Trend trading is also one of the types of strategies that could be applied when swing trading. It is not only doable, but it also has the most potential to produce huge gains in just a few trades.
Although attempting to catch trades that would result in huge trends is quite difficult, there is always a probability that the next trade you take may be that big trend that you are aiming for. Not only that, there are also ways to improve your chances of catching those huge waves.
One way of improving the probability of catching a huge trend is by using reliable indicators that keeps up with trends and trend reversals effectively. Trading on confluences of these indicators often produce trade setups that not only produces high reward-risk ratios but also an improved win ratio.
Heiken Ashi Smoothed
Table of Contents
The Heiken Ashi Smoothed indicator is one of the most reliable trend indicators available for most traders. It reverses when the market has clearly reversed and stays with the trend until it has clearly ended.
The Heiken Ashi Smoothed indicator is a version of the Heiken Ashi candlesticks. Both indicators draw candles which change colors only when the trend has reversed. However, their similarities end there.
The regular Heiken Ashi candlesticks is more closely associated with the regular candlesticks, while the Heiken Ashi Smoothed indicator closely resembles the behavior of moving averages. In fact, the Heiken Ashi Smoothed indicator is derived from the Exponential Moving Average (EMA).
The Awesome Oscillator is a momentum indicator which indicates trend direction as an oscillating indicator.
This indicator displays histogram bars to indicate trend direction. The bars are based on the difference between the 5-period Simple Moving Average and the 34-period Simple Moving Average. These moving averages are based on the median of the candles instead of the close of the candle.
Positive bars indicate a bullish trend while negative bars indicate a bearish trend. Crossovers from negative to positive or vice versa are indicative of a trend reversal.
The bars also change colors depending on whether its value is bigger than the previous bar or not. Green bars indicate that the current bar has a bigger value than the previous bar, while red bars indicate that the current bar has a smaller value compared to the previous bar. In a bullish trend, green bars indicate that the trend is gaining momentum while red bars indicate that the trend is contracting. The opposite applies in a bearish trend. Red bars indicate momentum, while green bars indicate contraction.
This strategy trades on trend reversal signals based on the Heiken Ashi Smoothed indicator.
Trade signals are filtered based on the long-term trend as indicated by the 200 Simple Moving Average (SMA). This is based on the location of price in relation to the 200 SMA, as well as the direction of the slope of the 200 SMA.
Aside from the 200 SMA, trades are also filtered based on the trend direction as indicated by the Awesome Oscillator. Trade signals produced during an established trend as indicated by the Awesome Oscillator tend to have a high probability. However, there are also trade entries based on the confluence of trend reversal signals coming from the Awesome Oscillator and the Heiken Ashi Smoothed indicator that work well. This strategy however trades on existing trends as indicated by the Awesome Oscillator.
- 200 SMA
- Awesome Oscillator
- Heiken_Ashi_Smoothed (default settings)
Timeframe: 4-hour and daily charts only
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York sessions
Buy Trade Setup
- Price should be above the 200 SMA.
- The 200 SMA should be sloping up indicating a bullish long-term trend.
- The Awesome Oscillator bars should be positive indicating a bullish trend direction.
- The Heiken Ashi Smoothed candles should change to blue indicating a bullish trend reversal.
- Enter a buy order upon the confirmation of the conditions above.
- Set the stop loss on the fractal below the entry candle.
- Close the trade as soon as the Heiken Ashi Smoothed candles change to red.
Sell Trade Setup
- Price should be below the 200 SMA.
- The 200 SMA should be sloping down indicating a bearish long-term trend.
- The Awesome Oscillator bars should be negative indicating a bearish trend direction.
- The Heiken Ashi Smoothed candles should change to red indicating a bearish trend reversal.
- Enter a sell order upon the confirmation of the conditions above.
- Set the stop loss on the fractal above the entry candle.
- Close the trade as soon as the Heiken Ashi Smoothed candles change to blue.
This strategy is the type of strategy that could produce huge gains in just a few trades. However, there are also trades that could reverse right away resulting in small gains or losses. In the long run, this strategy should result in a decent win ratio with a high reward-risk ratio.
Trailing the stop loss to protect gains is also very useful with this strategy. This allows traders to avoid giving back profits to the market. One technique would be to trail the stop loss a few Heiken Ashi candles behind the current candle.
Manual exits based on the behavior of price action would also be very beneficial. This is probably the most efficient way to exit trades, however it takes a lot of practice and experience to master exiting trades based on price action.
Forex Trading Strategies Installation Instructions
Heiken Ashi Smooth Trend Forex Swing Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
Heiken Ashi Smooth Trend Forex Swing Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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How to install Heiken Ashi Smooth Trend Forex Swing Trading Strategy?
- Download Heiken Ashi Smooth Trend Forex Swing Trading Strategy.zip
- *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Heiken Ashi Smooth Trend Forex Swing Trading Strategy
- You will see Heiken Ashi Smooth Trend Forex Swing Trading Strategy is available on your Chart
*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
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