Cobra Forex Trend Following Strategy

August 19, 2016

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Cobra Forex Trend Following Strategy

This system trades on a trend direction. This helps reduce risk by limiting us to trades that already have the momentum of the market. This is a short term trending system, it means we trade only in the direction has been moving over the last 3 days broken down over 72 hours on the 1 hours charts.
The moving average that are used in this system are the MA 72, this serves as guide to tell the direction of the short term trend. It also tells a trader the average direction of the market over the last 72 candle.

LONG SIGNAL:

Market is going up when the real price is above the 72 MA. This means that traders should go long on this.

SHORT SIGNAL:

Market is going down when the real price is below the 72 MA. This means that traders should go short on this

Forex Indicators:

72 period SMA (Simple Moving Average) applied to the “typical price” (high+low+close)/3.
72 period SMA calculated off the high of each candle.
72 period SMA calculated off the low of each candle.
12 period EMA (Exponential Moving Average) applied to the “typical price” (high+low+close)/3.
12 period EMA calculated off the high of each candle.
12 period EMA calculated off the low of each candle.
14 period ADX (Average Directional Movement Index) applied to the “typical price”.

SMA 72 = calculates and plots the average pice over the last 72 candles.
EMA 12- calculating the average over the past 12 hours. It gives more weight to the recent candles over the oldest ones.

The Mas can take the average of the closes, highs, lows, opens because they can calculate the average of part of the candles.

The ADX is the Average Directional Movement Index, and it really complements the MA lines.

Its most basic form measures the average direction up and the average direction down over a set period (in our case 14 candles or 14 hours),

It smoothens the calculation out by adding a Moving Average line between the two.

It also uses to tell the strength of the trend.

The ADX draws a line on a graph underneath our main chart. If the line is moving upwards, it means the trend is strengthening. If the line is moving downwards it means the trend is weakening.

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