DAMIANI Forex Trading Strategy of MACD with Alligator Indicator

DAMIANI Forex Trading Strategy is an simple trend following forex strategy based on RSI Chart bars as filter, alligator, and KST momentum indicator. The keys of this trading system are Damiani and Alliagotor indicators.

 

Alligator Indicator Definition

Alligator is an indicator designed to signal a trend absence, formation and direction. Bill Williams saw the alligator’s behavior as an allegory of the market’s one: the resting phase is turning into the price-hunting as the alligator awakes so that to come back to sleep after the feeding is over. The longer the alligator is sleeping the hungrier it gets and the stronger the market move will be.

 

How to Use Alligator Indicator

The Alligator indicator consists of 13-, 8- and 5-period smoothed moving averages shifted into the future by 8, 5 and 3 bars respectively which are colored blue, red and green representing the alligator’s jaw, teeth and lips.

The Alligator is resting when the three averages are twisted together progressing in a narrow range. The more distant the averages become, the sooner the price move will happen.

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The averages continuing in an upward direction (green followed by red and blue) suggest an emerging uptrend which we interpret as a signal to buy.

The averages following each other in the reversed order down the slope are a strong signal of an unfolding downtrend so selling at this point would be more than appropriate.

 

DAMIANI Forex Trading Strategy

 

  • Time Frame : 30min, 60min, 240 min.
  • Currency pairs and Indicies : EUR/USD , USD/JPY, GBP/USD, AUD/USD, USD/CHF, AUD/JPY, NZD/USD and other majors.

 

Metatrader Indicators:
  • Alligator indicator
  • RSI bars, (55 period  55 period with 50 oversold & overbought )
  • RSI Chart bars( 55 period)
  • IHMax 3,
  • KST (Brookly),
  • Damiani Volameter,

 

DAMIANI Forex Trading Rules

 

Long Entry
  • Alligator in an upward direction (green followed by red and blue)
  • Damiani Volameter green line above white line;
  • KST histogram > KST line;
  • RSI Chart Bars blue color;
  • IMAX3 aqua line > red line.

 

Short entry
  • Alligator in an down ward direction (green followed by red and blue)
  • Damiani Volameter green line above white line;
  • KST histogram < KST line;
  • RSI Chart Bars red color;
  • IMAX3 aqua line < red line.

 

Exit Position
  • IMAX3 crosses in opposite direction,
  • Profit Target 1.3 ratio stop loss,
  • Use trailing stop,
  • Initial stop loss on the previous swing.


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