Simple Indie Forex Trading Strategy

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Simple Indie Forex Trading Strategy

Just as most things in life, trading is great when kept simple. Many retail traders are trapped in a mindset that the strategy they should be using should be complicated. That is very far from the truth. I’m not saying that complicated strategies don’t work. There are many traders who make use of complicated strategies, both retail and prop traders, and they make money doing it. However, as traders, we also have the option to make use of simple, mechanical strategies. Strategies that don’t take a lot of analyzing to make it work.

Another thing that has been going on in the trading world is the clash between those who use indicators and those who advocate using price action alone, which I’d like to call naked charts. Trading based on price action is great. I love it, I use it. But trading has no rules. It doesn’t mean that if you are using price action, then you should never be using indicators. Likewise, those who use indicators might also benefit from learning price action. However, many of those who use naked charts think that it is the only way to go. It seems that they think the use of indicators is a disease. Well, it is not. The blind use of indicators that you don’t understand is what is making you lose money, not the indicator itself. If you’ve studied how an indicator works, built a strategy around it, back test it, and prove that it works, you could be very profitable trading that indicator based strategy.

The Setup: Using Basic Indicators on a Simple Mechanical Strategy

So, today we will be exploring a strategy that is totally based on a few indicators that I like. Moving Averages, Stochastics, Average Directional Movement Index (ADX), and as a bonus Fractals. All these indicators come free with all MT4 platforms. No need to search the internet for these. And we will be using the most basic settings.

Moving averages are probably one of the most useful indicators. Many use it as an indicator of trend direction, some use it as a dynamic support or resistance, while other use it for crossover strategies. For this strategy, we will use it as an indicator of trend direction by identifying the location of price relative to it. If price is above it, then we’ll have a bullish bias. If below it, then a bearish bias.

Next, the stochastics. The stochastic indicator is another great too to use. It could identify overbought and oversold conditions and determine short term changes of bias of price direction using the crossover of the fast and slow stochastics. We will be using this crossover as a basis for our entry signal.

Then, the average directional movement index (ADX). The ADX is probably one of the most overlooked indicator. However, it is a hidden gem. Its main use is basically identifying if the market is trending or not. Knowing that most traders prefer to trade trend following strategies, this indicator comes in handy. Most traders may use their trend following strategies on any market condition. But trading a trend following strategy on a ranging market is a recipe for disaster. By using ADX, we will be able to filter out trades on a non-trending market.

Lastly, the fractals. Fractals are also not as familiar. But given the recent rise of the popularity of price action, this might be something that could be very useful for indicator based traders. One of the concepts of price action is the concept of making use of highs and lows. The fractal indicator, although not precise, could also help identify these highs and lows, even the minor ones. In this strategy, we will be using it as a basis for stop loss placement. The idea behind it is that highs or lows are natural horizontal supports or resistances, which price shouldn’t go beyond of if the market is trending.

Buy Entry:

  • Price should be above the 50 Exponential Moving Average (EMA) indicating a bullish bias
  • The ADX should be above 30 indicating a trending market
  • Both stochastics should be below 50
  • As soon as the fast stochastic cross above the slow stochastic, enter at the close of the candle

Stop Loss: Set the stop loss at the low of the most recent low fractal

Take Profit: Set the take profit at 2x the stop loss

Sell Entry:

  • Price should be below the 50 Exponential Moving Average (EMA) indicating a bearish bias
  • The ADX should be above 30 indicating a trending market
  • Both stochastics should be above 50
  • As soon as the fast stochastic cross below the slow stochastic, enter at the close of the candle

Stop Loss: Set the stop loss at the high of the most recent high fractal

Take Profit: Set the take profit at 2x the stop loss

Conclusion

These indicators are very simple, very basic, yet they serve their purpose well. By using these indicators with different purposes together, the result is a strategy that is very logical and could bring some pips.

This strategy, by the nature of how the indicators are combined, filter out bad trades. For example, the strategy filters out entries on a non-trending market. It also filters out trades that are on the wrong side of the EMA. It also filters out trades that seem to have a lesser room to run, using the 50 line of the stochastics. All these filters help take out lower probability trades, and help increase the win rate of the strategy.


Forex Trading Systems Installation Instructions

Simple Indie Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex system is to transform the accumulated history data and trading signals.

Simple Indie 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 system accordingly.

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How to install Simple Indie Forex Trading Strategy?

  • Download Simple Indie 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 system
  • Right click on your trading chart and hover on “Template”
  • Move right to select Simple Indie Forex Trading Strategy
  • You will see Simple Indie 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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