Forex Trading system that combines ADX and MACD

The ADX and its components the +DI and the -DI, ​​is an indicator of the strength of the trend in the market, which also indicates which is the current prevailing trend - bullish or bearish - so it can be very useful in trend following trading systems like the one we are going to introduce in this article.
The MACD was added to provide the buy/sell signals while the ADX serves to confirm the signals generated by the MACD, and together they offer a powerful combination as we will see below.
This system was created to trade on a daily time frame, which means it generates medium to long-term signals.
As always, it is recommended to test this system on a demo account before using it for real money trading.

System configuration

• Currency pairs: All. It can also be tested with precious metals.
• Time Frame: Daily.
• A candlestick/bar chart.
• MACD with the following settings: (3, 9, 16).
• 16-period ADX with +DI and –DI lines.

System rules

Long signals

• The buy signal is provided by the MACD. This signal consists of the bullish crossover of the MACD over the signal line and/or the bullish crossover of the zero line of the indicator.
• To confirm the MACD signal, the +DI must be above the –DI. In case the +DI is below the –DI and the MACD generates a buy signal, then the signal must be ignored by the trader who must wait for the bullish cross of the +DI over the –DI to open the trade. buy position.
• Stop loss: A stop loss can be placed below the last low.

Short signals

• The sell signal is provided by the MACD. This signal consists of the bearish cross of the MACD below the signal line and/or the bearish cross of the zero line of the indicator.
• To confirm the MACD signal, the +DI must be below the –DI. In case the +DI is above the –DI and the MACD generates a sell signal, then the signal must be ignored by the trader who must wait for the bearish cross of the +DI below the –DI to open the trade. selling position.
• Stop loss: A stop loss can be placed above the last high.

Closing of positions

Close the position if any of the following signals occur:

• Buy position: The +DI crosses the -DI downwards, indicating a possible trend change from bullish to bearish. The position can also be closed if the MACD generates a bearish signal.
• Sell ​​position: The +DI crosses the –DI upwards, indicating a possible trend change from bearish to bullish. The position can also be closed if the MACD generates a bullish signal.

If the market moves in favor of the trade, a trailing stop can be used to follow the price so that the trader can make the most profit while at the same time protecting the profit generated by the position so far.

System Example Chart

Trading system with MACD and ADX
The image above shows a daily chart of the EUUSD with various buy signals generated by this system (white arrows). In all four signals we can see that the price action is bullish and the MACD is above the zero line and has crossed the signal line.
Also, the +DI is above the –DI in the ADX, which confirms the signals generated by the indicator. At the last signal, we can see that the market was up hundreds of pips from the hypothetical entry point.
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Simple trend following system

If you're novice who has simply entered into foreign exchange trading commercial enterprise with the wish of creating lot of cash, you have to first understand approximately specific kind of foreign exchange technical indicators and their usage. If you're an skilled dealer, you have to understand the proper mixture of foreign exchange indicators which let you make steady profits in foreign exchange commercial enterprise. There are 4 sorts of indicators which might be used typically via way of means of buyers such as Momentum, trend, quantity and volatility indicators. Forex indicators, positioned in reality, are diverse indicators used to discover styles withinside the forex marketplace. Generally, they control uncooked records in diverse approaches to attempt to create trading scenarios. Forex indicators attempt to pinpoint charge records, which is a useful device to a forex marketplace dealer. Using the statistics generated from a Forex indicator, a dealer can discover and make the most possibilities that she or he could have in any other case neglected and consequently now no longer profited upon. The indicators are neither proper nor wrong, however alternatively are greater gear withinside the forex buyers' toolbox of monetary capabilities. Because every Forex indicator in reality gives indicators to a dealer, they have to be used accurately and nicely included into a legitimate cash control method this is already been advanced via way of means of a assured and able investor.Basic marketplace literacy is essential that allows you to absolutely make use of an indicator, and what's preferred from an indicator have to be made absolutely clean whilst it's far created. Different strategies and structures of an indicator can cause specific outputs whilst it's far used, which means that it ought to be cautiously vetted earlier than being positioned into use. Using an Forex indicator, you could apprehend the Forex marketplace tons higher than you will via way of means of in reality staring at it. Using the indicator, it's far feasible to expect results, and from those results a savvy dealer can discover the fine plan for the marketplace.
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Using an indicator along diverse different marketplace evaluation strategies is a great manner to look at your cash grow, in addition to defend it from marketplace volatility. The purpose of a investor who's looking for out which indicator is the fine ought to be to alternatively discover which indicators he ought to institution collectively to create the fine set of indicators. When multiple indicators are running collectively in a set, they are able to verify every different's predictions, thereby confirming and strengthening the viability of the prediction. Many specific indicators are to be had on superior platforms, and this will create a undertaking for even an skilled dealer, not to mention a novice. Two of the maximum popular Forex indicators are Moving Averages and Stochastic Indicator. One first-rate gain of the Stochastic Indicator is that it can sign an investor whilst the marketplace is both overbought or oversold, sending caution indicators earlier than some thing calamitous has happened. Typically, indicators which might be primarily based totally on forex power are relative forex power and absolute forex power. Combined, those two indicators are referred to as a Forex go with the drift indicator, due to the fact the complete forex go with the drift of the Forex marketplace is seen on a unmarried chart, thereby substantially simplifying and streamlining the marketplace evaluation method for the investor who's the usage of absolutely the and relative forex strengths as Forex indicators to useful resource in his or her funding method.

