Laguerre Mean Trend Forex Trading Strategy

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Laguerre Mean Trend Forex Trading Strategy

Trading strategies could be categorized into a few types. It could either be a momentum strategy, a trend following strategy, a trend reversal strategy, a mean reversal strategy, etc. All these strategies could work on the right market condition.

As a trader, your job is to apply the right trading strategy for the current market condition. Traders who could adapt to the current market and trade the right plan at the right time are the ones who could make exponential profits. However, this is easier said than done.

Another approach would be to find a common entry point while combining two or more types of strategies. This means combining elements of different strategy types in order to find confluence. This greatly increases the probability of a winning trade. For example, traders could trade trend reversal strategies using support and resistance lines while being in confluence with a momentum strategy using a Bollinger Band. Traders could also trade trend following strategies on the long-term while looking at trend reversals on the short-term. There are so many ways to combine different elements of a strategy type. The key is in finding complementary combinations.

Laguerre Mean Trend Forex Trading Strategy combines elements of a trend following strategy and a mean reversal strategy. It takes trades that are following the long-term trend while at the same time reversing from an overbought or oversold condition on the short-term.

Laguerre Indicator

The Laguerre indicator is an oscillator developed by John Ehlers. Like most oscillating indicators, the Laguerre indicator was developed with the intention of anticipating market cycles.

This indicator is based on the Relative Strength Indicator (RSI). In fact, it was originally called the Laguerre RSI. Like the classic RSI, the Laguerre indicator is also bound within a fixed range. It oscillates within a range of 0 to 1.0.

This indicator could also help identify overbought and oversold market prices. This version of the Laguerre indicator marks overbought prices above 0.75 and oversold prices below 0.15. Prices breaching these levels tend to reverse on the short-term.

The parameters of this indicator are Gamma and Count Bars. Count Bars refer to the number of bars it will base its computation. The Gamma on the other hand makes the Laguerre indicator sensitive. The lower the Gamma, the more sensitive the indicator is. The higher the Gamma, the less sensitive it becomes.

Characteristically, the Laguerre indicator tends to be very jagged. This makes it a very good indicator for anticipating sudden reversals. It also tends to have flat tops and bottoms as it touches the edge of the range. This becomes even more pronounced when using higher Gammas.

Trading Strategy

This trading strategy is a mean reversal strategy with elements of a trend following strategy.

To identify trend direction, we will be using the 100-period Simple Moving Average (SMA). The trend will be based on slope of the 100 SMA line. Price action should also stay on the side of the 100 SMA line where price is trending. Price should also be visually trending, creating higher highs and lows on an uptrend, or lower highs and lows on a downtrend.

As soon as we identify a trend, we wait for price to retrace. These retracements would cause the Laguerre line to be temporarily overbought or oversold. We then wait for a mean reversal signal coming from the Laguerre line, which is indicated by the line going back within the 0 to 0.75 range. Take the trade as soon as this is accomplished.

If the mean reversal signal is successful, it would create a short trend line forming either a support or resistance line. Keep the trade open until price breaches the line.

Indicators:

  • 100 SMA (Green)
  • Laguerre (default setting)

Preferred time Frames: 15-minute, 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should be above the 100 SMA line.
  • The 100 SMA line should be sloping up.
  • Price action should be in an uptrend.
  • Wait for price to retrace causing the Laguerre line to be temporarily oversold.
  • Enter a buy order as soon as the Laguerre line crosses above 0.15.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • A diagonal support line should be formed.
  • Close the trade as soon as price closes below the diagonal support line.

Laguerre Mean Trend Forex Trading Strategy

Laguerre Mean Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should be below the 100 SMA line.
  • The 100 SMA line should be sloping down.
  • Price action should be in a downtrend.
  • Wait for price to retrace causing the Laguerre line to be temporarily overbought.
  • Enter a sell order as soon as the Laguerre line crosses below 0.75.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • A diagonal resistance line should be formed.
  • Close the trade as soon as price closes above the diagonal resistance line.

Laguerre Mean Trend Forex Trading Strategy 3

Laguerre Mean Trend Forex Trading Strategy 4

Conclusion

This trading strategy is a high probability trading strategy that could help traders produce consistent profits. It also has the capacity to produce trades with decent yields.

The key to trading this strategy successfully is in having a good understanding of price action. This would help traders identify when to exit the trade or could help traders anticipate if a trade is working or not.

It is also imperative that the trader should learn to identify trending markets. This strategy works well when used on the right market condition. Markets that are trending but have a decent retracement. This would allow traders to trade high probability setups with a decent yield potential.


Forex Trading Strategies Installation Instructions

Laguerre Mean Trend 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.

Laguerre Mean Trend 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 Laguerre Mean Trend Forex Trading Strategy?

  • Download Laguerre Mean Trend 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 Laguerre Mean Trend Forex Trading Strategy
  • You will see Laguerre Mean Trend 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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