This is a very easy trading strategy, which helps to determine strong entry points to the market. In order to use this strategy we will need only two indicators: Parabolic SAR and Moving Average.
This strategy is applicable on the hourly chart for the currency pairs EUR/USD and GBP/USD.
Setting of the indicators:
Parabolic SAR: step – 0.1
Moving Average: three moving average Exponential should be installed with the periods 6, 11 and 34.
Opening of a sell position
The first signal is the intersection of the moving average lines in order to catch downtrend. Therefore, the faster moving average lines EMA shall be below the slow lines. EMA6 is the lowest line, EMA 11 is slightly higher and the line EMA 34 is the highest one.
The second signal is the location of the point SAR above the current candlestick, when the previous point shall be below the candlestick.
After that we can open a sell position (Fig. 1).
Fig. 1
It is required to close position either when Parabolic SAR shows the first point below the candlestick, or if the fast EMA6 is crossed by a slower EMA 11 (fig.1). It will allow us to isolate the noise of the market and turn market movement in our direction; however, at the same time, potential risks at the price reversal will also increase.
Opening of a buy position
The first signal is the intersection of three moving average lines, when the faster EMA will be above the lower lines, which is the indication of the beginning of uptrend.
The second signal is the layout of the point of the indicator Parabolic SAR below the candlestick; the previous position of the indicator was the reverse (Fig. 2).
Let’s consider the second option of closing of a position.
Now, we shall close a position at the intersection of the fastest line EMA 6 with the line EMA 11 (Fig. 2).
So, we will be able to avoid much market noise and receive profit, which will be twice as large as at the closing described in the option of opening a sell position.
Fig. 2
The combination of these two indicators gives good results. Also note that it is very easy to work with these indicators. However, at the same time you should be present at the trading terminal, monitoring the movement of the indicators, as it is not advisable to place take profit or stop loss.