The system for making decisions on transactions in the Forex market “Trading on kickbacks” is extremely simple. Moreover, this system uses only four indicators, each of which can be found in the Metatrader 4 terminal. That is, in fact, even a beginner in trading can use this technique in order to practice trading and derive financial benefit from the Forex game.
To trade this strategy, it is recommended to use the most liquid currency instruments, that is, EUR / USD or GBP / USD. In this case, trading is carried out on a time interval of five minutes. This interval was identified as the best for the “Trading on rollbacks” system, if you use other timeframes, the strategy may work unstable.
The following technical indicators are used in the methodology of the strategy “Trading on pullbacks”:
• MACD with parameter settings 38,120, 20. The indicator should be calculated at the closing prices
• Moving Average with a period of 50. The averaging method is exponential, the calculation is based on closing prices. Let’s choose blue for her.
• Moving Average with a period of 200. It is calculated similarly to the previous one, the difference is made only in color, choose red.
• Stochastic indicator (MTF_for M5), In the indicator settings, set Kperiod = 14, timeFrames = “М5; М15”. This is necessary to display charts for different periods. Other settings should be left in the “default” mode.
Since trading in this strategy is conducted exclusively within the day, it is quite obvious that a very important issue is the problem of the timing of the game. According to the developers, the best time may be from 5 to 8 hours GMT, as well as from 11 to 15 hours GMT. These time periods were chosen for the reason that it is at this time that the most dynamic market movements occur.
If we talk about the rules for opening deals, they are as follows. When buying, it is necessary that:
• The histogram of the MACD indicator showed values above its zero level.
• The 50-period exponential moving average was above the two hundred-day exponential average.
• Stochastic indicator (MTF_for M5) crossed its level with a value of 50.
In order to limit the possible loss, a stop loss order is placed at a distance of 20-30 points from the position opening price. At the same time, take profit is not set, and the transaction itself is closed by a trailing stop order, that is, by a trading stop.