average Ribbon Indicator or MA Ribbon Indicator is a simple custom indicator which shows two modified moving averages with the area in between the two moving averages filled. The area in between the two moving averages changes colors whenever the two moving averages crossover. Whenever the short-term moving average is above the long-term moving average, the area is filled lime. If it is the inverse, then the area is filled red. This conveniently shows traders the direction of the trend based on the location of the short-term trend in relation to the long-term trend.
There are several of ways of using this indicator.
First, it could be a trend direction filter. Based on the features that this indicator has, traders could use it to identify the direction of the trade. Traders may then opt to take trades which are in agreement with the direction of the trend.
Next, it could be used as an entry area using the concept of dynamic supports and resistances. We could already establish the trend direction based on the points mentioned above. However, we could also identify if price has already retraced enough to consider the entry point as a discount considering the general direction of the trade. If price has retraced back to the shaded area, then we could already consider it to have retraced enough with the assumption that the trend would still continue.
Lastly, this indicator is also a standalone crossover strategy indicator. Each time the two moving averages would crossover and the area in between it would change color, that is an entry signal for a crossover strategy.
The Fisher Indicator
The Fisher Indicator is a custom oscillating indicator which is based on probabilities. It is an unbounded oscillating indicator which is represented by histogram bars. Positive figures are painted as lime histogram bars while negative figures are painted as red histogram bars. The trend is then interpreted based on the color of the bars with the lime bars being bullish and the red bars being bearish.
The Fisher Indicator’s characteristic is as a smooth moving oscillating indicator, which effectively indicates the trend direction. It is more accurate than many other oscillating indicators available and works well as a trend filter indicator. Trades that are taken in agreement with Fisher Indicator seem to have a higher probability of success compared to other indicators.
Trading Strategy Concept
This strategy is a crossover strategy which is based on the MA Ribbons custom indicator. Entries are generated based on the crossing over of the two moving averages and the changing of the color of the area in between the two moving averages.
However, not all entries are high probability trades as most crossover strategies are. To remedy this, we will be filtering our trades based on the general trend direction. This will be based on the Fisher Indicator. Because the Fisher Indicator is an excellent indicator for determining trend direction, it works well as a trend direction filter.
Only entry signals generated by the MA Ribbons indicator which are in agreement with the Fisher Indicator will be considered as a trade setup.
- MA ribbon filled.89.21
- Period: 50
Timeframe: 1-hour, 4-hours and daily charts only
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York sessions
Buy (Long) Trade Setup
- The Fisher Indicator should have been printing positive lime histograms indicating an established bullish trend direction
- Enter a buy trade as soon as the MA Ribbon indicator crosses over with the short-term moving average crossing above the long-term moving average
- Set the stop loss below the moving averages
- Close the trade as soon as the Fisher Indicator changes to red indicating the possible start of a bearish trend
Sell (Short) Trade Setup
- The Fisher Indicator should have been printing negative red histograms indicating an established bearish trend direction
- Enter a sell trade as soon as the MA Ribbon indicator crosses over with the short-term moving average crossing below the long-term moving average
- Set the stop loss above the moving averages
- Close the trade as soon as the Fisher Indicator changes to lime indicating the possible start of a bullish trend
This crossover strategy produces better results than most crossover strategies. The MA Ribbon on its own is a good crossover strategy indicator. However, when paired with the Fisher Indicator, which filters out trades that are not in agreement with its trend, the probabilities of getting a profitable trade that may result in huge profits becomes exponential.
Forex Trading Strategies Installation Instructions
Fisher Moving Average 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 Moving Average 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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How to install Fisher Moving Average Cross Forex Trading Strategy?
- Download Fisher Moving Average 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 Moving Average Cross Forex Trading Strategy
- You will see Fisher Moving Average 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.
Click here below to download: