Trading the forex markets is often an emotional rollercoaster. Traders would sometimes feel an emotional high whenever they see their equity being positive. Then, the inevitable drawdown comes along. Traders would start to see their profits dwindling down and along with it their emotions turn sour. Most traders are not immune from this. Probably only those who have a strong predisposition to waste money or to gamble would feel no pain when losing money.
However, it is usually those who can avoid feeling that elation and pain whenever they see their accounts moving erratically who tend to make more money trading the forex markets. This is probably because they are free of worries and can think more clearly and objectively.
Win streaks and drawdowns are a normal part of a trading life. At times you would win some and at times you would lose some. The important thing is that the result is still an income. When probabilities play out and trade plans are executed accordingly, profitable traders would end up on the green.
These traders often have a system that they follow. This allows them to make decisions quite easily without much worries. They know that their trade could end up being a winner or a loser. As long as they win bigger or win more often, then they should be good to go.
Free Flow Forex Trading Strategy is a systematic trading strategy designed to help traders make decisions on whether to buy or sell. It is based on a synergy of trend reversal signals and momentum which provides a strong probability that price would trend strongly in a certain direction.
MA Trend Indicator
The MA Trend indicator is a trend following indicator which is based on a combination of modified moving averages.
This indicator plots four moving average lines which move complementary to each other. These moving averages are designed to move like a channel that crossover and cause a certain color to either be on the inside or on the outside of the channel.
In a bullish trending market, the purple moving average lines move on the outside, while the yellow moving average lines move towards the inside. On the other hand, during a bearish trend, the purple line would move towards the inside, while the yellow lines would towards the outside of the channel. Such reversals of color indicate a probable trend reversal.
Free Scalping System Indicator
The Free Scalping System indicator is a trend following oscillator type of technical indicator.
It is a simple oscillating indicator which plots histogram bars to indicate trend direction. Positive bars are painted lime, while negative bars are painted red. Lime bars indicate a bullish trend bias, while negative bars indicate a bearish trend bias.
Traders can use this indicator as a trend reversal signal. They can base such signals from the shifting of the bars from positive to negative or vice versa. Usually the first few bars tend to produce better results because it allows for more room for price to move.
Traders can also use this indicator as a trend direction filter indicator. Traders can trade short-term momentum bursts during retracements whenever the market is trending. Traders can filter out trades that are not aligned with the current trend direction as indicated by the Free Scalping System indicator.
Although this indicator is named as a “scalping” indicator, it can certainly be used in any timeframe. This also means that day traders and swing traders can use it if they apply it to the timeframes they are using.
This trading strategy trades on confluences of trend reversal and momentum signals coming from the MA Trend indicator and a confirmation of a trend reversal coming from the Free Scalping System indicator.
On the MA Trend indicator, a momentum candle should crossover and close strongly on the other side of the MA Trend lines. This should also be in line with the crossing over of the moving average lines causing the color of the predominant trend to move towards the outside of the channel.
Then, on the Free Scalping System indicator, the bars should crossover zero and cause the bars to change color confirming the direction of the new trend.
Confluences of these signals which are closely aligned would qualify as a trend reversal signal based on this strategy.
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 sessions
Buy Trade Setup
- The Free Scalping System bars should shift above zero and change to lime.
- The MA Trend indicator lines should hook up and crossover causing the purple lines to move outside of the channel.
- A bullish momentum candle should close above the MA Trend indicator lines.
- Enter a buy order on the confluence of these conditions.
- Set the stop loss below the MA Trend lines.
- Close the trade as soon as price closes below the MA Trend lines.
- Close the trade as soon as the Free Scalping System bar shifts below zero and changes to red.
Sell Trade Setup
- The Free Scalping System bars should shift below zero and change to red.
- The MA Trend indicator lines should hook down and crossover causing the yellow lines to move outside of the channel.
- A bearish momentum candle should close below the MA Trend indicator lines.
- Enter a sell order on the confluence of these conditions.
- Set the stop loss above the MA Trend lines.
- Close the trade as soon as price closes above the MA Trend lines.
- Close the trade as soon as the Free Scalping System bar shifts above zero and changes to lime.
This trading strategy is a working trend reversal strategy. It is somehow closely related to moving average crossovers. The difference is that it uses multiple moving average lines in one indicator and it also incorporates strong momentum price action as a confirmation.
The MA Trend indicator and the Free Scalping System indicator are complementary indicators. They tend to produce reliable trend reversal signals whenever they are in confluence.
Traders who can master observing price action, momentum and trend reversals incorporated with this strategy would benefit greatly from this trading strategy.
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