This Forex strategy is easy to use and it is based on the classic trend indicator - the well-known moving average with various periods - and the MACD indicator that is as popular as the former one. The strategy has been designed for working during the London and American trading sessions, but it's not applicable to the Asian session and does not imply multiple trades within 1 week (5-7 trades will be quite enough). The strategy is meant for intraday trading on M5 and M15 timeframes, with the latter being regarded as the best option. It should be mentioned, that the strategy should not be used at night as it will produce more false signals.

Let's elaborate on the strategy

The strategy is based on the classic trend following indicator - the MA. It is the main indicator for opening a position. Three 34-day exponential moving averages (EMA34) need to be added onto the chart: EMA34 Open, EMA34 Close, and EMA34 Low. As a result, we'll have quite a narrow envelope of moving averages. Let's call it a "roadway" as it looks like a two-lane road seen from above. Next, we will use the so-called road for identifying the levels for opening positions and placing stop orders.

Taking a decision about opening a position is easy in the framework of this strategy. If the candle breaks one of the roadsides and closes above, we place a pending Buy Stop order a few points higher than the highest value of the closing candle. When placing a Sell Stop, it's necessary that the candle closes below the roadside, so we need to place a pending order a few points below the lowest value of the closing candle. When placing an order, we need to make sure that the MACD indicator has crossed the zero line, or else we will have to wait until it produces a signal. Once a pending order is placed, we need to place stop orders for limiting potential losses in case the price starts moving against us. A Stop order should be placed at the level of the separating strip and trailed along this strip when a pending order is placed.

An example of opening a long position is shown in the picture below. The candle broke the moving average and closed above at 14:15. The MACD indicator signalled that the zero line was crossed, which allowed us to determine the levels of an order and STOP LOSS order. A pending order Buy Stop was placed at 1.6837 with a stop order at 1.6925. The pending order was triggered in an hour and a Buy position was opened. The Stop Loss order should be immediately put at a new level of the separating strip. Next, we only need to watch our position and trail the Stop Loss order. In the example given, our profit amounts to 24 points.

“Roadway” trading strategy

To optimize profits, we can close the position right before the stop order is triggered in case we see that the market is going to reverse. The divergence between the readings of the chart and the MACD indicator - when the previous highest value on the chart is lower than the next one and the level of the previous highest value of the indicator is higher than the level of the next one - may serve as an example (see the picture below). In this case, our profit will be 31 points.

“Roadway” trading strategy