Tagged: 1H

Two Moving Average Price Crossover

Place 20 EMA and 30 EMA on USDJPY 1H chart.

Rules for entry:
For Longs/Buys, wait for price to CLOSE above both EMAs and place a Buy order above the high of the bar. Stop loss will be placed at the low of the bar.
For shorts, do the reverse.
Exit current position and reverse when the opposite trade signal appears.

As with all trend following systems, this works best in a trending market and is not good for ranging or whipsaw periods.
You can add ADX as an additional filter. Enter trades only when ADX is above 25, for both Buys and Sells.

Note that this strategy is only concerned with whether price has closed above or below the 2 EMAs. It does not matter if the faster EMA is above or below the slower one.

This differs from the other two MA crossover strategy.

2 ema price cross

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

Two Moving Average Crossover

This trading strategy is both simple and effective. You can trade a few currency pairs or even other markets together to get some diversification. This will increase your chance of catching a trend and reduce the effects of whipsaws and trading ranges.

Rules:
Place 12 EMA and 30 EMA on USDJPY chart. Timeframe will be 4H.

For longs:
Long entry signal appears when the faster EMA, which is the 12 period one in this case, cross above the slower 30 period EMA at the close.
Create Buy order 2 pips above the high and stop loss will be 2 pips below the low of the same bar.
For shorts:
When at close, 12 EMA has crossed and gone below 30 EMA.
Create sell order 2 pips below the bar with stop loss 2 pips above the high.

This is an ‘always-in’ trading strategy. If you are long, you will exit and go short when a sell signal appears.

This strategy works well on longer time frames, 1H, 4H and Daily charts.
If you trade on daily time frames, you can check all the charts once a day nad setup orders if you find signals. A less stressful yet profitable scenario!

2 ema cross

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

Simple Moving Average Cross

It may come as a surprise to some but the moving average indicator can be a complete trading system on its own with clear objective entries and exits.

FX pair: Any
Timeframe: 1H or Daily chart
Indicators: 50 EMA

Rules:

Open EUR/USD chart and choose the 1 Hr time frame.
Place the 50 EMA indicator and wait for the candle to CLOSE on the other side of the EMA line.

Long/Buy when price bar cuts EMA from below and CLOSE above it.
Short/Sell when price bar cuts EMA from above and CLOSE below it.

This MA price cross strategy is an always-in trading strategy where you are always in the market and an exit would mean opening a new position in the opposite direction. For example, if you were originally short 1 lot, you will enter a 2 lot buy when a new BUY signal occurs. One lot will be used to close your short position and another lot to open a new long position.

Examples:

The first trade in this example is a SELL at 1.2589, which is closed out shortly at 1.2632, incurring a 43 pip loss.

The second trade is a BUY at 1.2632 which is profitable and is exited at 1.3078, netting a hefty 446 pips profit. This trade on the EUR/USD, 1H timeframe, happens to be held for almost 8 days, which would make it into a medium to long term position. If it makes money, who cares anyway.

eu-1h-1ma-1 eu-1h-1ma-2

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

Inside Bar Breakout Trade

This is a simple strategy that does not make use of any indicators, just price bars.
This strategy can be traded on any time frames and any currency pairs or even non currencies. I have success trading the Nikkei225 and other related stock index futures as well.

There are many definitions of what qualifies as a valid inside bar. To me, the entire inside bar, with its high and low should be inside the high and low of the previous bar. It does not matter what the open and close combinations are.
Once an inside bar is observed, set a limit order to long on a breakout 2 pips above the high of the inside bar or set a limit order to short on a breakout 2 pips below the low of the inside bar.
I would also use a EMA as a filter. For example, if an inside bar appeared on while price is trading below the EMA, I will only take shorts. Vice versa, if the inside bar appeared above the EMA, I will only take long breakouts.

Steps:
Currency pairs I trade this on includes EUR/USD, GBP/USD and GBP/JPY. GBP pairs are especially suited for breakout strategies as they are sufficiently volatile.
Open GBP/USD chart and go to 1H timeframe.
Add 20 EMA.
Start to look out for inside bars on close. Alternatively, you can use the following indicators to help spot inside bars.
[add indicators!!!]
Initial stop loss will be on the other side of the inside bar. If the trade goes our way, a trailing stop is placed at the EMA.

For Shorts
If we are short, we will exit the trade when price closes ABOVE the EMA.
Alternatively, you can trail more aggressively by placing a stop above the highs of the previous 2 bars.

For Longs,
If we are long, we will exit the trade when price closes BELOW the EMA.
Or, you can trail aggressively by placing the stop loss below the lows of the previous 2 bars.

Our initial stops will often times be really small, sometimes even less than 10 pips on 1H timeframe. However, winning trades often generates profits of more than 2 times risk.
Example below shows GBP at 1H timeframe, and 3 trades would have been taken. The first inside bar has a high of 1.5389 and a low of 1.5371. Therefore, we will place a limit order to short at 2 pips below the low, which will be 1.5369. Likewise, the stop loss level will be at 2 pips above the high, at 1.5291.
The trade gained +99 pips on a stop loss of 22 pips, yielding a 4 times risk reward ratio. However, there were 2 losers during the same period that cost us -21 pips and -13 pips respectively.
gbp-1h-inside bar BO trade1 gbp-1h-inside bar BO trade2

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

20 SMA Envelope and ATR

Suggested currency pair: GBP/USD
Timeframe: Daily, 1H
Indicators: 20 period SMA with 0.5% envelope applied, 14 period ATR

Rules:
Long at open of next bar when price close above the upper bound of the envelope. Initial stop loss is ATR of the signal bar.
Short at open of next bar when price close below the lower bound of the envelope. Initial stop loss is ATR of signal bar.
If trade is stopped out, we will wait until a new trading signal appears.
If the trade is going for us, we will keep our trade open until the opposite trade signal appears.

Trade 1:
Price close at 1.4696, which is above the upper bound of 1.4564. The ATR is 191 and will be our stop loss size.
Long at 1.4696 with initial stop loss placed at 1.4505.
Closed trade at 1.5575 when Short trade signal appeared for a profit of 879 pips on risk of 191 pips.
Trade 2:
Short signal appeared and we close out our previous long and reverse our position to turn short.
We shorted at 1.5575 with a stop loss at 1.5724, a 149 pips stop loss.
20SMAenvelope-final

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather