Forex Strategy 'vegas-wave'

By Author: Douglas George
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We recommend choosing dealing centers with a Metatrader 4 trading terminal for trading.The significant feature of the exponential moving average EMA 144 is that it acts as a good support for prices when the movement is strong and long.Should price cross over the exponential moving average EMA 144, this signifies that the trend of the market will change direction and move in the opposite one.If you use these 2 features of EMA 144 skillfully and add some extra filters on the basis of a trading system, you can use the resulting system as a profitable, logical and relevant trading system.Market entry signals will be a crossing of a price channel, formed by two moving averages (EMA 144 and EMA 169). Formation of a fractal on the market will be a filter for the conclusion of a transaction; we will place a pending order on breakout of this fractal.Signals can be taken for profit-taking using the elliott wave Theory and in conjunction with Fibonacci levels and extensions, measured from the 1st Elliott Wave on the existing market trend.But applying a common pattern to the Forex market would be ...
... impossible so the 'Vegas Wave' forex strategy will still produce some unprofitable transactions as the market will still be entered at times other than the start of a trend movement. But the trading statistics still show that for every unprofitable transaction there will be 3 profitable ones. This is a very significant advantage of this type of forex strategy!The trading principle of the 'Vegas Wave' forex strategyMoving averages EMA 144 and EMA 169 form a channel on a price chart. Should the price be in the area above this channel it will be known as the 'buy-zone' and below the channel is called the 'sell zone'.The Trading Signals for BuyingWhen looking at the specific price chart and a candle breaks though the channel formed by 2 EMA's and closes above or in front of it (so between the 2 moving averages) using the interval H1, a fractal should be formed on the chart first. This fractal will be the filter for placing a pending 'BuyStop' order (potentially 1 in 5 candles of the given fractal should close either above or in it.)A signal could be a simple fractal breaking through one of the two moving averages from the formed channel (ignoring the closed candles) when trends change.What is required is to wait for a buying transaction retracement impulse to take shape and then place a 'buystop' pending order on the fractals breakout as well as considering filters and spread size. Behind the peak of the first wave of the formed channel (local minimum) or behind the previous fractal, is where a stop-loss order should be placed but on the opposite side if the market wasn't entered when the trend reversal began.Selling Trading signalsFrom the chart, we see a candle breaking through the 2 EMA channels and closes in front or below it (between the 2 moving averages) taking the interval of H1, the chart should have a fractal formed first. When placing a pending 'SellStop' order this fractal will be the filter (every 1 out of 5 candles for this fractal would close in or below it).)A signal could be a simple fractal breaking through one of the two moving averages from the formed channel (ignoring the closed candles) when trends change.So all you need to do is to wait for a retracement impulse for a selling transaction to form and place a pending 'SellStop' order on a breakout of the given fractal plus filter. On the opposite side, behind the peak of the first wave of the formed channel (local maximum) or behind the previous fractal, is where a stop-loss order should be placed if the market wasn't entered when a market trend reversal began.'Vegas Wave' forex strategy trading rules1. A 'buy-zone' is situated above the channel, formed by moving averages, with a corresponding 'sell-zone' situated below the same channel. When the first fractal has a breakout above or below the channel that was formed by the moving averages a pending order is placed. A safety stop-loss order is placed either above or below the beginning of the first elliott wave. If you don't enter the market at the first wave, a stop loss is placed behind the previous fractal, which is situated at the opposite side of the formed channel.2. It is best to split out a trading position's size into 2 equal parts.3. The rules of profit takinga) The first part of a transaction - Profit should be taken at 262% Fibonacci extensions of the first wave's size or when the third Elliott wave concludes.b) The second part of a transaction - you should take profit either at 362-424% Fibonacci extensions from the size of the first wave or at the end of the fifth Elliott wavec) You should take a profit of 50% of the transaction when the movement in price has stopped if the trend in the third wave is strong enough.. Generally this happens at 300 - 338 - 362% of the Fibonacci extensions using the first wave's size.d) Using the wave structure as your trading basis, the lower wave levels should be taken into account or put another way, Elliott waves using M15 - M30 intervals so as to determine the take profit levels with greater accuracy.e) If you enter a transaction at the fifth Elliott wave, the first part of profit is taken on 362% Fibonacci; at the same time, you should also specify the take profit area for lower wave structuref) With the initial 50% of the profit taken place a stop-loss order at the break-even spot for the following section of the lot that has been opened.4. Stop-loss is also placed at the break-even level behind the formed retracement level after the peak of this price movement has been broken through.5. Using a trailing stop for the previous fractals opposite to the movement is an option for taking profit for the second part of the opened lot. This applies if the initial section of the lot was already taken at Fibonacci level 262% or 362% from the first Elliott wave. 6. You should also take into account a time filter for opening transactions on EURUSD and GBPUSD currency pairs. I.e., you should place orders from 8:00 to 18:00-19:00 terminal time (i.e. approximately from 7:00 to 17:00-18:00 GMT).7. You can place orders for EURUSD and GBPUSD after 17:00-18:00 GMT, but in this case you should take the market situation into account. Don't place pending orders before 7:00 GMT!8. At the end of a market trend, consider a time filter to enter the market such as if the trend lasted no longer than a week. This will be no sooner than 2 days of trading after the end of the trend - i.e., orders are not placed. 9. Cross rate currency pair pending orders: EURGBP, GBPJPY, GBPCHF, can be placed at any convenient time in a trading day.10. Buy or sell trading signals should be ignored should they be formed following the large movement in price in the same trading signal direction.These are some examples of the forex strategy 'Vegas Wave' transactionsBuying: in this case the stop-loss order is initially placed at the level 1.4050, minus filter 5 points.Market entry was performed at the beginning of the third Elliott wave.Pic 1Selling:Pic 2When the third Elliott wave started the market was also entered.Here, the initial 50% of the transactions were taken roughly at the 323% level of the initial Elliott wave. The second 50% of the transactions were taken on the placed take-profit at the level 362% minus filter.