There is no single answer to the question of how many indicators there should be in a successful strategy. Someone can earn literally one or two indicators, reinsuring with graphical analysis. Someone, on the contrary, prefers to complicate things by adding as many lines as possible to the chart in the hope that this will be more accurate. This strategy (it does not have a name) refers to the second type. It uses 4 familiar to many simple Forex indicators, which together give quite acceptable results. It is important that all indicators give a signal at the same time, only then it will be possible to count on success. And of course, do not trade during the news release.
Strategy based on simple Forex indicators
The strategy uses 4 indicators that are found in almost every platform: stochastics, simple moving average (MA), MACD and OsMA. The combination of MACD and stochastics is rare, but in conservative strategies this takes on a special meaning. The stochastic oscillator only in theory shows accurate signals, in practice they are blurred due to market volatility, redrawing and price noise.
The OsMA indicator is considered relatively rare because it is not particularly interesting for traders. Its task is to determine bearish and bullish divergence (market conditions, when the oscillator and price have different directions). By the principle of operation, it is similar to MACD, in favor of which traders prefer. Its settings consist of 4 parameters:
- slow EMA (default setting is 26);
- fast EMA (period 12);
- MACD SMA (signal line with parameter 9);
- price type (closing price of bars, average price, price highs and lows).
Simple Forex indicators essentially complement each other, the strategy is based on checking the incoming signal from all sides.
Those who don’t like to clutter up the lines with a graph can be advised to use the combined indicator called Hooya map, its MT4 template can be downloaded for free on the Internet. All indicators except OsMA are accumulated in it. Note that the aggregated indicator simplifies (automates) trading, but has a significant drawback. Indicators are not always accurate. For example, for a stochastic, the angle at which it crosses 20 and 80 levels matters. When crossing near horizontal, there is a risk that the indicator does not penetrate the level, but will push away from it. In such cases, traders either check the signal or do not risk opening a position. Hooya map will reflect the fact of crossing the level, but will not show how. That is, the risk of a false alarm increases slightly.
- OsMA: default (12, 26, 9);
- Hooya map: MacdFast (5), MacdSlow (34), MacdSig (5), StockK (5), StochD (3), StochS (3), MaPeriod (21). For the rest of the indicator parameters, you can safely put zeros.
It’s easy to catch signals using a combined indicator. A long position is opened when OsMA has been below zero for a long time and the first column above zero is the main signal. The confirmation signal – the Hooya map on the same candle draws 3 green dots. On the next candle with a stop of 15 points, we open a long position. The target profit is 15 points, after which the position is insured by trailing.
A short position is opened under completely opposite conditions. Trading is not recommended at the exit of fundamental news or with a relatively large body of a signal candle.
The strategy is interesting because there are a lot of indicators that complement each other. This is exactly the case when they do not interfere with each other and do not confuse the trader, but on the contrary smooth out possible non-standard market situations. Download the template, test and train to make money!