Forex Strategy «Powerful Tool» — Not too complicated, but interesting enough forex strategy, which allows to determine quite easily the direction of change the market trend with three lines of candles and with the help of 2 we are already well-known indicators Elder (Strategy Roentgen Elder): BearsPower and BullsPower, to determine more accurately time for the opening of trading positions in the forex market.
- I recommend selecting a Broker Forex with Terminal MetaTrader 4.
Primarily on the schedule for the chosen currency pair (which can be any time interval — it is desirable to D1 or optionally can be used H4, H1, smaller intervals — if desired), add 2 lights Forex:
1) BearsPower (13), for clarity, redden
2) BullsPower (13), for clarity, tinged with green
Now let’s define what «lines of three candles» (Three-Bar net Line)?
This line was proposed by Joseph Stowell to identify a trend reversal in the financial markets.
Line three candles — this is a common horizontal line, which held the right of the minimum of the third candle (which is below the minimum — in an uptrend or a maximum which is greater than in trend for down), counting from the maximum or minimum movement. Trend in the forex market is rising, until it was candle closing below the current line of three candles.
All internal low of the candle (for an uptrend) and maximum (for downtrend) is ignored! (On the schedule, they crossed out)
Now let’s consider the conditions of the transaction, according to Forex Strategy «powerful tool» and out of it.
For transactions on PURCHASE:
1) Formed a «three candles» in a downward trend movement and the price broke through the line up, and most importantly closed above this line! — The graph line is green.
2) Bulls indicator is above its zero line.
3) We are waiting for that moment when the indicator Bears crosses its zero line down! This intersection means that the market is not overbought, and we can conclude a deal on a purchase. But we still do not, wait for the next condition.
4) We are waiting until a bar closes at a later indicator Bears a little higher than the previous one, even if it is above its zero line (or closer to its zero line). It may also not necessarily be the next bar, and after one, two, etc. The main thing that condition has been fulfilled!
5) Only after this, we place our pending order to buy — Buy Stop, a few points higher (3-5 points) candles, which vypolnelos condition of paragraph 4.
6) The protective stop-loss set below the «line of penetration of three candles» or 2 nd option below the nearest local minimum. You decide.
7) Take-profit in the forex strategy is not established, and closing the transaction occurs after the formation of the inverse of 3 candles and closing prices below the line of this combination of topping 3 candles. Actually starts as the trend movement in your direction, you will constantly move the stop loss at least the last «Three Candles» (which is at least 3 candles, do not forget about internal minima candles — throwing them).
8) You should not forget about the rules of Money Management in Forex!
(For a larger image, click on it — will open in new window) Delete a pending order on the schedule allocated prematurely. It is better to remove it after the formation of a new signal on the sale or if the market has gone far in the opposite direction.
For transactions on sale — check the conditions:
1) We look forward to closing prices below the line of three candles.
2) Power indicator Bears — Bears, under the zero line.
3) Power indicator Bulls — Bulls, has to cross or already is above its zero line.
4) Signal strength Bulls — Bulls, on the next bar of the indicator, nihoditsya below (closer to the zero line) than yesterday’s bar, or down under the zero line.
5) Only then will we place our pending order for a few points lower (3-5 points) candles, which vypolnelos condition of paragraph 4.
Further, the stop-loss are putting in the same way as in the transactions for the purchase. Profit fix a similar way.
If there has been shaping and breaking through a new «line of three candles in the same direction after the issuing of a pending order, delete the previous order and wait for the next signal.
- By this strategy, forex trading, you can download the template Metatrader 4 — powertool_strategy.tpl (previously simply drag and drop). MT4 template suitable for any broker (5-digit, type ALPARI, 4-digit, type FOREX4YOU). See here: How to install the template in MT4?
- Indicators BearsPower and BullsPower do not spread because they are in every terminal MT4 default.