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[Vlad RF]

How to Trade the Three Moving Averages + MACD Strategy

Autho : Victor Gryazin

Dear Clients and Partners,​

In this article, we will look at a medium-term indicator trading strategy based on using three Moving Averages and MACD. We will learn how to set these indicators on the chart and apply them in trading.

How the Three Moving Averages + MACD strategy works

The "Three Moving Averages + MACD" strategy, as the name implies, is a trading system based on the combined use of trend indicators’ Moving Average (MA) and MACD (Moving Average Convergence/Divergence) oscillator signals. These are popular and in-demand tools, which are often used in various trading systems. To trade on the strategy, three exponential Moving Averages (EMA) with periods of 5, 15, and 50, and the MACD with parameters 12, 26, and 9 are applied to the chart.

The Moving Average has long been proven to be a simple and effective tool for trend following. In this strategy, the slow EMA (50) is used to identify the direction of the current trend and acts as a guide to limit risk, while the faster EMA (5) and EMA (15) are used to identify points to enter the market.

The MACD indicator belongs to the oscillator group. It helps to determine the trend direction, strength and duration, price range, and reversal levels and to receive trading signals. The MACD is used in this strategy to confirm the priority trading direction.

How this strategy works:

• When the EMA (5) crosses the EMA (15) from bottom to top, there is a buy signal. The price chart should be above the EMA (50), and the MACD histogram should be in the positive zone (above 0)
• When the EMA (5) crosses the EMA (15) from top to bottom, there is a signal to sell. The price chart should be below the EMA (50), and the MACD histogram should be in the negative zone (below 0)

How to use the strategy in trading

The Three Moving Averages + MACD strategy is primarily focused on the EUR/USD and GBP/USD currency pairs. Recommended chart timeframes - H4, D1. Recommended Take Profit (5 digits) for EUR/USD: H4 time frame - 1000 pips, D1 time frame - 2000 pips. Recommended Take Profit values (5-digit quotes) for GBP/USD: H4 time frame - 1250 pips, D1 time frame - 2500 pips. Stop Loss is set immediately after the EMA (50).

Three Moving Averages + MACD Buy Signal

• Prices begin to rise, EMA (5) crosses EMA (15) from bottom to top
• The price chart is above the EMA (50)
• The MACD histogram is in the positive zone (above 0)
• A buy position is opened, and the Take Profit value is set according to the above recommendations
• Stop Loss is set just below the EMA (50)

Three Moving Averages + MACD buying example

• On 17 March 2023, on the H4 chart of the GBP/USD currency pair, the red EMA (5) crossed the blue EMA (15) from bottom to top
• The price chart was above the green EMA (50) at this point
• The MACD histogram was in the positive zone (above 0)
• The buy position was opened at 1.21070, and Take Profit was set 1250 pips higher at 1.22320
• Stop Loss was set just below the EMA (50), at 1.20500

Three Moving Averages + MACD Sell Signal

• Quotes begin to decline, EMA (5) crosses EMA (15) from top to bottom
• The price chart is below the EMA (50)
• The MACD histogram is in the negative zone (below 0)
• A sell position is opened, and the Take Profit value is set according to the above recommendations
• Stop Loss is set just above the EMA (50)

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, a RoboForex project called ContestFX will continue with the following competitions:

The 145th competition of "Demo Forex" has been running since the beginning of the month.
The 409th competition of "Week with CFD" has just started.
The 543rd competition of "Trade Day" will start on 19.04.2023 at 12:00.
The 457th competition of "KingSize MT5" will start on 20.04.2023 at 20:00.

It does not take much effort to participate in our contests: all you need to do is to go through a simple registration procedure, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

Good luck to all traders!

Sincerely,
RoboForex Contest

 

[Vlad RF]

Situational Vs. Systematic Trading: Which One is More Efficient?

Author : Andrey Goilov

Dear Clients and Partners,​

To be successful on financial markets, you need a neat trading system that will give you a clear understanding of how to enter and exit the market either with a profit or a loss. The rules of money management are also worth sticking to as they will psychologically prepare you for a series of losing trades as well as profitable ones.

Trading with a high-quality system is different from trading without one is also better in the sense that you do not need to think about whether the situation on the market is good enough to enter. You simply follow the rules and open or close trades, moving along the price chart.

Unfortunately, no one can tell if the current pattern will be executed or you will have to close it at the Stop Loss. To find out, you just have to trade the chosen method. Of course, you can use certain lifehacks and take measures to increase the probability of the execution of the signal, such as trading on a demo account until you receive two losing positions and only then moving to a real one. There are plenty of ways and methods of trading in the world, and every day millions of traders try to conquer the market.

In this article, we shall have a look at the pros and cons of both systematic and situational trading, discuss their differences, and speak about the practicability of each of them.

Systematic trading

Here, we are talking about a simple indicator-based system that will give the same signals to a dozen of different traders. As a rule, systematic trading does not allow for more than one opinion about the current market situation; the trader just needs to open a position and wait or to wait for a signal to enter the market.

In one of our posts, we spoke about the Ichimoku indicator. At first glance, it seems too complicated, but it boils down to trading the trend and waiting for the entrance signal to form. After that, we open a position and wait for the signals to form. For example, if the price breaks through the Ichimoku Cloud bottom-up, then you can buy.

If the price breaks through the Cloud top-down, the trend is likely to be descending, so you can sell. You do not need much time to make a decision, following the rules is enough.

Sure, in the times of a flat, you will be getting the breakaways all the time and either be opening and closing too many positions bringing no profit or suffering a series of insignificant losses. However, as soon as a trend begins, the market will be bringing the prices farther and farther from the entrance point. In such a case, you simply need to move the SL and hold the profit until the market reverses and closes your position.

Pros of trading along with the rules

It can often be heard that a good system is no more than 20% of success on the market while the remaining 80% is the ability to follow the rules of money management and stick to your own rules in the hard times, which will happen periodically.

As Victor Niederhoffer used to say: "In investments, as well as in life, the question is not whether you will be knocked down but when it will happen and whether you will manage to get up and keep fighting. The risk of failure is an essential part of human experience which is especially visible on financial markets dominated by speculation, which is the readiness to accept commercial risks".

A huge advantage of such an approach is the easiness of market analysis and decision-making. The lines have crossed — we sell, the lines have crossed back — we close the position and open a new one. If we hand the method to other traders, they will see the same crossings and will sell the same way due to the signal lines crossing. What is more, the trader feels less emotional pressure as he leaves decision-making to the system.

Pros and cons of situational trading

It must be admitted that an experienced trader can show a better result in trading graphic patterns than someone who has just seen a pattern and is trying to use it. In other words, experience is critical here. If you practice situational trading, you will have to think a lot and sometimes make hard decisions, which is lacking in the systematic approach to trading on financial markets.

So, analyzing charts regularly on different timeframes and sticking to your own rules of trading, sometimes postponing open positions due to low volatility, may be very hard in the long run. What should the trader choose?

How to choose an approach for a trader?

If the trader is new to the market, systematic trading by strict rules might be the best option. It will spare them from excessive market entries without good signals as well as decrease emotional pressure during a series of losing positions. In the process of trading, the beginner will be moving along the stages of a trader's development to the top where they can use their experience for situational trading, getting rid of some strict signals of the system that has shown the worst results.

We should not forget that a good system is just 20% of the overall result: you have to master risk control and feel confident suffering losses and locking in profit. A sports car will not make a racer out of an ordinary driver; same way, for situational trading you need experience and knowledge.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

What is Price Action Analysis?

Author : Timofey Zuev

Dear Clients and Partners,​

Today we will talk about price action analysis, an important aspect of technical analysis on Forex. Price Action analyzes price behavior and patterns and can identify almost any market trend.

What is the subject of Price Action analysis, and how does it differ from graphic or indicator analysis?

The graphic analysis is meant to detect certain patterns on the chart that often reflect the interaction of demand and supply (buyers and sellers). For example, a Triangle, often emerging in the way of the trend, is normally a trend continuation pattern. In essence, a trader practicing graphic analysis need only to know this fact (that the Triangle is a trend continuation pattern) to make a decision. This simplifies analysis but creates additional limitations.

If the trader wants to figure out the reasons for the price movement, such an explication will not suffice – they need a more intricate understanding of market mechanisms. This need leads many traders to Price Action analysis.

Some say that Price Action analysis is just the analysis of simple candlestick patterns. Say, Rail or Pin Bar signal about an upcoming reversal, a breakaway of the inner bar signals to buy, etc.

