Sometimes, a trader can gain some of the best part of their trading knowledge and experience when they encounter losses.
It is important to have it behind the back of your minds that when you lose, you can make a profit in subsequent trades.
The Four Average Crossover forex trading strategy offers you a smooth way of winning when you trade forex pairs.
Let’s have a look how this simple strategy works:
Chart Setup
MetaTrader4 Indicators: EMA 5,6 Crossover.ex4 (Inputs Variable Modified; FasterEMA=25, SlowerEMA=30), fouraverage-indicator.ex4 (Input Variable modified; PeriodFA=50, PaintArrow=false)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any (London, New York, Tokyo)
Currency Pairs: Any pair
Download
Download the Four Average Crossover Forex Trading Strategy
Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Initiate a buy entry if the following indicator or chart setup gets put on display:
- If the spring green upward pointing arrow of the EMA 5,6.ex4 Crossover custom indicator gets aligned somewhat below the candlesticks as depicted on Fig. 1.0, price is said to be pushed higher, hence a trigger to go long on the pair of interest.
- If the lime histograms of the fouraverage-indicator.ex4 get arranged above the 0.00 level as shown on Fig. 1.0, it is a signal to buy the listed forex 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 take precedence:
- If during a bullish trend we get a red downward pointing arrow of the EMA 5,6 Crossover custom indicator that is slightly above the candlesticks (refer to Fig. 1.0), it is a trigger to exit or take profit accordingly.
- If the fouraverage-indicator.ex4 red histogram pops up below the 0.00 level during a bullish signal, it is an indication of weaning bulls power, hence an exit of take profit will suffice.
Sell Entry Rules
Enter a sell order if the following holds true:
- If a red downward pointing arrow of the EMA 5,6 Crossover.ex4 custom indicator gets placed fairly above the candlesticks as shown on Fig. 1.1, price is said to be pushed lower, hence a signal to go short.
- If the red histograms of the fouraverage-indicator.ex4 get placed below the 0.00 level as illustrated on Fig. 1.1, it is a signal to sell the listed currency pair.
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:
- If a spring green upward pointing arrow of the EMA 5,6 Crossover.ex4 custom indicator gets placed slightly below price bars during a short sell, it is a trigger to exit or take profit without delay.
- If the lime histogram of the fouraverage-indicator.ex4 gets displayed above the 0.00 level during a sell alert, it is an indication of halting bears power, hence an exit of take profit will do.
Sell Trade Example
Fig. 1.1
Free Download
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About The Trading Indicators
The fouraverage-indicator.ex4 is a brand new forward-looking trend indicator designed by ExcStrategy team and it uses adaptive four-level averaging.
It is a quite powerful and efficient adaptive tool designed to fit into changing market conditions.
The EMA 5,6 Crossover.ex4 custom indicator is simply a crossover of two exponential moving averages (a faster EMA & slower EMA) represented by arrows on the activity chart.