Forex Strategy “Elder’s Momentum” is another Elder’s strategy (previously we considered the Forex strategy of 3 screens), based only on 2 Forex indicators:
as well as clear rules for entering and closing open trading positions.
Before reading the article and writing your questions in the comments section, I recommend to watch this video. It’s not long but covers the biggest part of questions on the topic.
The strategy is multi-currency (suitable for any currency pairs), although the following currency pairs yielded more or less stable results: USDJPY, USDCAD, GBPUSD, EURUSD, trade was conducted on the interval H1.
As a first step, open your trading platform and create a template by setting the following indicators (Picture 1):
- EMA – exponential moving average (Moving Average indicator in MT4, Exponential method) with period 19 — EMA (19), apply to close.
- Momentum indicator (18), apply to close, and also add level 100 for the reference.
Elder’s momentum strategy setup
- Look at the hour chart of the selected currency pair (EURUSD) and wait for the first signals — Momentum (18) crosses has to be above 100. (Picture 2)
- As soon as the hour candlestick is FULL above the moving average EMA (19) or at least 80% (if the candlestick is much larger than the previous few candlesticks) — open the buy trade at the opening of the next candlestick after the confirmation of the signal.
Signals to enter the market may not appear immediately after first closed candle, but in succession, hence to open a trade, you need to wait for 2 additional signals!
- The safety stop-loss is established as follows: choose the shortest period on the chart, when Momentum (18) was below its level of 100 and set the stop loss at the minimum price for this period.
- Risk: reward ratio is advised to be 1.5,2:1
- You should also close a trade at the opposite intersection of the Momentum line of its value 100
- If desired, you can take a trailing stop at a distance of 20-30 points (as well as a universal trailing stop)
- And most importantly, as for all the Forex strategies: do not forget to follow the Money Management rules!
In this particular case in Picture 2, we are risking around 60 pips to make 90. Once again, we close a trade only at closing the hour candlestick after confirming all the signals. The same setup applies for short trades (only reverse).