Slopes and Crosses Forex Trading Strategy

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Slopes and Crosses Forex Trading Strategy

Complex strategies do not always mean better results. Sometimes it is the simple concepts that are more effective. This is because it is not the complexity of the strategy that matters, but rather it is the concept and logic behind it that matters.

Moving averages are probably the most basic indicators that traders use. However, despite its simplicity many successful professional traders use it. Traders use it for a variety of reasons. It may to identify trend direction based on its slope. It could also be used as a dynamic area of support or resistance. Many also use it as a trend reversal signal based on crossovers. This simple concept of averaging out historical prices is widely used because it works in a variety of ways for different traders.

Slopes and Crosses Forex Trading Strategy is a simple strategy based around moving averages. It applies the concept of identifying trend direction based on the slope of a moving average and uses entry signals based on short-term trend reversals using crossovers. Despite its simplicity, this strategy can fetch huge gains when used in the right market condition.

Exponential Moving Average Crossovers

Moving Averages are excellent tools used by many traders. However, it is usually plagued by a common disadvantage, which is that it is often lagging. Signals could be produced a bit too slow, which often makes traders miss out on good trading opportunities.

The Exponential Moving Average (EMA) was developed to address this disadvantage. Whereas the basic Simple Moving Average (SMA) averages out price as it is, the EMA places more weight or emphasis on the most recent prices. This creates a moving average line that is very responsive to price movements. It changes directions as price movements change allowing traders to capitalize on trading opportunities presented by the market.

The EMA has many uses. The most basic use is in identifying trend direction based on its slope. EMAs that are sloping up indicate an uptrend, while EMAs that are sloping down indicate a downtrend.

It could also be used as a dynamic support or resistance. In a trending market condition, the right EMA could be used to identify where price could retrace and bounce.

EMAs are also great tools to identify trend reversals. Because the EMA is so responsive, crossover signals produced by a pair of EMA lines are also highly dependable. Traders could use it to enter or exit a trending market.

MA Angle

The MA Angle indicator is an oscillating indicator that could be used by traders to identify trend direction.

This indicator is based on the concept of identifying trend direction based on the slope of an EMA line. To do this, the indicator uses a moving average line, duplicates it and shifts the duplicate forward. The indicator then computes for the differences between the two moving average lines. The result is then plotted as a histogram.

Positive bars mean the moving average line is sloping up, which indicates an uptrend. Negative bars mean the moving average line is sloping down, which indicates a downtrend.

The indicator also changes color depending on the strength of the trend. Yellow bars indicate that the trend is not yet strong. Lime Green bars indicate that the bullish trend or bias is picking up strength. Fire Brick bars indicate that the bearish trend or bias is strengthening.

Trading Strategy

This simple trading strategy produces trade signals based on the slope of a 50-period moving average line and the crossover two Exponential Moving Averages.

The MA Angle indicator is used to identify the main trend direction. It is preset at 50 bars to identify the slope of a 50-period MA line. Trades are filtered based on whether the indicator is printing positive or negative bars predominantly. The bars may change to yellow as price retraces causing the 50 MA line to flatten out. However, the indicator must maintain its current trend bias indicating that the moving average line is still sloping. The entry candle on the other hand must either be lime green indicating a strengthening bullish bias, or fire brick indicating a strengthening bearish bias.

This strategy uses a crossover of two moving averages to identify the entry candle. It uses a combination of a 5 bar Exponential Moving Average (EMA) and a 20 bar Exponential Moving Average (EMA). The gold line represents the 5 EMA line, while the green line represents the 20 EMA line.

Indicators:

  • 5 EMA (gold line)
  • 20 EMA (green line)
  • MAAngle (default setting)

Preferred Time Frames: 30-minute, 1-hour and 4-hour charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The MA Angle indicator should be printing positive bars.
  • Price action must be visually trending up.
  • The 5 EMA line should be above the 20 EMA line.
  • Price should retrace causing the 5 EMA and 20 EMA lines to temporarily reverse.
  • The 5 EMA line should cross back above the 20 EMA line.
  • The corresponding MA Angle bar should be lime green.
  • 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 5 EMA line crosses below the 20 EMA line.

Slopes and Crosses Forex Trading Strategy

Slopes and Crosses Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The MA Angle indicator should be printing negative bars.
  • Price action must be visually trending down.
  • The 5 EMA line should be below the 20 EMA line.
  • Price should retrace causing the 5 EMA and 20 EMA lines to temporarily reverse.
  • The 5 EMA line should cross back below the 20 EMA line.
  • The corresponding MA Angle bar should be fire brick.
  • 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 5 EMA line crosses above the 20 EMA line.

Slopes and Crosses Forex Trading Strategy 3

Slopes and Crosses Forex Trading Strategy 4

Conclusion

This trading strategy is a simple short-term trend following strategy which trades on confluences between a crossover and an oscillator that represents a moving average line slope.

It is most effective when used in a trending market. Traders should also visually identify if the market is indeed trending based on how price action is moving. The crossover signal is just a mere entry signal based on retracements, which allows traders to accurately time the trade entry and exit.


Forex Trading Strategies Installation Instructions

Slopes and Crosses 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.

Slopes and Crosses 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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How to install Slopes and Crosses Forex Trading Strategy?

  • Download Slopes and Crosses 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 Slopes and Crosses Forex Trading Strategy
  • You will see Slopes and Crosses 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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