Ravi Trend Signals Forex Trading Strategy

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Ravi Trend Signals Forex Trading Strategy

Trend reversal strategies produce some of the highest yielding trades. This is because trend reversals produce trade entry signals at the start of the trend with the hope of riding out the trend up until the end. If done correctly and the market trends for a long time, trades could gain a lot of pips and produce huge yields for traders.

Crossover strategies are some of the most popular types of trend reversal strategies. Almost all newbie trader would come across such type of strategy and many would test it at some point. This is probably because crossover strategies are very simple, anyone could follow it. Traders simply enter a trade whenever moving averages would crossover and exit a trade whenever it reverses.

However, some traders find it difficult to find success trading crossover strategies. They either enter a trade too late or exit a trade too late. Others take trades even when the market is not prime for such kind of trading strategy.

Ravi Trend Signals Forex Trading Strategy is a trend reversal strategy that trades on crossovers of long-term moving averages. It uses multiple custom indicators that measure trend and momentum to increase the likelihood of catching the right trade setups in the right market condition.

Ravi Signal Indicator

RAVI stands for Range Action Verification Index. This indicator was developed in order to identify if the market is trending or not, as well as the direction of the trend.

RAVI is an oscillating indicator displayed as histogram bars. These bars could oscillate in a free range. Positive bars generally indicate a bullish bias, while negative bars indicate a bearish bias.

Trends are identified whenever momentum has picked up. This is identified by having histogram bars that cross above 0.3 in a bullish trending market, and below -0.3 in a bearish trending market. The bars also change colors to indicate if a trend is strengthening or not. A bullish trend that is strengthening has green bars, while a bearish trend that is strengthening has red bars. A weakening trend is indicated by gray bars.

Rainbow MMA 03

Moving averages are the most basic indicators of a trend. Traders could identify trend direction based on the location of price in relation to it, or base the trend on the slope of a moving average line. Other traders also use multiple moving averages and identify the trend based on how the moving averages are stacked.

Rainbow MMA 03 is a multiple moving average indicator that uses long-term moving average lines. This provides an indication of a trend that is very smooth and is less susceptible to price spikes and choppy markets.

Reduced Lag MA

Reduced Lag MA is a moving average line indicator that uses two modified moving average lines. The faster line is colored red, while the slower line is colored blue.

Although both lines are intended to measure longer-term trends, the faster line uses a slightly shorter period. This line is also very responsive to price changes allowing it to change directions whenever the long-term trend is showing signs of reversal.

The blue line, which is the slower line has a longer period and is characterized as a very smooth line. This creates a line that is less susceptible to price spikes and only reverses whenever the long-term trend has clearly reversed.

Crossovers between the two lines create a good entry signal for long-term trend reversals. Trades that turn out to be trends often last very long.

Trading Strategy

This trading strategy trades on crossover signals coming from the Reduced Lag MA and the Rainbow MMA 03 indicators. These crossover signals should also be in confluence with the trend signal coming from the RAVI Signal indicator.

On the Reduce Lag MA, the red moving average line should simply crossover the blue line indicating the direction of the new trend.

The Rainbow MMA 03 indicator should also start to reverse. This could be observed by the reversal of the colored lines.

Aside from this, the Rainbow MMA 03 lines should also start to crossover the blue line of the Reduced Lag MA.

Lastly, the RAVI Signals indicator should also indicate the start of a trend. This is shown by a histogram bar breaching above 0.3 in a bullish trend and falling below -0.3 in a bearish trend.

Indicators:

  • reducedlagma (default setting)
  • ravisignal (default setting)
  • RainbowMMA_03 (default setting)

Preferred Time Frames: 1-hour and 4-hour charts

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • On the Reduced Lag MA, the red line should cross above the blue line.
  • The Rainbow MMA 03 lines should start to reverse with the pink lines crossing above the medium orchid lines.
  • The Rainbow MMA 03 lines should start to cross above the blue line of the Reduced Lag MA.
  • The RAVI Signals histogram bar should breach above 0.3.
  • 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 fractal below the entry candle.

Exit

  • Close the trade as soon as the RAVI Signals histogram bar falls below 0.

Ravi Trend Signals Forex Trading Strategy

Ravi Trend Signals Forex Trading Strategy 2

Sell Trade Setup

Entry

  • On the Reduced Lag MA, the red line should cross below the blue line.
  • The Rainbow MMA 03 lines should start to reverse with the pink lines crossing below the medium orchid lines.
  • The Rainbow MMA 03 lines should start to cross below the blue line of the Reduced Lag MA.
  • The RAVI Signals histogram bar should fall below -0.3.
  • 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 fractal above the entry candle.

Exit

  • Close the trade as soon as the RAVI Signals histogram bar breaches above 0.

Ravi Trend Signals Forex Trading Strategy 3

Ravi Trend Signals Forex Trading Strategy 4

Conclusion

This trading strategy is a long-term trend reversal type of strategy.

Because of the nature of trading on long-term trend reversals, traders could easily gain huge pips in a single trade. This allows traders to gain high yields in just a few trades.

However, trends could move erratically as the trend goes along. At times, it could also reverse steeply, wiping out much of the profits gained on that trade. Traders should learn to manage their trades correctly by trailing the stop loss to protect their profits. This is critical for traders who would want to gain huge profits using crossover strategies.

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