Nihilist “Holy Grail” trading strategy for Forex and other markets

Last week we published a trading system called Nihilist , which was designed to trade practically any instrument on long-term time frames, and based on a series of custom indicators for Metatrader 4 (these indicators were in turn created based on in the ADX ).
Now we are going to explain the features of a variation of that trading methodology, known as the Nihilist Holy Grail system, which was created to trade on shorter time frames, specifically 30 minutes, 1 hour and 4 hours, so it is more suitable. for day traders.
The original Nihilist Strategy is designed for 4-hour, 1-day and 1-week time frames, making it ideal for traders who prefer longer-term trading and have the patience to wait for entry signals. to the market. For traders who are not particularly patient, the Nihilist Holy Grail system is more suitable.
As always, before using it to trade with a real account, it is recommended to test it on a demo account.

Nihilist «Holy Grail» System Rules

The system is mainly recommended for trading on 30 minute, 1 hour and 4 hour time frames. For the first two time frames, the system produces the best results during the London session.
The 4-hour time frame produces good results in any period, however it is not recommended to enter the market in the period between the first and the third candlestick. It is also not recommended to enter the market in the last two candles of the week.

Long positions

• The HolyGrail indicator must be sea green or lime after the candlestick closes (If the previous bars were lime, then the next bar must be lime for the entry to be valid, not sea green).
• In the ADX indicator window corresponding to the trade-specific timeframe, there should be no red boxes and at least one/two lime-colored boxes after the close of the candlestick. More lime colored boxes on the vertical line from the top to the bottom box (from period 7 to period 144) represent stronger bullish momentum
• In the Nihilist Ultra ADX Dash Mtf, all lower time frames should be lime, from the 1 minute time frame to the current time frame being monitored, to have the best entry.
• The Kijun Sen should show an upward move.
• The candle should close above the Kijun Sen, preferably the entire candle should be above the Kijun Sen.
• Short positions
• The HolyGrail indicator should be pink or red after the candlestick closes (If the previous bars were red, then the next bar should be red for the entry to be valid, not pink).
• In the ADX indicator window corresponding to the trade-specific timeframe, there should be no lime boxes and at least one/two red boxes after the close of the candlestick. More red boxes on the vertical line from the top to the bottom box (from period 7 to period 144) represent a stronger bearish momentum
• In the Nihilist Ultra ADX Dash Mtf, all lower time frames should be red, from the 1 minute time frame to the current time frame being monitored, to have the best entry.
• The Kijun Sen should show a bearish move.
• The candle should close below the Kijun Sen, preferably the entire candle should be below the Kijun Sen.
• If a trader follows the daily trend in their intraday trades, their account will see profits over time.

Take Profit

For taking profit in the Nihilist HolyGrail trading system the following rules must be applied:
The position should be closed if the system produces the opposite signal indicating that the market is about to change direction.
The indicator based on the ADX should show the following signals:

• Buy Positions: All boxes should turn red, signifying a change in momentum from bullish to bearish.
• Sell ​​Positions: All boxes should turn green, signifying a change in momentum from bearish to bullish.

