Hull Optimum Forex Trading Strategy

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Hull Optimum Forex Trading Strategy 1

Trending markets are probably one of the easiest market conditions to trade on. Trend direction is clear, so trade direction should also be easy. Once a trader gets that right, it usually means that the chances that the trade would end up in profit would be more than 50%. Now that might not sound a lot, but consider this, because you know the trend, chances are you are right more times than you are wrong. Now, let us say, when you are right you are earning 2x more than what you are risking. That means you are profiting twice as much as you are losing. To me, that sure sounds like a good proposition.

The Hull Optimum Forex Trading Strategy is one which allows traders to have a high win ratio and still have a positive reward-risk ratio. This is because the Hull Optimum Forex Trading Strategy is a trend continuation strategy. It is one which is traded during an established trend so that traders could easily identify if they should be buying or selling. The only question that remains is when.

AMA Optimum Indicator

AMA stands for Adaptive Moving Average. The AMA Optimum custom indicator is a modified moving average indicator which allows traders to easily identify trend direction using a moving average. The smoothened characteristic of this particular moving average allows it to cleanly slope up or down during a trending market environment. This somehow reduces the confusion of what the trend direction is or whether or not the market is even trending strongly enough.

During bullish market conditions, the AMA Optimum tends to cleanly slope upwards. On the other hand, during a bearish market condition, it also tend to cleanly slope down. This is true even when the period being used is that of a mid-term parameter.

BS Trend Indicator

The BS Trend Indicator stands for Buy Sell Indicator. It is a custom trend filter type of indicator. It reads the trend direction and shows traders what the trend direction is by printing either green bar or a red bar. Green bar is for a bearish market condition while red bars are for bearish market conditions.

This feature allows traders to objectively filter out trades that are not in agreement with the big picture trend direction.

Hull Moving Average

The Hull Moving Average is a variation of a moving average introduced by Alan Hull. This particular type of moving average is somewhat the best of both worlds. It is a very responsive moving average which works well with short-term trends. In fact, it somehow tries to minimize lag. Yet in spite being very responsive, it still manages to do well smoothening its movements.

Trading Strategy

This trend continuation strategy is one which allows traders to enter the market even on an already well-established trend. This done with the use of the AMA Optimum Indicator and the BS Trend Indicator.

The AMA Optimum Indicator is a smoothened moving average which allows traders to clearly identify a trending market by looking at the slope of a moving average. During a trending market, the AMA Optimum Indicator tends to smoothly slope up or down depending on the direction of the trend, while during a choppy or range bound market, it somehow seem to be flatter. As a trader, you would have decide based on the sloping of this moving average.

The BS Trend Indicator then confirms this by showing the direction based on the color of the bars on its window. During a trending market, the BS Trend Indicator would typically have a long period of having bars with the same color or sometimes with just a few short-lived instances of a detracting series of bar color.

Chose markets with a clearly sloping AMA Optimum line and a BS Trend Indicator window with one color dominating most of the window.

The specific entry signal is then based on the Hull Moving Average. The smoothened yet very responsive nature of the Hull Moving Average makes it a very good indicator to use as an entry trigger. This particular version of the Hull Moving Average changes color every time the moving average changes its slope. This changing of color would be the basis for entries and exits.

Indicators

  • i-AMA-Optimum
  • hull-moving-average
  • BSTrend

Timeframe: 1-hour, 4-hour and daily charts

Currency Pairs: major and minor pairs

Trading Session: Tokyo, London and New York sessions

Buy (Long) Trade Setup

Entry

  • The AMA Trend Indicator should be smoothly sloping up indicating a bullish trend
  • The BS Trend Indicator should be dominated by green bars with the current bar being green indicating an established bullish market condition
  • Allow price to have retracements on the short-term
  • Enter a buy order as soon as the Hull Moving Average changes to green indicating a bullish reversal on the short-term

Stop Loss

  • Set the stop loss at the support level below the entry candle

Exit

  • Close the trade as soon as the Hull Moving Average changes to violet indicating a bearish reversal on the short-term

Hull Optimum Forex Trading Strategy 1

Hull Optimum Forex Trading Strategy 2

Sell (Short) Trade Setup

Entry

  • The AMA Trend Indicator should be smoothly sloping down indicating a bearish trend
  • The BS Trend Indicator should be dominated by red bars with the current bar being grereden indicating an established bearish market condition
  • Allow price to have retracements on the short-term
  • Enter a sell order as soon as the Hull Moving Average changes to violet indicating a bearish reversal on the short-term

Stop Loss

  • Set the stop loss at the resistance level above the entry candle

Exit

  • Close the trade as soon as the Hull Moving Average changes to green indicating a bullish reversal on the short-term

Hull Optimum Forex Trading Strategy 3

Hull Optimum Forex Trading Strategy 4

Conclusion

Traders should have a strategy available for use during an established trending market environment. The Hull Optimum Forex Trading Strategy is one which you could employ in such conditions.

This strategy could be done multiple times during a trending market environment. Enter the market during those short retracements and exit the market as the trend’s short expansion phase ends. Then, allow price to retrace and repeat. However, try to avoid markets that seem overextended. You would notice this whenever you see the expansion phases getting shorter and shorter. This means that the momentum behind the trend is fizzling out.

The key to this strategy is to correctly identify if the market is trending enough.

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