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.
Place 12 EMA and 30 EMA on USDJPY chart. Timeframe will be 4H.
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.
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!
20 day High and Low Breakout
Trading entries based on new price highs and lows of N days/periods ago are as old as trend following and breakout trading itself.
However, it is not too much to say that Turtle trading and the Donchian price channel breakout methodology pushed it into the mainstream.
The trading rules are simple and straight forward. As with any trend following strategies, it performs best in a market that has large price moves and sustained trends.
Currency pairs: EUR/USD, EUR/JPY, GBP/USD, GBP/JPY and USD/JPY.
Indicators: 20 and 10 Donchian channels, 14 ATR
Japanese Yen currency pairs perform best and often have sustained trends probably due to the popularity of Carry trading strategies.
Set Long/Buy order 2 pips above the High of the previous 20 days.
Initial stop loss will be equal to ATR.
The 10 Day low will be our trailing stop when price move further up. Stop is placed 2 pips below it.
Set short/sell order 2 pips below the Low of the previous 20 days.
Similarly, initial stop loss will be 1 ATR away.
The 10 Day high will act as our trailing stop when price moves further down. Stop is placed 2 pips above it.
20 day low is 1.5125, sell order at 1.5123
ATR is 145, so initial stop loss is 1.5268
10 day high is 1.4611
Exit trade at 1.4613
Profit is 510 pips on 145 pips risk. (3.5 times)
20 day high is 1.4770, buy order at 1.4772
ATR is 197, so initial stop loss is 1.4575
10 day low is 1.5561
Exit trade at 1.5559
Profit is 787 pips on 197 pips risk. (4 times)