Close the position when the price reaches a fixed take profit target such as 30/50/100/200/300 pips or more (depending on the specific time frame and volatility of the traded pair).
Close the position if the price reaches an important support/resistance area.

Stop loss for long position

The stop loss can be placed on the last flat area of ​​the Kijun Sen indicator below the signal candle, minus the spread and minus 4/5 pips.
If it is impossible to find the flat area under the signal candlestick, or it is too close to the current price, then we use the last low of the move, minus the spread and minus 4/5 pips.
If the last low of the move is too far from the entry point, a fixed stop loss of 30/50/70/80/100 pips is recommended, depending on the specific volatility of the pair we are trading.

Stop loss for short position

The stop loss can be placed on the last flat area of ​​the Kijun Sen indicator above the signal candlestick, plus the spread and plus 4/5 pips.
If it is impossible to find the flat area above the signal candlestick, or it is too close to the current price, then we use the last high of the move, plus the spread and plus 4/5 pips.
If the last high of the move is too far from the entry point, a fixed stop loss of 30/50/70/80/100 pips is recommended, depending on the specific volatility of the pair we are trading.

Conclusion

Do not open positions in the nihilist HolyGrail system when:

• The HolyGrail indicator is gray.
• The ADX shows that the momentum in the market is weak or that there is no momentum.
• The Kijun Sen shows a flat movement (no bullish or bearish direction).

https://preview.redd.it/hmymfrqj5zq91.png?width=800&format=png&auto=webp&s=ee62eea1d0fe9c00213f0db43d70539811f5ce1a
The image above shows the template with all the custom indicators of the system. You can download the set of indicators and the template for Metatrader 4 at the following link:
-Custom Nihilist Holygrail System Indicators for Metatrader 4
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How to Trade Ranges in Forex?

While most traders seek to trade with market trends, the reality is that most of the time the market moves in ranges without a defined trend. According to data from some brokers, those traders who focus on trading in ranges tend to be more successful and obtain better returns more regularly than those who only trade based on trends.
That is why in this article we are going to provide a brief guide to trading in the ranges with the greatest efficiency using several important technical indicators and other tools that can help you identify the ideal times to enter and exit each trade.
We will also show the conditions under which this trading strategy should not be applied, especially at times when the market is experiencing signs of volatility and is going to move with a fairly strong trend.
Traders who normally trade in ranges do not take into account the direction of the market as they assume that sooner or later the price will return to its starting point. That is why they base their strategies on the possibility that the price will move between the same levels on multiple occasions, for which their goal is to make profits by taking advantage of these upward and downward oscillations.

Disadvantages of Range Trading

The main disadvantage of trading in ranges is that on those occasions when the price breaks one of the limits of the channel, it tends to move quite strongly in the direction of the breakout. For this reason, those traders who do not have adequate risk managementthey may suffer great losses.
Therefore, although it may seem the opposite, operating in ranges is not easy. That is why most of the great investors are dedicated to developing strategies based on trends since under these market conditions it is possible to earn a lot of money. However, it is possible to obtain good returns consistently in markets that move in ranges.
In the case of the Forex market, one of the most relevant aspects is to operate only with the currency pairs that show the greatest probability of staying in a range. Below we will provide a guide to trading ranges in the forex market, concentrating on the tools based on technical and fundamental analysis that increase the chances of success.

Supports and the resistances

Support and resistance are the basis of range trading as the price often bounces off of these. We can define support as a price level at which most traders tend to buy and resistance the price level at which traders tend to sell. The more times the market has failed in its attempts to break through support or resistance, the more important this will be and indicates at the same time that it is a level of indecision between buyers and sellers. Another aspect that influences the importance of these levels is the extension of the period of indecision, in this case the longer it is, the more relevant the support or resistance will be.

What pairs should I trade in ranges?

Before starting to trade with ranges in the Forex market we must choose the right pairs to do so. Traders interested in this type of strategy can benefit from choosing those pairs that are more likely to stay in a defined range for extended periods of time as opposed to others that tend to move in very strong trends. In this case, the key currency is the US dollar (USD), whose pairs generally move in trends. Below is a list of currency pairs to avoid when trading ranges:

• EUUSD
• USD/JPY
• GBP/USD
• USD/CHF
• USD/CAD
• AUD/USD
• NZD/USD

For this reason, the most suitable pairs for range-based strategies are those that do not include the USD and which are influenced by the divergence in performance between the two countries in question. Among the pairs that we can take into account are the following:

• EUGBP
• EUCHF
• CHF/JPY
• GBP/JPY
• AUD/CAD
• Others.

