Multi Signal Synergy Forex Trading Strategy

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Multi Signal Synergy Forex Trading Strategy

There are many things that traders must look out for when trading the forex market. Traders look at trends, momentum, candlesticks, indicators, mean reversals, trend reversals and so much more. This often creates confusion in a trader’s setup. This is because trading is a mishmash of different opposing signals, views and sentiments. What may seem like a trend continuation for one trader may seem like a trend reversal for another trader. What may seem like a breakout could also mean a double top setup for another trader. Both could be correct based on their analysis, but the market would only reward one of them with profits. No one would be able to pick the right side all of the time. The key to making money in forex is by trying to pick the right side more often.

So, how do we get to pick the right side of the market more often? This is by looking for confluences. Confluences are basically a convergence of trading signals that point in one direction. These signals could be based on different sources. It could be based on candlestick patterns, trading patterns, price action, moving averages, oscillators, or whatnot. Traders who could find confluences from different signals that are complementary tend to do well when trading the forex markets.

Multi Signal Synergy Forex Trading Strategy is just as its name implies. It is a trading strategy which has confluences built into its system. This allows traders to simply follow the signals provided by the strategy, while using the strategy in a market condition which has a clear long-term trend.

Indicator Arrows

Indicator Arrows indicator is a custom indicator which provides entry signals based on a confluence of underlying indicators. It incorporates Moving Average Convergence and Divergence (MACD) and Exponential Moving Averages (EMA) in order to identify high probability trade entries. It also identifies ranges which price could breakout from with strong momentum.

This indicator simply looks for confluences between signals from its underlying indicators and plots arrows pointing the direction of the trade entry. Traders could then use these signals to confirm their trade entries or use it as their main trade entry signal.

Fisher Indicator

The Fisher indicator is a trend following indicator developed to help traders anticipate price movements and trend or momentum direction.

It is an oscillator that converts prices into a Gaussian normal distribution. By doing so, the Fisher indicator helps traders identify when price has moved to an extreme compared to the historical price of a trading instrument. This helps traders identify points wherein price may reverse. Traders could also easily identify trend direction using the Fisher indicator, as well as the wave cycles within a trend.

This version of the Fisher indicator is plotted with histogram bars. Positive bars generally indicate a bullish momentum bias and are painted lime. Negative bars generally indicate a bearish momentum bias and are painted red.

Traders could use the shifting of the bars from positive to negative or vice versa as a trend reversal signal, which they could use to enter and exit trades. It could also be used as an additional confluence with other entry signals in order to increase the confidence that a trade setup has a relatively high probability of a win.

Trading Strategy

This trading strategy provides trade setups based on the confluence of the Fisher indicator and the Indicator Arrows. These two indicators are complementary indicators and tend to work well together providing trade signals with confluence, filtering out trades that are premature, and providing early warning signs of a possible trend reversal.

However, instead of taking every trade signal with confluence, we will be aligning these trade signals with the long-term trend in order to filter out lower probability trade setups.

We will be using the 200 bar Exponential Moving Average (EMA) in order to identify the long-term trend bias. This will be based on the location of price in relation to the 200 EMA line as well as the slope of the 200 EMA line.

As soon as we identify a market that is trending on the long-term, we will be looking for confluences between the Indicator Arrows and the Fisher indicator. On the Indicator Arrows, signals will simply be based on the arrows plotted by the indicator. The Fisher indicator on the other hand will provide signals based on the shifting of the bars or the changing of the color of the bars.

Indicators:

  • 200 EMA
  • Indicatorarrows
  • Fisher

Preferred Time Frames: 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

  • Price action should be above the 200 EMA line.
  • The 200 EMA line should be sloping up.
  • The Fisher indicator should plot positive lime bars.
  • The Indicator Arrows should plot an arrow pointing up.
  • Enter a buy order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on the support level below the entry candle.

Exit

  • Close the trade as soon as the Fisher indicator changes to red.
  • Close the trade as soon as the Indicator Arrows plot an arrow pointing down.

Multi Signal Synergy Forex Trading Strategy

Multi Signal Synergy Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should be below the 200 EMA line.
  • The 200 EMA line should be sloping down.
  • The Fisher indicator should plot negative red bars.
  • The Indicator Arrows should plot an arrow pointing down.
  • Enter a sell order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on the resistance level above the entry candle.

Exit

  • Close the trade as soon as the Fisher indicator changes to lime.
  • Close the trade as soon as the Indicator Arrows plot an arrow pointing up.

Multi Signal Synergy Forex Trading Strategy 3

Multi Signal Synergy Forex Trading Strategy 4

Conclusion

This trading strategy is a long-term trend following strategy that systematically provides trade setups that are in line with the long-term trend. It is most suited for markets that are trending on the long-term yet have deep retracements to warrant a viable run.

As a standalone setup, this strategy could already provide excellent trade setups with good probability. However, this strategy would shine best if combined with a support or resistance breakout coming from a diagonal trendline.

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