20-100 Short Term Momentum Strategy

 

Those who prefer short-term trading expect all market reactions to occur immediately and are obsessed with currency pairs fluctuating every ten pips. They also want to secure profits within five minutes of entering the position, and if there is a loss, immediately clear the position. This type of trader prefers to make ten pips on ten trades rather than wait for a long time and earn 100 pips at a time.

The most appropriate strategy for these traders is the short-term momentum strategy. The 20-100 short-term momentum strategy can be used independently and used to select the optimal entry price even if a long-term strategy is used. There are three different indicators used in this strategy: 20 days EMA, 100 days SMA, and MACD.

The EMA on the 20th is the starting point of this trading strategy, and the reason why using EMA instead of SMA is that it places more weight on the recent movement of prices essential for fast momentum trading. 100-day SMA helps to identify broader trends, and MACD allows us to identify the intensity of the momentum and pre-filter low probability signals.

On the MACD histogram chart, the first EMA is set to 12, the second EMA is set to 26, and the signal EMA is set to default. All values use the closing price and begin trading within five candles after the MACD rebound.

 

 

TRADING METHOD

 

BUY

 

1. Find a currency pair with the price under 20-days EMA and above 100-days SMA. 

2. Stand-by for the exchange rate to cross both 20-days EMA and 100-days SMA. The MACD should have a positive value of at least five candles.

3. When it crosses, enter the buy position and set a stop order below the candle if the exchange rate moves under the moving average.

5. When the exchange rate rises to the targeted price, sell off half of the positions.

6. For another half, set the trailing stop at the price where the exchange rate is below 15 pips of the 20-days EMA.

 

SELL

 

 

1. Find a currency pair with a price above 20-days EMA and under 100-days SMA. 

2. Stand-by for the exchange rate to cross both 20-days EMA and 100-days SMA downward. The MACD should have a negative value of at least five candles.

3. When it crosses, enter the sell position and set a stop order above the candle if the exchange rate moves above the moving average.

5. When the exchange rate falls to the targeted price, clear half of the positions.

6. For another half, set the trailing stop at the price where the exchange rate is above 15 pips of the 20-days EMA.