In reality, such a simplistic approach to Price Action analysis will hardly be efficient: if you are eager to understand market processes from scratch, your analysis must become more complicated, not simpler. The number of details and factors that you must pay attention to will increase in a non-linear manner, and making decisions will become harder because the number of conflicting parts of the picture will grow (more signals and scenarios will appear for both buys and sales).

Of course, a trader does not need to see and understand everything: in the end, every market player chooses two or three trading styles and focuses on several types of events, such as breakaways of ranges or the appearance of trends two-three weeks long, etc. However, the understanding of Price Action frees the trader from a fixation on certain patterns – they start to operate principles and become able to find trading opportunities in virtually any market.

On the one hand, information becomes so plentiful that it needs filtration and specialization in a limited number of market situations; on the other hand, the abundance of information lets the trader see more in the market that forms no known-by-all pattern and gives no direct answers.

What does Price Action analysis consist of?

Understanding of patterns

A pattern is a figure on the chart that indicates some market process with a higher or lower probability. For example, if on the chart we see a candlestick with a large body and several other candlesticks that the first one incorporates, we may presume that the market is consolidating, and the following few hours, at least, the price will remain within the range. Why is this information helpful? For example, if we have decided to buy along with the trend, we should wait until the consolidation is over, or the price escapes the range. Similarly, we may see a 1-2-3 pattern that often indicates a beginning reversal.

However, just knowing the patterns is not enough: this alone will not give you any statistical advantage because the predictability of any financial market is quite low, no higher than 60% but normally lower. Forecasts seldom correlate with real events. Any forecast must be confirmed by price dynamics.

Watching price dynamics

This point is named like this for a reason: on history, charts look smooth and appealing, but in real-time, the market moves smoothly from point A to point B extremely rarely, if ever. Much more often, the market leaps abruptly in this or that direction, causing imbalance to traders. How could we use this information?

In fact, it is price dynamics that may indirectly indicate certain market processes. For example, increased aggressiveness and speed of market movements will most likely mean a lack of directed demand and supply (when the asset is accumulated for subsequent medium- and long-term positions) followed by a lack of a trend. A combination of sloppy price dynamics in consolidations with bolt-like breakaways in the direction of the trend will, on the contrary, most often indicate trend scenarios.

A bright example

Imagine an auction selling antiques. An auction house (best auction houses are usually English) puts something on sale for 1000 pounds but it turns out that no one wants to buy the thing for such a price. The auctioneer decreases it: 950 pounds, 900, 850, 800. AT last, a gentleman on the right is ready to buy. The auctioneer starts counting but an elderly lady offers 850 pounds. More and more participants get involved in the process, and the price soon overcomes 1000 pounds, where trading started, What has happened? Does the price not seem high anymore, or did auction players suddenly realize the value of the lot? In reality, the participants got involved in mass action, scared by rivalry or a probability to miss something important – anyways, the auction process has little in common with the real evaluation of a thing.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project, as usual, is waiting for everyone to participate in the following competitions:

The 145th competition of "Demo Forex" has almost reached its final.
The 410th competition of "Week with CFD" has just kicked off.
The 544th competition of "Trade Day" will start on 26.04.2023 at 12:00.
The 458th competition of "KingSize MT5" will start on 27.04.2023 at 20:00.

All winners of our contests receive prize funds on their real trading accounts, and this money can be used for trading in Forex instead of investing the traders' own savings.

Don't miss your chance to be one of the winners!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How to Trade the Kicker Candlestick Pattern

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will get acquainted with a rather rare reversal candlestick pattern called Kicker. We will consider the features of its formation and the rules of trading with it.

How a Kicker candlestick pattern is formed

The Kicker candlestick pattern is not often seen on price charts and portends a reversal of the current trend, showing a sudden change in market sentiment. It is usually caused by important or unexpected news related to an asset.

A pattern consists of two candles of different colours: if the first is white, the second is black, and vice versa. The size of the body of the candles does not particularly matter. The body of the first candle follows the direction of the current trend, and the second candle opens with a gap from the opening price of the first candle and closes in the opposite direction.

The peculiarity of this pattern is that the second candle opens immediately with a large gap against the direction of the trend. If the first candle of the pattern is "bearish", the gap widens, and a white candle appears; if the first candle is "bullish", the gap shrinks, and a black candle follows. The gap covers the whole body of the first candle and forms a gap with its opening price.

