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DailyFX Home / Technical Analysis / Forex Trading Strategy / Trading Strategies Explained
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In our guide to FXCM Speculative Sentiment Index-based trading strategies, we discussed the why trade against the crowd? with a specific look to our SSI. This article covers the how can we trade against the crowd? with a closer look at the Momentum1 trend trading strategy.The Momentum1 trading system is our purest trend-trading strategy. We need to emphasize that past performance is not indicative of future results, but the system has historically done well in times of long-term currency trends.
FXCM
Speculative
Sentiment
Index-Based
Automate our SSI-based trading strategies via Mirror Trader free of charge Buy Rule: If the Speculative Sentiment Index shows there are more than 1.5 traders short for every one that is long (60% of traders are short), buy one unit. Sell Rule: If the Speculative Sentiment Index shows there are more than 1.5 traders long for every one that is short (60% of traders are long), sell one unit. Profit Targets: Momentum1 does not use fixed profit targets. Instead the system takes profits via a trailing stop loss. Stop Losses: Calculate the Average True Range (ATR) on the past 14 daily bars. Set a trailing stop 1 ATR away from entry price. If short, this means placing a trailing stop above entry price and will move lower if and when the currency moves lower. If long, the system places the trailing stop below price and moves higher if and when the currency pair trades higher.
http://www.dailyfx.com/forex/technical/trading_strategies/trading_straed/2013/02/27/forex_automated_trading_speculative_sentiment_index.html
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Trading Against the Crowd - Automate the Momentum1 Trading Strategy | DailyFX
11/24/13 8:56 AM
Exits: Take the daily Average True Range (ATR) of the currency pair for the past 14 days. If short, place a trailing stop 1 ATR above entry price which moves lower if and when price declines. If long, place stop 1 ATR below entry price which moves higher if and when price advances. Momentum1 uses no hard profit targets and instead relies on a trailing stop loss to ultimately take profit on its trades. Why? The system does best during times of strong market trends. In trend trading, it is important to not limit profits when the trade is in your favor. Thus Momentum1 simply trails its stop lower or higher with strong market moves. This system is based on a strategy that did not use profit targets or stop losses at all, and the ATR-based stop can thus serve as a general guide instead of a hard level. In other words, we believe the system can work best when we manually set profit targets and stop losses based on our own risk parameters. The mix of hard profit targets in our Breakout2 trading system can serve as an attractive template to managing Momentum1 trades. Sample Trades from Momentum1 as shown on a EURUSD Daily Chart
Past performance is not indicative of future results, but our experience shows that using the Volatility Percentile and Trend indicators helps improve performance of the Momentum1 trading system. Automate our SSI-based trading strategies via Mirror Trader free of charge
http://www.dailyfx.com/forex/technical/trading_strategies/trading_straed/2013/02/27/forex_automated_trading_speculative_sentiment_index.html
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Trading Against the Crowd - Automate the Momentum1 Trading Strategy | DailyFX
11/24/13 8:56 AM
Articles
on
Automating
DailyFX
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PLUS
View how to automate the Breakout2 Trading System via our previous article and webinar recording. View how to automate the Momentum2Trading system via our previous article and webinar recording. Automate the DailyFX Breakouts on Volatility System article, webinar. Take advantage of forex intraday seasonality via our DailyFX Asia RSI Trading system, view archived webinar. Why do most forex traders lose? How can we avoid common mistakes? --- Written by David Rodriguez, Quantitative Strategist for DailyFX.com To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link. New to FX markets? Learn more in our video trading guide. Contact David via Twitter at http://www.twitter.com/DRodriguezFX Facebook at http://www.Facebook.com/DRodriguezFX http://www.fxcmapps.com/trading-station/momentum1/http://www.fxcm.com/products/specialtyplatforms/mirror-trader/dailyfx-trading-signals/
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM.
27 February 2013 12:00 GMT
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Trading Against the Crowd - Automate the Momentum1 Trading Strategy | DailyFX
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