There are many instances in the market where when we see the market perform all we have to do is hope that we have ridden this big trend wave. The question is how?
There are many trading opportunities that could allow us to ride the wave from start to finish. One of the most popular ways is to use crossover moving average strategies. It's simple, easy to follow and, given the right market conditions, could allow traders to catch these big trend waves.
The Guppy Trend Forex Trading Strategy is one of those strategies that is based on a crossover strategy. It is a trend following strategy that aims to capture trends from the beginning and spread them through to the end. This enables a trading strategy with a high risk / reward ratio.
The Guppy Multiple Moving Average indicator
The Guppy Multiple Moving Average indicator is a custom indicator based on two modified major moving averages, which are then multiplied by different time periods. This then shows two groups of multiple moving averages crossing each other. These moving averages also tend to fan out when the market starts trending and shrink when the trend slows.
There are many ways that the Guppy Multiple Moving Average indicator can be used. It could be used to identify the trend direction. This could be achieved by identifying the location of the price in relation to the moving averages. When the price is above the slower set of green colored moving averages, the medium term trend is said to be bullish. If the price is above both the slower and faster rates, green and red, then both the medium term and the short term trend are considered bullish. On the other hand, if the price is below the green moving averages, the medium-term trend is considered bearish. When the price is below both the green and red bands, both the medium-term and the short-term trend are bearish.
Another way to look at this indicator is to see how the moving averages are stacked. When the faster moving averages are above the slower moving averages, the trend is said to be bullish. When it is reversed and the faster moving averages are below the slower moving averages, the trend is considered bearish.
We could also visually gauge the strength of the trend based on the characteristics of the moving averages. When the moving averages wear off, the trend tends to be stronger. On the other hand, if the moving averages shrink, the trend could slow down.
Trading strategy concept
This strategy is based on using the Guppy Multiple Moving Average Indicator as a crossover strategy in line with the long term trend.
Our main filter would be the Exponential Moving Average (EMA) with 200 periods. Trades should only be made towards the 200 EMA. Whenever the Guppy Multiple Moving Average indicator is above 200 EMA, we would just try to make buy trades. On the other hand, if the Guppy Multiple Moving Average indicator is below 200 EMA, we would only be doing sell trades.
Then we wait for the crossover to move towards the 200 EMA. On a bullish long term trend, we would wait for the price to decline in order for the faster band of red colored moving averages to fall below the slower green colored band. Then we wait for the red moving averages to cross the green moving averages again. This would indicate that price is picking up the direction of the long-term trend. This would be our buy signal.
For sales transactions, the Guppy Multiple Moving Average indicator should be below 200 EMA. We then wait for the price to go back, which causes the red band of moving averages to cross over the green band. Then we wait for the red band to fall below the green band again, indicating the resumption of the bearish trend. This would then be our sell signal.
- 200 EMA (gold)
Time window: 15-minute, 30-minute, 1-hour, and 4-hour charts
Currency pair: each major and minor pair plus a few crosses
Trading session: any
Buy (Long) Trade Setup
- The price should be above 200 EMA
- The guppy multiple moving average bands should be above 200 EMA
- The price should decline, causing the red moving averages to fall below the green moving averages
- Wait for the red moving averages to come back above the green moving averages, indicating that the uptrend has resumed
- Place an order to buy at the confluence of the above conditions
- Set the stop loss below the Guppy Multiple Moving Average lines
- Close the trade when the price closes again within the green area with multiple moving averages
Sell (Short) Trade Setup
- The price should be below 200 EMA
- The Guppy Multiple Moving Average bands should be below 200 EMA
- The price should go down, causing the red moving averages to be above the green moving averages
- Wait for the red moving averages to fall back below the green moving averages, indicating the resumption of the bearish trend
- Enter a sell order at the confluence of the above conditions
- Set the stop loss above the Guppy Multiple Moving Average lines
- Close the trade when the price closes again within the green multiple moving average area
This strategy is a version of a crossover strategy that uses multiple moving averages based on the Guppy Multiple Moving Average indicator. This allows us to see the big picture by taking into account multiple moving averages.
Like many moving average crossover strategies, this strategy is a high reward-to-risk strategy. This is because the strategy allows traders to start trading just before a trend starts and to close the trade as soon as the trend ends. However, this strategy should be used in trending markets. Markets that tend to be more range tied can result in trades with low returns or even losses. However, when used in a trending market or a trending market, this strategy can produce large profits.
Forex Trading Strategy Installation Instructions
The Guppy Trend Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
The Guppy Trend Forex Trading Strategy offers the opportunity to identify various peculiarities and patterns in price dynamics that are invisible to the naked eye.
Based on this information, traders can assume further price movements and adjust this strategy accordingly.
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How do I install the Guppy Trend Forex Trading Strategy?
- Download Guppy Trend Forex Trading Strategy.zip
- * Copy mq4 and ex4 files to your Metatrader Directory / Experts / Indicators /
- Copy the tpl file (template) into your Metatrader directory / templates /
- Start or restart your Metatrader client
- Select the chart and timeframe in which you want to test your forex strategy
- Right click on your trade chart and hover over "Template".
- Move right to select the Guppy Trend Forex trading strategy
- You will see that the Guppy Trend Forex Trading Strategy is available on your chart
* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already built into the MT4 indicators of the MetaTrader platform.
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