Forex Strategies Resources

31# ADX and Moving -Average Channel Trading System

Time Frame :4H and daily.

Pairs: all.

For this system, we calculated an EMA of highs and an EMA of lows to construct a moving-average channel (MAC). Our setup to buy is a close above the MAC with ADX greater than it was one bar ago; our setup to sell short is a close below the MAC with ADX greater than one bar ago. (Remember that a rising ADX indicates a strong trend, but the trend can be either an uptrend or a downtrend.)

With the setup in place, we need to calculate our entry price. With a close above the MAC and ADX rising, we will enter long at the close of the setup bar plus half the height of the MAC (EMA of highs minus EMA of lows)/2. If an entry is not triggered within two bars of the setup, the setup is cancelled. Our exit when long will be on a close below the MAC.

When a market closes below the MAC with ADX rising, we have a setup to sell short. Our entry price will be at the close of the setup bar minus half the height of the MAC. We cancel the setup if the entry is not triggered within two bars.


In this system, we defined both long and short entries as well as exit orders. We also did some setup work to construct the EMA channel of highs and lows and to calculate the ADX.

The setup, entries, and exits are described next.

Setup

a) Calculate a 30-bar EMA of highs and a 30-bar EMA of lows.

b) Calculate a 12-bar ADX.

Long Entries

a) Check for a close above the EMA of highs and a rising ADX.

b) If both conditions are true on the same bar, calculate the entry price by adding half the height of the MAC to the close of the setup bar.

c) Keep the entry order active for two bars after the setup.

Short Entries

a) Check for a close below the EMA of lows and a rising ADX.

b) If both conditions are true on the same bar, calculate the entry price by subtracting half the height of the MAC from the close of the setup bar.


c) Keep the entry order active for two bars after the setup.

Exit Orders

a) Exit a long position on a close below the EMA of lows.

b) Exit a short position on a close above the EMA of highs.

c) Also enable a money management stop, a breakeven stop, and a $ risk trailing stop.

dTake Profit: 60 pips EUR/USD, 70 pips GBP/USD 4H Time Frame, for Daily time frame 200pips EUR/USD , 250 pips

 

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Comments: 2

  • #1

    mohsen (Tuesday, 07 January 2014 00:42)

    good

  • #2

    mohsen (Tuesday, 07 January 2014 01:10)

    good

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ADX Forex Strategies