Optimum channel cross foreign currency trading technique

Many traders would agree that trading the trend is one of the easiest ways to make money in the Forex market. The direction of trade appears to be much clearer amid emerging market conditions. Half the battle is knowing which direction to go. The only question is when to start trading.

While trend-following trading may seem easy with just charts, you know that trend-following strategies are easier said than done when you've been in the trade for a while. This is because most strategies are missing an essential component in the post-trade trend. Trend following is not just about knowing when the trend starts and ends. It's also about knowing if the trend is strong enough to hold its direction for some time. Trades with weaker trends could allow some profit for a while, but those trends would easily reverse and return profits to the market.

The Optimum Channel Cross-Trading Strategy is a trend following strategy that takes into account not only the direction of the trend, but also the strength of the trend. That way, we have a better chance of getting trades that have been trending for quite some time.

Average directional movement index

The Average Directional Movement Index (ADX) is one of the most useful technical indicators that can be used by a trend following trader. This is because it not only provides information about the direction of the trend and its turning points, but also information about the strength of the trend. This information is very important as it allows traders to judge whether the market trend is likely to last longer or not.

The ADX indicator is a pulse indicator that is displayed in a separate window. It consists of three lines, the + DMI-, -DMI- and the ADX line.

DMI stands for Directional Movement Index. This component of the indicator indicates the direction of the trend. The DMI consists of two lines, + DMI and -DMI. Whenever the + DMI is above the -DMI, the market is bullish. On the other hand, a -DMI above the + DMI would mean the market is viewed as bearish.

In contrast to the DMI lines, the ADX line is non-directional. Instead, it just shows the strength of the trend. Traditionally, trend strength is only considered strong when the ADX line is above 25. However, this usually does not apply to trend reversals. This is because during market reversals, the ADX line tends to decline before rising again. The same applies if the market comes out of a market contraction phase before an expansion phase typical of a trend market. The ADX line tends to be lower before rising above 25 during the trend. This is because the ADX line is still a lagging indicator. Some would still use it as a trend strength filter, prohibiting them from making trades with an ADX below 25. Aggressive traders, on the flip side, would prefer to take the trade as the ADX is rising even though it is still below 25 and knows it is tending to lag a bit.

Adaptive moving average indicator

The AMA (Adaptive Moving Average) indicator is a custom moving average that is significantly different from the usual moving average. This is because the AMA takes into account the strength of the trend. The sensitivity of the moving average based on the strength of the trend could also be adjusted depending on the parameters used by the trader.

Channel trading signals indicator

The channel trading signal indicator is a custom indicator that draws channels based on the high, low and close of candles. However, this indicator could also be used in a crossover strategy. This is because this indicator closely follows price movement, making it an excellent leading indicator.

Trading strategy

This strategy is a crossover strategy based on trend strength. Both the ADX indicator and the i-AMA indicator form the trend strength component of the strategy. In addition to the trend strength, the strategy also uses the crossover signals provided with the two indicators.

The Channel Trading Signals indicator is then paired with the i-AMA indicator to provide a crossover signal based on trend strength and a leading indicator.

Indicators:

  • i-AMA optimum
  • Channel trading signals
  • Average directional movement index

Time window: 1-hour, 4-hour, and daily charts

Currency pair: Major and minor pairs

Trading session: Meetings in Tokyo, London and New York

Buy trade setup

entry

  • In the ADX indicator window, the + DMI line should be above the -DMI line, indicating a bullish trend reversal
  • The ADX line should be rising indicating a stronger trend
  • The Channel Trading Signals line should be above the i-AMA line, indicating a bullish trend reversal
  • Place an order to buy at the confluence of the above conditions

Stop loss

  • Set the stop loss to the support level below the entry candle

output

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Sell ​​Trade Setup

entry

  • In the ADX indicator window, the + DMI line should be below the -DMI line, indicating a bearish trend reversal
  • The ADX line should be rising, indicating a stronger trend
  • The Channel Trading Signals line should be below the i-AMA line, indicating a bearish trend reversal
  • Enter a sell order for the confluence of the above conditions

Stop loss

  • Set the stop loss to the resistance level above the entry candle

output

  • Close the trade as soon as the + DMI line crosses the -DMI line

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Conclusion

This trading strategy is a high yield strategy. It is typical of this strategy to catch trades with a reward-to-risk ratio of 2: 1 to 5: 1. These are the types of trades that cause trading accounts to grow exponentially. It also allows traders to easily offset some losses during the drawdown periods that are typical of most trading strategies.


Forex Trading Strategy Installation Instructions

The optimal channel cross 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 optimal channel cross forex trading strategy provides the ability to spot 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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Click here for the step-by-step XM Trading Account Opening Guide

How do I install the Optimum Channel Cross Forex Trading Strategy?

  • Download Optimum Channel Cross 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 trading chart and hover over “Template”.
  • Move to the right to select the optimal Channel Cross Forex trading strategy
  • You will see that the optimal Channel Cross 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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