Forex Strategy "Technique Chariot" Based on the Moving Average
Only one indicator - Moving Average (MA) on closing, the period of which
is equal to 40 is used during the process of trading using “Chariot”
strategy.
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Any currency pair, as well as all the timeframes, ranging from an hour
and up to a week will suit for this strategy. It is best for timeframe
to be as big as possible.
The situation when the price is slowly increasing, happens very often in
the process of trading, although it also happens that the price
carries large movement in the totally opposite direction. This trading
strategy has been designed to apply this kind of swings on a timely
falling or rising market. Presented trading strategy is very simple, but
it is considered to be effective if the price moves sideways or general
upward/downward trend of the market.
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Location of the MA indicator in the terminal |
Settings of the MA indicator |
It is preferable to use such strategy on the weekly chart, but it can also be applied on intraday and daily price charts.
Trading rules are quite simple. If the price is above the Moving
Average, you should open long position (buy). In this case, the short
positions are not opening.
If the price moves in the flat and ranges close to the moving average, it’s not recommended to open new positions.
In a situation, when the first candle completely exceeds the moving
average (MA), the closure of which is performed from the top of the
price range, you should do the following:
- open a position on the first candle, at least 80% more than the
length of the moving average, if it is closed in the upper third of the
price range;
- open a long position in the breakdown of the top of the candle,
which is relevant for this characteristics. This candle is considered an
entrance candle.
While the balancing of the prices above and below the Moving Average,
the opportunity to enter the market is given after the price "dives" out
of the moving average (MA). If the candle, which precedes to the first
entrance candle is located on the Moving Average and closing occurs in
the upper half of the price range, then this is a signal that you are
ready to open long position, but you should enter the market when the
breakdown of the top by this candle takes place.
The position to buy should be opened if the price is placed above the
moving average (40) and short positions - is below. Initially, the
strategy involves only long positions.
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Settings of the MA indicator on the chart |
Stop loss is best to be positioned at the level of the candle Low, which
precedes the entry candle. Take Profit is not necessary to be placed as
well as to use Trailing Stop. The bigger the time scale, the greater
will be the value of trading. Similar option - is partially closing
position, with the orientation for Fibonacci extension and levels, which
are placed near.
Before opening the position, it is necessary to analyze the pricing
schedule and make sure that there are price reversals within the SMA
(40). Best of all, if the amplitude of such reversals will be maximal,
because it is the sign of incipient consolidation. Find not a very
strong trend, not greater than 45 degrees. In the case of a larger trend
steep price will be similar to the SMA (40). When it moves away from
this figure, it’s better not to open the positions. The essence of
strategy is to follow the trend after the kickbacks. To avoid a break,
you can use an additional oscillator ADX.
Everyone chooses the most suitable strategy for him. However, in any
case, you should test all the popular and common strategies, because you
can find the one that will bring you a steady income.