Forex Master Method trading strategy

Forex Master Method trading strategies - A very good system of work on the foreign exchange market. based on the concept of divergence. Its author is a trader with many years of experience in the Forex market - Russ Horn. As we said before, Forex Master Method trading strategy is based on divergence (divergence of the indicator chart with the price chart) and, by and large, it is not that difficult when studied attentively. But, at the same time, it requires a lot of attention and the necessary experience on the part of the trader when directly using the strategy in practice.  Forex Master Method Strategy can be used on any classic currency pairs and on any timeframe, but still preference is given to larger timeframes - from H1 and above.

There are three kinds of divergence:

– Normal (or regular) divergence is a counter-trend signal, i.e., it signals a change in the trend (price reversal in the opposite direction).
– Hidden Divergence signals the continuation of the trend, its strengthening.
– Extended divergence - is also a signal for a stronger trend.

Divergence should also be separated by the direction of the signal it creates:

– Bullish divergence signals an upward price movement (a buy order should be opened).
– Bearish divergence indicates a downward price movement (open a sell order).

Now that we've got the concept of divergence figured out, let's move on to the rules of the trading strategy.

Forex Master Method Trading Strategy Indicators

We use two standard indicators that you can easily find in your terminal:

– MACD indicator with parameters: fast EMA (12), slow EMA (26), MACD SMA (9).
– Stochastic Oscillator indicator with the parameters: period %K (8), period %D (3), deceleration (5), prices (Low/High), MA method (Simple), minimum (0), maximum (100), levels (20 and 80).

So that traders do not waste time looking for different types of divergence on the chart, the strategy will use an Expert Advisor called TradLocator. All the variations he finds will be marked on the charts, and the indicators will be used as filters.

The TradeLocator Expert Advisor draws colored lines on the chart, which, depending on the color, mean one or another divergence. In the settings of the Expert Advisor you can see what color is meant by this or that formation, as well as adjust it for yourself.

Forex Master Method Strategy Trading Signals

Open a sell orderWhen a bearish divergence is drawn by TradeLocator on the price chart (the line above the price chart), one of the indicators (Stochastic or MACD) or both simultaneously confirm the signal of the advisor, as shown in the picture below.

StopLoss should be set a few pips above the last local maximum and depending on the timeframe. The author of the strategy, Russ Horn, suggests applying the following numbers:

Timeframe - Value in pips

M1 - 1-2
M5 - 2-5
M15 - 3-10
M30 - 5-15
H1 - 8-20
H4 - 20-40
Daily - 30-75
Weekly - 100-200
Monthly - 150-350

TakeProfit should be set at the nearest support-resistance level, i.e. at the level that the price touched several times in the past.

Open a buy orderWhen a bullish divergence is drawn by TradeLocator on the price chart (the line under the price chart), one of the indicators (Stochastic or MACD) or both simultaneously confirm the signal of the advisor, as shown in the picture below.

StopLoss and TakeProfit in Forex Master Method trading strategy set in the same way as when opening a Sell order.

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