Directional Moviment ADX
with Sar Trading works on strong trends. This is a trend following
strategy for intraday and swing trading. Indicators that uses :
Average Directional Movement Index (ADX), Exponential Moving Averages
(EMA) and Parabolic SAR (Stop and Reverse). The trading strategy is
quite simple and can be used for any currency pairs and time frames,
but it is recommended to set middle-sized interval length, (for
example, 1 hour or 4 hours). 9-period ADX Indicator (ADX, +DI and –DI
lines) is used to find a trend and determine its direction. The EMA
lines (12-period and 5- period) and the Parabolic SAR indicator are
used to find entry points.
Trading rules for
Directional Moviment ADX with Sar Trading.
BUY signal: First, a
closed candle crossing both slow and fast EMA lines should be found.
Slow EMA should be lower than fast EMA. Then it is necessary to wait
for two EMA lines to cross: slow EMA should cross fast EMA upward. If
Parabolic SAR is placed lower than the current price and +DI line is
placed higher than –DI line, a long position is opened with a stop
loss order of 60-70 points.
SELL signal: First, a
closed candle crossing both slow and fast EMA lines should be found.
Slow EMA should be higher than fast EMA. Then it is necessary to wait
for two EMA lines to cross: slow EMA should cross fast EMA downward.
If Parabolic SAR is placed higher than the current price, and -DI
line is placed higher than +DI line, a short position is opened with
a stop loss order of 60-70 points. After getting a profit of 30-40
points, a trailing stop of 30-40 points is set.
Exit
A long position will be
closed by a stop loss or when Parabolic SAR is above the price. A
short position will be closed by a stop loss or when Parabolic SAR is
below the price.
In the picture below two
trading examples.
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