Strategy Examples 1

Strategy One: Momentum 1

Momentum 1 is a short-term trend momentum strategy. Short-term means that this strategy can enter and exit several trades a day. It is a trend momentum strategy because it buys only when the Schaff Trend Cycle (‘STC’) is rising and sells only when the STC is falling. The strategy exits a trade when trend or price momentum slows down.

For example, MOM 1 will buy into an uptrending market as it accelerates. And it will exit that trade when the speed of the uptrend slows down. The reverse holds true for a sell trade. MOM 1 will sell into a downtrend as it accelerates. It will exit a sell trade when the speed at which prices are falling slows down.

Indicators used in this strategy & their inputs:

Schaff Trend Cycle - STC(5,7,13)
Simple Moving Averages – Two Lines, SMA(3) and SMA(5)
FXS Trend Oscillator - TrendOscl(2)

Trend

This strategy uses a fast moving Schaff Trend Cycle (‘STC’) on a 1-Hour Chart to indicate Trend. The STC moves between 0 and 100. Trend is the direction of the “fast” STC.

UP: Trend is considered to be UP when the STC is rising or at 100.

Chart 1. Momentum 1 uses three strategy indicators.

DOWN: Trend is DOWN if the STC is falling or is equal to zero.

Trade Entry

The strategy uses two fast moving Trade Entry indicators to fine-tune when to buy or sell: Simple Moving Averages – Two Lines and the FXS Trend Oscillator (‘TrendOscl’).

The moving averages are considered bullish when the faster black SMA(3) is rising and above the green SMA(5), and bearish when the SMA(3) is falling and below the green SMA(5).

FXS Trend Oscillator crosses above and below zero. The green ‘TrendOscl(2)’ line is bullish when it is above zero and rising. It is considered bearish when it is below zero and falling.

Chart 2. A Buy Entry occurs at 1.4186, at 8:00, when all three strategy indicators became bullish.

Here are the Buy Entry and Sell Entry rules:
BUY when Trend is UP and:

1. The black SMA(3) above the green SMA(5) and
2. The green Trend Oscillator line is above zero and rising

SELL when Trend is DOWN and

1. The black SMA(3) is below the green SMA(5) and
2. The green Trend Oscillator line is below zero and falling

Trade Exit

Various exit tactics are used, depending on how price could develop.

Profit Target:

1. Exit Buy Position if price trades at Key Resistance target and TrendOscl crosses below zero.
2. Exit Sell Position if price trades at Key Support target and TrendOscl crosses above zero.

Strategy Indicators Changes Direction:

If the Trend Indicator changes direction then exit the trade. If both of the Trade Entry indicators change direction then exit the trade.

Chart 3. Buy Trade exits after Trend changes to DOWN.

Exit a BUY Position if

1. Trend changes to DOWN

OR
2. Both Trade Entry indicators change to Bearish

Exit a SELL Position if

1. Trend changes to UP

OR
2. Both Trade Entry indicators change to Bullish.

Initial Stop Loss Order: Controls trade risk. Establish before the trade. (See "Risk Controller".)

Risk Control

Go to Risk Controller. Input risk preferences to determine:

1. Stop Loss Order
2. Maximum Position Size

Use the Trade Strategy Worksheet to control, monitor and record the trade.