Welcome to our trading community! Today, we're diving into a powerful strategy that combines two essential indicators: the Average Directional Index (ADX) and Moving Average (MA).
If you're curious about the nitty-gritty details, you can check out this in-depth guide. Plus, we have a detailed analysis of this system available in our magazine issue from April 21, 2008. Feel free to share your thoughts or questions on our forum.
Trading Strategy Algorithm:
- Open a daily chart for EUR/USD with a lot size of 0.1.
- Set up the ADX indicator with a period of 14 and highlight level 20.
- Configure the Moving Average with a period of 21.
Trading Signals:
For a Buy Signal: Look for the bar to close above the MA, and ensure the ADX is above 20.
For a Sell Signal: The bar should close below the MA, with the ADX also above 20.
In both scenarios, close your trades as soon as the bar crosses the MA in the opposite direction.
We tested this strategy over the period from January 11, 2007, to January 11, 2008, using close prices. Here are the results:
After integrating Take Profit, Stop Loss, and Trailing Stop parameters, specifically tailored for buying and selling, we optimized these values over the same period. The outcome for the Expert Advisor (EA) was quite promising:
For those interested in forward testing results outside the optimization area, you can find them in our April 21, 2008 magazine issue.
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