In this group of peers we can find several low risk and others high risk. Low risk pairs are known as those that move within a relatively narrow range while high risk pairs are those that fluctuate in a wider range. Low-risk pairs are safer to trade but offer lower profits. On the contrary, high-risk pairs offer a higher return but at the same time a higher risk.
One way to determine the risk level of a currency pair is through the interest rates of its currencies. The difference between the interest rates of two countries usually affects the range that the pair formed by their currencies operates.
For example, the differential between interest rates in the European Union is much lower than that between Japan and the United Kingdom, which is why the GBP/JPY pair is more volatile than the EUCHF. From here we can define the following rule:
The higher the interest rate differential between two countries, the more volatility the pair will have and the higher the range in which it oscillates.
It is important to take this rule into account and accommodate to the volatility of the pairs since an operator who likes low risk and therefore prefers safer operations should trade in pairs in which the spread between interest rates is small.
On the contrary, in the case of a trader who has a preference for high risk since he expects that his operations will produce high returns, he must operate in pairs whose differential between interest rates is high. Ignoring interest rate differentials before trading ranges can lead to potentially winning trades ending up in losses.
In this case, currency pairs with low ranges and that allow trading with relatively narrow stops and with large volumes are the EUGBP and EUCHF, while the crosses that have high ranges and require wider stops with larger trading volumes. smaller (and less leveraged) are GBP/JPY and AUD/JPY among others.
It is very important to keep this in mind before formulating the trading strategy. For example, if we are trading a pair as volatile as the GBP/JPY there is not much point in trading with a very tight stop as the price is likely to reach it before moving in the direction we want. Also, that same volatility makes it dangerous to trade very large volumes as the potential for losses is high compared to a lower range pair.
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Technical indicators for range trading

There are several technical indicators that can be used as quite useful analysis tools since they were specifically designed for ranging markets, however it is important to know what they are and under what conditions to use them. Some allow detecting overbought conditions (in resistance) or oversold (in supports) in the market, as is the case with oscillators.
Some indicators that we can use when trading ranges are Stochastic Oscillators , MACD , ADX , Bollinger Bands, RSI and CCI. Next we will explain how two of the most useful indicators are used when trading with ranges:

Using the RSI in range trading

The Relative Strength Index or RSI is an oscillator that is among the most popular indicators today. It was invented in 1978 by J. Welles Wilder and what it basically does is compare the magnitude of the recent gains in a specific instrument (a currency pair, a stock, etc) with the recent losses converting the ratio obtained into a number that fluctuates between 0 and 100.
If we are trading a currency pair that moves in a range, we can apply the following rules to trade based on the RSI:

• Open a buy position when the RSI crosses from below to above the 30 level.
• Place a stop loss about 10 pips below the previous low as a protective measure.
• If the trade develops in our favor we close the position and take profit when the RSI reaches the overbought area at the 70 level.
• Wait for the RSI to lose strength and cross below the 70 level at which point we open a short position.
• Place a stop loss about 10 pips above the previous high as a protective measure.

If the trade develops in our favor we close the position and take profit when the RSI reaches the oversold area at the 30 level.
If we see the following image, several examples of operations carried out applying these simple principles in the EUGBP pair are shown:
https://preview.redd.it/3ax9wjnuhno91.png?width=610&format=png&auto=webp&s=5b23b52a3b1ac869b3aac79ec437cd97a28d2275
The green circles mark the buying operations and the orange circles the selling operations. The dotted lines indicate the 30 and 70 levels of the RSI. Being a pair that mainly moves in ranges during the period analyzed in the chart, the signals derived from the RSI were quite reliable as you can see, producing in most cases winning trades.

