Dragon" trading strategy based on Heikin ashi and Heikin ashi smoothed

Master Class: Training in Internet Trading and Stock Exchanges

We offer to your attention A very short term trading strategybased on the Heik candle techniquein Ashi and a rather unconventional description of jiva34 — by a user of the ForexFactory forum.

The anatomy of the trading system "Dragon"

The body of the "dragon" consists of Heik candlesin Ashi, the Heikin Ashi Smoothed indicator and the three-period exponential moving average (EMA3), the values of which are calculated from Heikin Ashi Smoothed - hence, probably, the similarity of the price chart with the dragon (see Fig. 1).

The direction of the long-term trend is indicated by the 200-period EMA (EMA200). Here the horizontal support/resistance levelsThe DailyWoodPivot indicator provides - they are almost the same as the classic Pivot Points levels. Additional market conditions are tracked by DSS Stochastic indicators, as well as MACD with crossing.

Fig. 1. View of the working chart for the trading strategy.

In this system, the readings are very important indicator Heikin Ashi (NA). The essence of the trading system is to enter the market at the moment of the beginning of the reversal or "bend of the dragon's back".

Dragon" Trading Strategy Signals

The transaction, as in Figure 1 above, will be checked against the following parameters:

1. The Heikin Ashi indicator has changed color to the opposite;
2. The Heikin Ashi Smoothed is headed downward and is located below its moving average (EMA3);
3. DSS Stochastics oscillator makes a U-turn at the overbought zone;
4. The MACD is below its signal line;
5. The trade opens in the direction of the slope of the heavy EMA(200);
6. Particular attention to support/resistance, as the most effective bounce of the price from these levels.

The market changes direction very often, but not every change in direction is good for a trade. When the HA indicator changes color, the first signal to trend reversal. It is important to note in which

indicator MACD With Crossing. The DSS Stochastic speaks to the intentions of the "dragon" in the short term. Over time you will begin to better understand the dragon's actions, but in general they are easily recognizable.

Market entries/exits by trading system

According to the author, it is preferable to use this strategy on short-term charts: M1, M5. Fixed StopLoss и TakeProfit No, the exit from the trade is performed as soon as there is a reverse signal from the indicators, for example, a change in the color of Heikin Ashi candles, MACD lines crossing or DSS Stochastic entering the opposite zone.

You have to be very careful when processing signals and be extremely demanding not to open up during a flat, preceding a reversal. As the author puts it, "the dragon is not a soulless mechanical creature, it is alive and, like any creature, devoted to its master and always ready to serve...".