The second article of the series, dedicated to the Forex Strategy Master trading system (before studying this strategy, we strongly recommend you to read the previous article of this series). Here we will talk about the first and most fundamental strategy - Power Trader, on the basis of which all other strategies will be built.
Signals indicating the opening of a short position (sale)
Now let's look at the step-by-step algorithm for making a sale.
On the older TF moving averages and "column" indicators (GHL and QTI) should form a certain set:
1. The "right fan" of the moving averages from senior SS to junior SS
- The price is below the 3 EMA.
- The 3 EMA is below the 5 EMA.
- The 5 EMA is below the 15 EMA.
- The 15 EMA is below the 45 EMA.
2. the GHL indicator is colored red.
The QTI indicator is colored red.
On the high TF, the price should pull back and touch the 5 EMA.
Switching to Junior timeframe.
We expect a sell signal on the low TF.
- The closing price of the candle should be below all moving averages.
- The 15 EMA should be below the 45 EMA.
- Both "bar" indicators should be red.
Switching to a higher timeframe to see if there are still bearish trends there.
Once again, we switch to a lower TF and determine the level of the stop loss (the techniques for setting a stop are identical to those used when opening a buy trade).
We open a position on a low TF.
Determine the take profit level (the take profit setting technique is identical to the one used when opening a buy trade).
Continue to manage the position (the position management technique is identical to that used in a buy trade).
Step 10. (Optional)
If necessary, we use trailing stop (The trailing technique is identical to the one used in a buy trade).
What to do when the QTI indicator is grayed out
When the price touches the 5 EMA and the signal appears on the lower TF, there are three possible outcomes:
- On the older TF, the bar indicators remain colored in the desired color (green for a bullish trend and red for a bearish trend). This is ideal. In this case, we open a position.
- On the older TF at least one of the bar indicators changes color. Presumably there is a reversal trend. In this case, do not enter the trade.
- On the older TF, the QTI indicator is colored gray.
Let's take a closer look at the last option. When the QTI indicator turns gray (while the GHL indicator retains the color we need), this case should be considered favorable, in which you can open a position.
In this case, as a rule, on a low TF the fan is broken, and the moving averages overlap each other (once again, note that the GHL indicator on the high TF must remain in the desired color, in this case - red).
Such deals are slightly riskier, but often successful. Even if the fan is broken on the lower TF, you should wait until the candle closes below all moving averages, and both bar indicators are red (if the trade is to buy, it is the other way around).
What to do when one of the bar indicators is colored in the opposite color on the older TF
It was mentioned earlier that if on a high TF, after the price touches the 5 EMA moving average and one of the bar indicators turns the opposite color, trades will not open. However, especially risky comrades may seek their luck with this scenario as well. Here, it is necessary to keep an eye on the 15 EMA and 45 EMA moving averages.
- In a bullish trend, the 15 EMA should remain above the 45 EMA.
- If the trend is bearish, the 15 EMA should remain below the 45 EMA.
As soon as there is a signal to open a trade on the low TF and the moving averages remain in the correct position on the high TF, you can enter the trade. However we shall repeat once again, Such deals are very risky.