This is Most Effective Forex Price Action Trading Strategy Using Moving Average. Using a combination of a short term EMA and a longer term EMA will help us identify the upward price surges. The short term EMA reacts faster to price changes, so when it crosses above the long term EMA, you have a confirmation that the more recent prices are moving up faster than it used to.
This is the point where we look for some buying opportunities. Of course, the opposite would apply in a downtrend, wherein the short term EMA would cross under the long term EMA.
The Forex Trend Hero is customizable. Below are the parameters found in the Inputs tab.
These are the periods that appear on your chart.
Period1 = 5 – 5 Minute
Period2 = 30 – 30 Minute
Period3 = 60 – 1 Hour
Period4 = 1440 – 1 Day
NumberOfBars = 14
The minimum number of that appear in each box.
AutoAdjustNumberOfBars = true
This feature allows you have a good view of the different timeframes even if you zoom in.
AutoAdjustFactor = 1.2
If in case the bars on the indicator appear too small for the current timeframe, you can increase the AutoAdjustFactor.
OverwriteWidth = 0
This is the static width of each candle. You can also set it from 1 to 5.
ShowMADetails = true
If set to true, it will display the type of MA used on the indicator.
TextSize = 11
Font size used.
Below are the different colors used:
cInfo = Blue – lines and timeframe
FirstMAColor = Aqua – first moving average
SecondMAColor = Orange – second moving average
Here, you have the option to change the MAs used in each box. This pertains to the first box to the right, which shows the 5 Minute timeframe.
FirstMAPeriod = 25;
SecondMAPeriod = 10;
FirstMAType = MODE_EMA;
SecondMAType = MODE_EMA;
ApplyMAPrice = PRICE_CLOSE;
UseGeneralSettings = false
- If set to “false”, it will only use the settings above for the 5 Minute timeframe and follow the settings below for the other timeframes. Set this to true if you want to use the same MA on each timeframe.
- Box 2 Settings – Settings used for the 30 Minute timeframe.
FirstMAPeriod2 = 5;
SecondMAPeriod2 = 10;
FirstMAType2 = 1 (EMA) or 0 (SMA)
SecondMAType2 = 1 (EMA) or 0 (SMA)
ApplyMAPrice2 = 0 (close price)
- Box 3 Settings – Settings used for the 1 Hour timeframe.
FirstMAPeriod3 = 5;
SecondMAPeriod3 = 10;
FirstMAType3 = 1 (EMA) or 0 (SMA)
SecondMAType3 = 1 (EMA) or 0 (SMA)
ApplyMAPrice3 = 0 (close price)
- Box 4 Settings – Settings used for the Daily timeframe.
FirstMAPeriod4 = 5;
SecondMAPeriod4 = 10;
FirstMAType4 = 1 (EMA) or 0 (SMA)
SecondMAType4 = 1 (EMA) or 0 (SMA)
ApplyMAPrice4 = 0 (close price)
Forex Trend Hero is a great filter for false signals. It can help confirm your trades if you already have an existing method of trading. To illustrate how to improve your trades, let’s start with a simple system and use Forex Trend Hero to confirm the signals.
Looking at the rules above, I can see a weak system. We can improve that by using Forex Trend Hero. We will confirm the trend on at least 2 higher timeframes before placing the trade at the close of the signal candle.
For a buy trade, the 5 EMA must be above the 10 EMA on at least 2 higher timeframes. For a sell trade, the 5 EMA must be below the 10 EMA on at least 2 higher timeframes. All you have to do is look at the boxes at the bottom of the chart.
I will show you exactly how in the next few pages. Note: You can find the chart template (forex_trend_hero.tpl) for this system in the folder containing the Protocol 1 indicator.
Below is a buy trade on the USDJPY 5 Minute chart. You can see that the 10 EMA had been above the 25 EMA for some time (1). This is a good sign that we’ll have some nice trades coming.
If you look at Forex Trend Hero, you can see that the 30 Minute and the 1 Hour timeframes were showing an uptrend as well (2). There was no uptrend on the Daily chart but we had a bullish candle. This means that the price had been going up during the day.
With the confirmation on at least two higher timeframes, we were able to enter a buy trade at the close of the candle above the 10 EMA (3) which was at 98.7. The stop loss was set at 98.55 (4), and the take profit was set at 98.85 (5). The price retraced before it continued to go up and hit the take profit. The trade was closed with 15 pips in profit.
Our sell trade was on the EURUSD 5 Minute chart. The 10 EMA crossed below the 25 EMA (1) so we had a downtrend on the M5 timeframe. Next, we can see that the trend was also going down on the M30 and the H1 timeframes (2). With this as confirmation, a sell trade was placed as soon as the candle closed under the 25 EMA (3), at 1.3192.
The stop loss was set above the most recent swing low, at 1.3203 (4). Then the take profit was set at 14 pips, which was at 1.3181 (5).
Not long after, the price hit the take profit level and we got out of the trade with 11 pips of profit. Not bad for the 5 Minute timeframe!
The above examples were for a very simple technique. Use the Forex Trend Hero as you see fit. It can only help your trading. The point of this report is to give you a glimpse into how I think about trading.
I believe the more information you have, the better the trading decision you will make and in my system, the Forex Secret Protocol, I use at least two time frames.
Think about this… Traders don’t become successful because of some psychic power or luck. They are successful because before they place their trades, they make sure they are going in the right direction.
Forex Trend Hero provides a simple but effective tool to view the trend on multiple timeframes. All you have to do once you find a signal is confirm the direction of the trend.
If your signal says buy but you have a downtrend on the higher timeframes, you might want to wait for a sell signal. Then you can place a sell trade, which gives you a higher probability of success.
Trading is a business and it pays to be conscientious. So before ever placing another trade ever again, ask yourself: “What does my elephant look like?”
It’s my sincere hope that Forex Trend Hero will benefit you as it has benefitted many of my students. Have a great day!