A bullish Kicker candlestick pattern

This forms on the price chart during a downtrend when there is an active downward price movement and local lows are formed. First, the first black candle of the pattern appears, then the second candle opens with a large gap upwards and closes in white, showing growth. The "bears" were moving the market down, confident in their strength, but unexpected positive news strongly influenced market participants, and the situation changed dramatically. Now, the "bulls" have taken the initiative.

Thus, a bullish candlestick pattern Kicker has been formed on the chart. It is fully formed after the closing of the second candle with a white body, and it is assumed that the bulls, having received unexpected support and going on the offensive, will continue to move the price upwards. Thus, we can expect a severe upward correction or even a reversal and the start of a bullish trend.

Bearish candlestick pattern Kicker

This forms on the price chart during an uptrend, which is when there is a strong upward price movement and local highs are formed. First, the first white candle of the pattern appears, then the second candle opens with a large downward gap and closes in black, showing a decline. "The bulls" had been driving the market upwards with a strong initiative, but unexpected negative news strongly influenced the market participants, and the situation changed dramatically: now the bears have taken the initiative.

So, a bearish Kicker candlestick pattern has been formed on the chart. It is fully formed after the second candle closes with a black body, and it is expected that the "bears", having received unexpected support and going on the offensive, will continue to move the quotes downwards. Thus, we can expect a severe downtrend or even a reversal and the start of a bearish trend.

How to buy on a bullish Kicker pattern

• During a downtrend, a bullish Kicker pattern forms on the price chart.
• It is recommended to open a buy position at the opening of the next candle after forming the pattern. Stop Loss can be set at the low of the first black candle.
• The Fibonacci retracement lines and significant resistance levels can be used to set Take Profit.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How Should a Beginner Prepare a Trading Plan?

Author : Victor Gryazin

Dear Clients and Partners,​

In this overview, we will discuss preparing trading plans. A trading plan helps evaluate the current market situation and make the trader’s plans come to life.

What is a trading plan necessary for?

A trading plan is something like a road map for traders. Based on the trading strategy that you use, a trading plan formulates existing trading opportunities and promising trades. Promising trades are those that have a high probability of a success; they are made in the right place, at the right time, with a moderate risk and a good potential profit.

A trading plan must describe your trading ideas, your analysis of the current situation in detail. It makes a “picture” of your view on the market on paper (or in a file). On the whole, successful analysis and a correct opinion about the market do not guarantee good trading by themselves, however, your current thoughts can show you the field where you can look for trading ideas.

Having a clear and easy-to-understand trading plan, a trader stops making chaotic emotional trades. They are no more a helpless wood chip on market waves. They set their sails and starts off towards their profit, finding and closing promising trades. Thanks to the plan their trading becomes more efficient.

Preparing the plan

The process of preparation can be split in several steps: technical picture, fundamental factors, additional signals (indicators), risk control, taking the profit. Active traders make trading plans every day in the morning, bringing it to life during the day with necessary corrections and amendments.

Step 1: Technical picture

To evaluate the technical picture in an instrument, we use good old tech analysis. Open the chart of your financial instrument, check several timeframes (starting with larger ones and going down to smaller ones), and mark all the important factors:

• Trend direction, trend lines
• Support and resistance levels
• Tech analysis patterns
• Additional signals: Fibonacci levels, candlestick combinations, Price Action patterns, various original methods.

After you have marked everything on the chart, find suitable entry points on it by your strategy. Choose signals based on which you will open your position: a breakaway of or a bounce off an important level, exiting a price range, a complete tech analysis pattern, etc. Mark all the entry points and confirming signals in your trading plan.

Step 2: Fundamental factors

The main thing that pushes quotations in the market forward is fundamental news, such as decision on interest rates, publications of macroeconomic indicators, speeches of politicians, etc. Such news provokes volatility and gives guidelines for quotations.

To find out which news will come out and when, use an economic calendar. Open it in the morning and mark important events of the day. After some serious data emerges, a signal to open a position by your trading plan might appear – this is the gist of trading news. Or, on the contrary, you will have to close a profitable position or minimize risks (by pulling the Stop Loss closer) before some data appears.

Step 3: Signals from indicators

These days, there are plenty of indicators that help traders carry out holistic market analysis. Trading indicators are mathematical functions based on price or volumes. They not only help to analyze the market but can also give additional trading signals. Some indicators are good for trends, some – for flats, some are universal.

