Ashi Directional Index Forex Trading Strategy

The Ashi Directional Index forex trading strategy is designed to help you manage your risk, which is one of, if not the, most fundamental features of profitability in currency trading.

The strategy is made up of the Heiken_Ashi_smoothed.ex4 and Average Directional Movement Index MT4 indicators.

They allow you scan the market for trend and at the same time determine the strength of the trend being reviewed.

Chart Setup

MetaTrader4 Indicators: Heiken_Ashi_smoothed.ex4 (Inputs Variable Modified; MaPeriod=10, Colors Width Modified; #0=3, #1=3), Average Directional Movement Index.ex4 [Parameters Modified; Period=50, Apply to: Weighted Close (HLCC/4)]

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

Download

Download the Ashi Directional Index Forex Trading Strategy 

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following rules or conditions hold sway:

  1. If the lime candle-like bodies of the Heiken_Ashi_smoothed.ex4 custom MT4 indicator gets aligned slightly below price bars as seen on Fig. 1.0, it is a trigger to go long on the selected currency pair.
  2. If the yellow green +DI line is greater than the wheat –DI line of the ADX MT4 indicator as depicted on Fig. 1.0, price is said to be pushed marginally higher i.e. a signal to go long on the designated fx pair.

Stop Loss for Buy Entry: Place stop loss below trading support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes center stage:

  1. If a red candle-like body of the Heiken_Ashi_smoothed.ex4 custom indicator is seen faintly above price bars (see Fig. 1.0), an exit or take profit is advised.
  2. If the wheat –DI line crosses the yellow green +DI line of ADX indicator to stay above as shown on Fig. 1.0, an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If the red candle-like bodies of the Heiken_Ashi_smoothed.ex4 custom MT4 indicator gets aligned slightly above the candles as illustrated on Fig. 1.1, it is a trigger to go short on the currency pair of focus.
  2. If the wheat –DI line is greater than the yellow green +DI line of the ADX MT4 indicator as exemplified on Fig. 1.1, price is said to be pushed lower i.e. a sell market alert.

Stop Loss for Sell Entry: Place stop loss above trading resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If a lime candle-like body of the Heiken_Ashi_smoothed.ex4 custom indicator is seen faintly below price bars (see Fig. 1.1), an exit or take profit will suffice.
  2. If the wheat –DI line gets aligned below the yellow green +DI line of ADX indicator while a sell signal is ongoing, an exit or take profit will suffice.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

Developed by Welles Wilder, the average directional index (ADX) is a technical indicator deployed in determining the strength of a trend.

It is typically deployed in a chart window along with two lines identified as the DMI (Directional Movement Indicators).

The Heiken_Ashi_Smoothed.ex4 uses filled candle like bars either place above or below price bars to define trends.

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