Trading doesn’t necessarily have to be complex in order to be profitable, but a sustainable trading strategy can come in a simple form, where key components of profit generation and equity protection are the foundations that makes it tick.
The 2-Signal Smoothing Trend forex trading strategy is a simple, yet powerful system that has fairly good win rate across many currency pairs.
It is an interesting system considering it can be traded on all timeframes.
The 2 Moving Average Signal and Holt_double_exponential_smoothing_trend technical indicators are separately deployed to spot market reversals and impending trends respectively.
MetaTrader4 Indicators: 2 Moving Average Signal.ex4 (Inputs Variable modified; ExtPeriodFastMA=14, ExtPeriodSlowMA=14, ExtModeFastMA=3), Holt_double_exponential_smoothing_trend.ex4 (Inputs Variable Modified; Estimate period=28.66)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any
Currency Pairs: Any pair (majors, currency crosses, exotics)
Buy Trade Example
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the blue upward pointing arrow of the 2 Moving Average Signal custom indicator gets aligned slightly below price bars as seen on Fig. 1.0, the overall market sentiment is said to be bullish i.e. a trigger to buy the designated currency pair. The blue line of the 2 Moving Average Signal indicator also intersects the magenta line bottom up in a bullish confirmation.
- If the gray line and lime green histograms of the Holt_double_exponential_smoothing_trend.ex4 indicator break above the 0.00 level within the indicator window (refer to Fig. 1.0), it is a trigger buy the designated fx pair.
Stop Loss for Buy Entry: Place stop loss 3 pips below trading support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If a tomato downward pointing arrow of the 2 Moving Average Signal custom indicator pops up above the price bars as depicted on Fig. 1.0, an exit or take profit is duly advised.
- If the gray line of the Holt_double_exponential_smoothing_trend.ex4 indicator dip below the 0.00 level during a buy trigger, an exit or take profit is recommended.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the tomato downward pointing arrow of the 2 Moving Average Signal custom indicator gets aligned slightly above price bars as shown on Fig. 1.1, the overall market sentiment is said to be bearish i.e. a trigger to sell the selected forex pair. The blue line of the 2 Moving Average Signal indicator also intersects the magenta line top downward in a bearish confirmation.
- If the gray line and orange histograms of the Holt_double_exponential_smoothing_trend.ex4 MT4 indicator break below the 0.00 level within the indicator window (check Fig. 1.1), it is a trigger to sell the forex pair of interest.
Stop Loss for Sell Entry: Place stop loss 3 pips above trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes to the fore:
- If a blue upward pointing arrow of the 2 Moving Average Signal custom indicator pops up below the price bars during a bearish alert as illustrated on Fig. 1.1, an exit or take profit will suffice.
- If the gray line of the Holt_double_exponential_smoothing_trend.ex4 custom indicator surges above the 0.00 level during a sell alert, an exit or take profit is advised.
Sell Trade Example
About The Trading Indicators
The Holt_double_exponential_smoothing_trend.ex4 is a form of an “on-chart average like” custom indicator that can forecast trends.
The indicator oscillates above (buy) or below (sell) its signal level, i.e. the 0.00 level.
The 2 Moving Average Signal custom indicator is built around two moving average lines (one fast and the other slow), and its crossover yields a buy/sell trade alert.