Using Bollinger Bands in Range Trading

Bollinger bands are a particularly useful indicator for range trading just like the RSI so it can be combined with it when analyzing ranges in the market. What this tool does is compare relative price levels and volatility during specific time periods. Bollinger bands are made up of three lines that encompass most of the price action.
The idea with this is that when the price touches the upper band it is an indication that the market is overbought since it is above the average and if the price touches the lower band it is considered that the price is oversold since it is above the average. below average.
Based on this, when the market is in a range, traders should buy when the price is touching the lower band (oversold market) and sell when it touches the upper band (oversold market).
In this case, the standard configuration of this indicator is used for its moving averages, which is 2 periods. Although the concept is easy to understand, the following graphic example will make it easier to visualize:
https://preview.redd.it/byz6n7vshno91.png?width=586&format=png&auto=webp&s=0249ebad148f0dbba7f9ed646262864a8b97b042
If you use the RSI, Bollinger bands or any other indicator to trade ranges, the important thing is to know when and how to use them so that the signals they produce are reliable.
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Forex Trading System Based on Detrend Price Oscillator

In this article we are going to explain in detail a trading system based on the technical indicatorIn this article we are going to explain in detail a trading system based on the Detrend Price Oscillator (DPO)It also uses other indicators to confirm DPO signals, in this case MACD and ADX.
The ADX and its complements (-DI and +DI) represent a group of directional movement indicators and among other things measure the strength of the current trend.
The combination of these three indicators produces a system with signals of greater reliability, which can be used to carry out medium-term operations in time frames of 60 minutes.
As always, it is recommended to test this system on a demo account before using it for real money trading.

System configuration

• Currency pairs: All.
• 1 candlestick/bar chart with a 1 hour time frame.
• 1 simple moving average of 3 periods.
• 1 simple moving average of 15 periods.
• Detrend Price Oscillator (DPO) indicator set to 12.
• ADX 14 indicator with DM.
• MACD with standard settings (12,26, 9).

*You can download the DPO indicator for MT4 at the following link (the other indicators are already included in the platform):
Detrend Price Oscillator Indicator for MT4 and MT5

Trading system rules

The opening of buy and sell positions are based on the DPO crossing above/below the zero line. These signals are confirmed by the other indicators for greater reliability.

Long positions

• The DPO must cross above the zero line.
• The MACD line must be above the signal line.
• In the ADX, the +DI must be above the –DI or at least it must be crossing above the –DI. This is not 100% necessary, but it is preferable.
• Finally, the 3-period moving average must cross above the 15-period moving average in a period not to exceed three candlesticks, either before or after the DPO's bullish crossover.
• The stop loss is placed below the 15-period moving average, at least 10 pips away, depending on the trader's risk tolerance.

Short positions

• The DPO must cross below the zero line.
• The MACD line must be below the signal line.
• In the ADX, the +DI must be below the –DI or at least it must be crossing below the –DI. This is not 100% necessary, but it is preferable.
• Finally, the 3-period moving average must cross below the 15-period moving average in a period not to exceed three candlesticks, either before or after the DPO's bullish crossover.
• The stop loss is placed above the moving average of 15 periods, at a distance of at least 10 pips, depending on the risk tolerance of the trader.

System Example Charts

Buy signal example for the EUUSD pair
In the example above we can see a good buy signal on the EUUSD. On the same candlestick, the DPO crosses above the zero line, the +DI crosses over the –DI, the 3-period moving average crosses the 15-period moving average, and the MACD has just moved above the signal line.
In this case, we wait for the close of the candlestick and open a long position on the next candlestick to ensure the reliability of the moving average crossover. This is usually a good practice to avoid premature entry. As you can probably tell, there is another good buy signal which occurred shortly after the closing of the first position, but it is not included in this example to keep it simple.

• Entry: 2629
• Stop loss: 2601 (28 pips, that is 10 pips below the moving average of 15 pips)
• Closing the position: 2751 (when the bearish crossover of the moving averages occurs)
• Profit: 122 pips.

Example of a sell signal on the EUUSD pair
In the image above we can see an excellent sell signal with this system. The reason for this statement is that each indicator shows a sell signal on the same candlestick simultaneously.
We can see the DPO crossing the zero line, and at the same time the +DI crossed below the –DI and bearish crossover of the 3-period moving average and the 15-period moving average occurred, confirming the signal. The MACD was also below the signal line. Signals like this are the ones that have the highest chance of success.
One thing we can notice is that prices temporarily pulled back almost to the exact 15 minute moving average, and then continued in the expected direction. This is something that happens more or less frequently.

• Entry: 2338
• Stop loss: 2368 (at a distance of 30 pips, i.e. 14 pips above the moving average of 15 pips)
• Position closing: 2029.
• Profit: 309 pips.

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Simple trend following system