Pipsqueaks #19 – Part 2: Build Your Own Strategy

Okay let’s return to the one hour chart with the MA 2 X 14 ribbon we were looking at last time:



You can see I added a red arrow indicator (indicating a short position) right where the red 10 EMA crosses the orange 50 EMA. Let’s see how this is done. If you are a Slick Trade member, your MT4 will have the “Slick trade – Follow  the Trend” indicator. You can double-click on it, or drag it onto your chart; when you do you’ll get the following dialog box – let’s look at the ‘inputs’ tab



We set MA1 to “10”, MA1mode to “1” (for exponential); and we set MA2 to 50, MA2Mode to “1”. This matches the moving average settings on the ribbon indicator we used earlier, so when the 10 EMA (red line) crosses the 50 EMA (orange line), we get an alert. If so desired, you can also set the indicator to generate an audio signal and an email. Now are free to do other things while the indicator watches the chart for us.


So now that we have a signal generated when the EMA’s cross, let’s look at what price action is doing when a “sell” signal is generated:



The yellow arrow is showing us where price action was at the moment the signal was generated. This is a one hour chart and this indicator will trigger at the top of the hour, pointing at the previous hour’s candle. Even if you’re a little slow responding to the signal, this trade was good for +20 pips. This was a good example of a trade where you can place a market order, that is, entering a trade immediately. If you look to the left of the red arrow, if we were basing our strategy on the cross of the 10 and 25 EMAs, you might have wanted to wait until price crept back a little closer to the 10 EMA. Let’s look at another example:




Again the yellow arrow shows price action at the moment a sell signal was generated. In this example, had you entered a market order when the signal was generated, price action would’ve gone 15 pips against you, before moving 50+ pips in your favor. This is where a limit order would have been a good thing to place. Remember a limit order is a pending order, which, in the above example, would have been a sell limit placed above the current price action near the red 10 EMA. In that case, we would have easily gained an extra 10 pips with very little drawdown, just my kind of trade. I would have placed a limit order just slightly above the bear (purple) bar pointed at by the downward red “sell” arrow and just waited for price to retrace. Remember, the better entry will always be closer to the ribbon then further away from it, and as we know very well, the market doesn’t move in a linear fashion but keeps me meandering up and down in its never ending search for equilibrium, because, after all, that’s what markets do.


And what do aspiring traders do? Well, one good thing might be considering becoming a Sapphire member in Slick Trade. The indicator I used in today’s article is just one of many tools available to members, along with expert advisors, trade signals, strategies, and help from other members just like you were starting their journey in the intriguing world of Forex trading. So if you been thinking about becoming a member, why not take a moment and sign up? I think you’ll be glad you did!


That’s all for now, in Pipsqueaks number 20 were going to talk about filtering. Until then have a terrific week and, as always, thanks for reading!  JC


Miss out on last week’s Pipsqueaks article?  CLICK HERE to access

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