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Forex strategy "System Selection Technique"

Trading setup:
Time frames: 5, 15, 30 minutes, 1 hour, 3 hour and 1 day – just one chart at the time will be used.

In case you do not have the exact time frames, simply substitute them with the closest ones. For example, 15 min can be changed to 10 min, 3 hour can be changed to 4 hour etc.

20 EMA and 40 EMA on all time frames
ADX 14 for all time frames.

Currency pairs: any.

The idea behind this Forex method is that ADX helps to measure the strength of the trend while 20 EMA acts as a flexible support-resistance line.

Trading rules:

Our first goal is to find the chart with ADX being over 30 mark, which will indicate a strong trend. We start with a daily chart and continue the search moving downwards (3 hour, 1 hour, 30 min, 15 min, 5 min) until we find the chart with ADX being currently over 30.

Note: In case several time frames meet requirements for ADX, we opt for the highest time frame. That's why we start with the highest frame first.

Having chosen the time frame, we are ready to trade the first bounce off of the 20 EMA. We set a limit order close to 20 EMA accordingly: in a downtrend we expect the price to touch 20 EMA from below, then reverse and move down, in an uptrend – from above, reverse and move up.

Always make sure that at the moment of entry you are using the highest time frame with ADX currently over 30. Only then you can expect the price to obey 20 EMA.

 

 

Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. 

 

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