2-Signal Smoothing Trend Forex Trading Strategy

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.

Chart Setup

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)

Download

Download the 2-Signal Smoothing Trend Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  1. 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.
  2. 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:

  1. 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.
  2. 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:

  1. 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.
  2. 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:

  1. 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.
  2. 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

Fig. 1.1

Free Download

Download the 2-Signal Smoothing Trend Forex Trading Strategy

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.

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