As a rule, traders use indicators as a supplement to tech analysis. Indicators can give confirming signals for opening positions; show the direction of the trend; give indications for placing Stop Losses and Take Profits. Write down the indicators you use and the opening and closing signal they give in the trading plan.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

In the first week of May, the ContestFX project offers you the following demo contests:

The 146th competition of "Demo Forex" and the 411th competition of "Week with CFD" have just started.
The 545th competition of "Trade Day" will start on 03.05.2023 at 12:00.
The 459th competition of "KingSize MT5" will start on 04.05.2023 at 20:00.

If you have never taken part in our contests, all you have to do is to go through a simple registration procedure on our website and get access to any competitions in just a couple of mouse clicks.

Join us, it won't be boring!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How to Trade the “Two Moving Averages + Fractals” Strategy

Author : Victor Gryazin

Dear Clients and Partners,​

In this overview, we will describe the simple medium-term swing trading strategy “Two Moving Averages + Fractals”. We will explain how it works, how to set the indicators, and how it can be used in trading.

What is swing trading?

Swing trading is a medium-term trading style that implies working with various financial instruments over the course of a few hours to a few weeks. As a rule, swing traders open trades in the direction of the current trend to catch the price movement momentum after the end of a local correction. In their search for trading opportunities, swing traders mainly use technical analysis.

How the “Two Moving Averages + Fractals” strategy works

The strategy uses two moving averages (Moving Average, MA) – the EMA (10) and SMA (30) – to confirm the trading direction and search for trading signals. The MA indicator has long been considered a simple and effective tech analysis tool, which tracks trend movements well. To pinpoint entry and exit points on the price chart, the strategy also uses Bill Williams’ Fractals indicator.

How the strategy works:

• To find buy signals, the trader needs a downward correction after an upward price impulse. The EMA (10) must be above the SMA (30), confirming the uptrend. During the correction, the price should fall to the SMA (30) and form an uptrend reversal with the formation of a lower fractal – this will be a signal to buy
• To find sell signals, the trader needs to wait for an upward correction after a downward price impulse. The EMA (10) must be below the SMA (30), confirming the downtrend. During the correction, the quotes must rise to the SMA (30) and form a downward reversal with the formation of an upper fractal – this will be a signal to sell

It should be noted that the Two MAs + Fractals strategy is particularly suitable for trading various financial instruments. The recommended timeframes on the chart are H1, H4, and D1. Trades are made in the direction of the trend at the end of the correction.

How to install the Moving Average and Fractals indicators

To install the indicators on the popular trading platforms MetaTrader 4 and MetaTrader 5, follow the process below:

1. Open the terminal and log in to your account.
2. Select the chart of your desired instrument.
3. From the Main Menu, go to – Insert – Indicators – Trend, and then click on Moving Average.
4. In the settings window that appears, select the period 10, the colour and width of the line, MA method – Exponential. Click OK to apply the parameters and close the settings window.
5. Repeat the actions above but in the settings window select the period 30, the colour and width of the line, and the MA method – Simple. Click OK to apply the parameters and close the settings window.
6. Go to the Main Menu – Insert – Indicators – Bill Williams, choose Fractals
7. In the setting window that pops up choose the colour and size of the fractals; other parameters are set up automatically. Click OK to apply the parameters and close the setting window.

How to buy with the “Two MAs + Fractals” strategy

• The market Is in an uptrend, and the EMA (10) is above the SMA (30)
• During a downward correction, the quotes drop to the SMA (30) and form an upward reversal with the formation of a lower fractal
• The trader opens a buy position and sets the Stop Loss just below the local low formed by the correction
• The position is closed when the opposite upper fractal appears on the chart

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

RoboForex provides access to CFDs on Futures

Dear Clients and Partners,​

We are happy to announce the latest expansion of our product line: in addition to the 12,000 instruments already available at RoboForex, you can now trade CFDs on Futures.

This is an excellent opportunity to trade this asset using higher leverage than on an exchange and benefit from the absence of swaps (rollover fees). CFDs on futures at RoboForex are available on MetaTrader 4/5 and R StocksTrader platforms.

Learn more >​

Trade CFDs on futures at RoboForex on the following account types:

Start trading with RoboForex, and try out this and other trading assets with competitive conditions:

• 12,000 trading instruments within nine asset classes
• Floating spreads from zero points, and fast order execution
• Minimum deposit from 10 USD
• Leverage up to 1:2000

Sincerely,
RoboForex team