Most new traders are attracted to forex trading because of the lure of making so much money in just a short span of time. This is fueled by ads of traders who show off their cars and houses whenever they put an ad. While some of them are bogus gurus, some do make a lot of money trading the forex markets. Trading is probably one of the biggest money multipliers. Millionaires could be made overnight. The question is how do they do it?
Chances are they are really great technical traders who could read market direction like charts were crystal balls, or they have strategies, systems or technical indicators that give them an edge. This allows them to trade with either high accuracy or with high reward-risk ratios. Traders who could get this mix right could easily make a fortune out of forex trading.
Trade Hack Forex Trading Strategy is a strategy that makes use of technical indicators that are highly accurate and reliable in order to provide traders an edge. These indicators are complementary. One indicator helps traders identify trend direction, while the other provides entry signals.
Heiken Ashi Smoothed Indicator
Table of Contents
- 1 Heiken Ashi Smoothed Indicator
- 2 CCI Extreme
- 3 Trading Strategy
- 4 Conclusion
The Heiken Ashi Smoothed indicator is probably one of the most useful trend following technical indicator. It provides clear trend direction, which is not too susceptible to market noise, and is very responsive to trend reversals.
It is a technical indicator which is a modified version of the Heiken Ashi Candlesticks and is based on the Exponential Moving Average (EMA).
“Heiken Ashi” in Japanese means average bars. The Heiken Ashi Candlesticks are literally average bars. Heiken Ashi Candlesticks are candlesticks which indicate short-term trend reversals based on the average movement of price.
Heiken Ashi Smoothed bars are also average bars. However, unlike the Heiken Ashi Candlesticks, the Heiken Ashi Smoothed bars are not candlesticks. Instead, it is more closely related to the Exponential Moving Average. It plots bars that move smoothly yet responsively just like EMAs.
The Heiken Ashi Smoothed indicator plots bars that change colors to help traders identify trend direction. Lime bars indicate a bullish trend bias, while red bars indicate a bearish trend bias. Trend reversals could also be identified based on the changing of the color of the bars.
As such, the Heiken Ashi Smoothed indicator can be used as a trend direction filter or a trend reversal signal.
The Commodity Channel Index (CCI) is a momentum-based oscillator developed to help traders identify momentum and short-term trend directions, as well as oversold and overbought market opportunities.
The classic CCI is derived from the difference between a Typical Price and a moving average, normalized within a range, with the Typical Price being the average of the high, low and close of price.
The figures are then plotted as an oscillating line which fluctuates from negative to positive or vice versa.
Traders use the CCI in various ways. One of the most common is identifying trend based on the -100 to 100 range. A CCI line that is dropping below -100 could indicate a downtrend, while a breach and push above 100 could indicate an uptrend.
Inversely, the CCI could also be used to identify overbought or oversold prices which are prime for mean reversals. Traders could place a marker at an extreme CCI level and wait for potential mean reversals coming from such levels. One of the most commonly used markers is -200 and 200. CCI dropping below -200 could indicate an oversold condition, while a CCI breaching above 200 could indicate an overbought condition.
The CCI Extreme indicator simplifies the process of identifying potential mean reversals. It marks oversold and overbought conditions by changing the color of the line. A blue line indicates an oversold condition while a red line indicates an overbought condition.
Trade Hack is a simple yet systematic trend following strategy which trades on significant retracements using the Heiken Ashi Smoothed indicator and the CCI Extreme indicator.
The Heiken Ashi Smoothed indicator is set at 50 periods. This will help us identify the mid-term trend more accurately. Trend direction will simply be based on the color of the Heiken Ashi Smoothed bars as well as the slope of the bars. Traders should also confirm the trend based on price action.
As soon as we identify the trend, we then wait for the market to retrace significantly using the CCI Extreme indicator. Deep retracements will be identified based on overbought or oversold conditions.
Valid trade signals are based on overbought or oversold mean reversals that are in confluence with the trend.
- MAPeriod: 50
Preferred Time Frames: 15-minute, 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
- The Heiken Ashi bars should be lime.
- Price action should be making higher swing highs and swing lows.
- Price should retrace towards the Heiken Ashi Smoothed bars causing the CCI Extreme line to change to blue.
- Enter a buy order as soon as the line reverses.
- Set the stop loss on the support level below the entry candle.
- Close the trade as soon as the CCI Extreme line changes to red.
Sell Trade Setup
- The Heiken Ashi bars should be red.
- Price action should be making lower swing highs and swing lows.
- Price should retrace towards the Heiken Ashi Smoothed bars causing the CCI Extreme line to change to red.
- Enter a sell order as soon as the line reverses.
- Set the stop loss on the resistance level above the entry candle.
- Close the trade as soon as the CCI Extreme line changes to blue.
This trading strategy is a high probability trading strategy when used in the right market condition, which is a trending market with deep retracements.
It could provide trade setups that have a relatively high probability. However, because it is a short-term mean reversal setup, trades would usually have reward-risk ratios that are pretty average.
This strategy is best used in conjunction with price action, candlestick patterns and breakouts from market congestions and minor supports or resistances.
Forex Trading Strategies Installation Instructions
Trade Hack 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.
Trade Hack 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 Trade Hack Forex Trading Strategy?
- Download Trade Hack 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 Trade Hack Forex Trading Strategy
- You will see Trade Hack 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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