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Sunday, July 25, 2021

Forex Trading Guide 2021: Impulse keeper

Impulse keeper trading strategy is based on simple indicator signals. Initially, the strategy was applied to the stock market. Due to its simplicity in signal interpretation, we can apply it to the foreign exchange market.

Strategy concept

By observing the price chart with the naked eye, you can see market impulses. At this time, the market price moves in one direction without retracements. If you correctly catch this impulse, you can make good money.

Position opening

To find a signal, we use exponential MA and Parabolic SAR and set the Moving Average with a period of 34 on the chart, which will be plotted at the highest bar prices (high). After that, we plot the average for the same period, but apply it to the minimum price of the bar (low). Thus, the chart shows a corridor consisting of two averages. Then we plot the average with a period of 125 at close prices and add Parabolic SAR with standard default settings. 

Conditions for a buy signal: a candlestick or bar closed above the level of the formed averages corridor, and the Parabolic SAR points are below the chart. The close of the signal candlestick price must occur above the opening price. If there are “spinning tops” or “doji” on the chart, wait for the next candle to close.

Conditions for sale are reversed conditions. The candlestick closes below the formed corridor of averages, and the Parabolic SAR points are above. The candlestick must close below its open.

It is known from the classical trading theory that it is more profitable to trade with the trend. Similarly, in the “Impulse keeper” strategy, there is an additional condition: the signals are processed in the direction of the trend. Determine the trend using the 125 EMA. Those. we try to open long positions when the price is trading above the average 125 EMA, and short if the price is below the average.

Holding an open position

We use the trailing stop technique. After opening an order, set the stop loss 2-3 points less than the last Parabolic SAR point when buying and 2-3 points higher than the last Parabolic SAR point when selling. After that, simply move the stop on the Parabolic SAR until the position is closed.

Timeframes

The strategy was originally developed for medium-term charts with periods of H1 and H4, it also showed good results on short-term intervals M5 and M15. When trading short-term, it is worth remembering that impulses, as a rule, occur within the day, when the news background in the market is saturated. If there is little news, you should not trade this strategy within the day.

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