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Editor'S Choice - 2019

Strategy "Calm River" - scalping without fuss

Hello friends forex traders. Today we’ll talk about a strategy called “Calm River”. This is a simple, understandable and calm scalping system, designed to take small goals on short-term transactions. At the same time, using a certain "trick" to increase profits.

One of the features of the strategy is the not quite standard use of moving averages. As a rule, a moving intersection is used to enter the market, here they appear in a slightly different light.

Vehicle Features

Platform: any
Currency pairs: any
Timeframe: M5
Trading Time: European and American Sessions
Recommended brokers: Alpari, InstaForex, RoboForex

Main idea

As you know, any indicators are somewhat late. But, instead of complaining about another market fraud, we will try to turn this flaw in our favor.

Since we know that moving lags are late, then we can use the indicator as a smoother (less zigzag) representation of the trend, so to speak, an “indicator of calmness."

The strategy uses inputs on the rebound from moving averages, but subject to the preservation of the trend. For this, it is necessary to distinguish two types of “flow” of the price. For example, in this case, we are dealing with a calm course resembling a river bed. Moving averages practically do not intersect, and have a clear direction, in this case - down.

Further, on the contrary, an extremely turbulent river is depicted. The averages intersect all the time and do not have an explicit focus. Thus, we can use averages as a trending model of the market.

Strategy Rules

So, we need a chart with an M5 timeframe and two exponential moving averages - with a period of 50 and 20.

Both averages should have a clear focus - up or down, and should not often intersect. Visually, this should resemble a kind of river.

Next, we are waiting for a price correction to 20 or 50 average. At the same time, the price should not be delayed for a long time in the riverbed. I.e, should not be more than 3 closures in a row between the two middle ones - inside the “river”. If we have 4 or more closures, skip the entry. Here, for example, we have as many as 6 closures in a row, so we are not considering such a deal.

Not later than after the third candle, the price should close beyond 20 average - at the close of this candle we enter into a deal.

Stop loss is placed at the local extremum. Profit we will close in two stages. To do this, you need to simultaneously open two orders of the same volume, with the same stop loss. Take profit of the first order will be equal to stop loss. The second order is left without take profit. We will move the stop loss of the second order as new local extremes form.

Thus, on the first order, we get a small scalping profit. We leave the second order in the hope of capturing a large piece of the trend, and sometimes it is very justified, since one such profit can cover several unprofitable deals at once.

Login to purchase:

  1. Price above 20th and 50th EMA.
  2. The 20th EMA is above the 50th.
  3. Both averages are directed upwards.
  4. Means should not overlap often. The 20th EMA above the 50th form the river.
  5. The price is adjusted and applies to the 20th or 50th EMA.
  6. The river does not let the price. No more than 3 consecutive closed candles below the 20th EMA.
  7. The candle closes above the 20th EMA - an input signal.

Entrance for sale:

  1. The price is below the 20th and 50th EMA.
  2. The 20th EMA is below the 50th.
  3. Both averages are directed down.
  4. Means should not overlap often. The 20th EMA below the 50th form the river.
  5. The price is adjusted and applies to the 20th or 50th EMA.
  6. The river does not let the price. No more than 3 consecutive closed candles above the 20th EMA.
  7. The candle closes below the 20th EMA - an input signal.

An important rule is that until a characteristic “river” has formed on the chart, you should not enter the market. For example, a candle crossed a moving one and, it would seem, it is necessary to enter a position. However, this is just the case when it is not worth entering the market. The averages are too close to each other and often intersect, that is, there is an obvious flat.

Examples

An example on an uptrend. The price closes below the 20th moving and immediately bounces back, with a close above average on the next candle. At the close of the candle we enter the purchase. Stop loss set at a local minimum.

The first order is closed at a take profit of +10 points. We move the stop loss of the second order as soon as a new low is formed just above the previous one. Here, unfortunately, the stop loss worked too early, and the second order closed at +3 points (not counting the spread).

Sales example - the price rebounded after the first closed candle inside the “river”. In this case, the first take profit came out very small - about 5 points. But on the second order, we got a very decent profit of +25 points.

Money Management

Always do not forget about the risks. For this trading system, stick to 1-2% per position on the size of the deposit. The lot is easy to calculate using a special calculator.

Output

The strategy is very simple. The main thing is not to forget that if the price has been kept above the 20th average for a long time, that is, inside the “river”, we do not enter the position. Maximum - 3 closures in a row. Try to take trend pairs, as the strategy itself, trend and flat tools will work out worse. Well, of course, do not be afraid to change the strategy for yourself, to add / remove something is a sign of the development of a forex trader.

Watch the video: The 33 Strategies of War Animated (November 2019).

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