Market: Forex;
Timeframe: M15;
Currency Pair: EUR/USD;
Trading Indicators: ADX(14), MACD(5,25,9), MA(9);
Protective Orders: Stop Loss and Take Profit.
The trading strategy is appealing due to its simplicity and the use of the MACD indicator for determining trade direction. The price chart is not used at all. You can remove the price chart entirely and trade based solely on the indicators. This strategy works well on a 15-minute price chart but can also be adapted for other timeframes by adjusting the stop-loss and take-profit levels accordingly.
To begin, configure the ADX. Adjust the DI+ and DI- lines to match the background color so they don’t distract. Next, overlay the Moving Average (9) on the ADX chart by dragging it onto the appropriate ADX chart window. Once the ADX is set up, you can start trading.
Trading Strategy Rules
A crossover of the ADX with the MA from below to above generates a trade signal. As soon as you receive a signal, check the MACD:
- If the MACD is positive, enter a long position and set a stop loss of 30 points and a take profit of 60 points;
- If the value is negative, enter a short position with the same stop loss and take profit levels.
When receiving a new signal:
- If it matches the previous one, you can open an additional order, moving the StopLoss to break-even and setting the TakeProfit according to the new order;
- If the signal does not match, close the previous order and open a new one in the direction of the new signal.
Fig. 1. Applying the trading strategy.
FAQ
What is the ADX indicator used for?
The ADX (Average Directional Index) measures the strength of a trend, helping traders determine if a market is trending or ranging.
How does the MACD indicator work?
The MACD (Moving Average Convergence Divergence) shows the relationship between two moving averages of a security’s price, helping identify potential buy or sell signals.
Can this strategy be used on different timeframes?
Yes, this strategy can be adapted for various timeframes by adjusting the stop-loss and take-profit levels accordingly.
