Strategy "ADX and Momentum"

Strategy "ADX and Momentum"

Recommended timeframes M5

This is a classic trend-following strategy based on the ADX and Momentum indicators. The strategy is very easy to understand and will suit experienced as well as novice traders.

Instruments: major pairs such as EUR/USD, GBP/USD, AUD/USD, USD/CAD.

Timeframe: M5.

Indicators used:

• ADX (D+ and D- with the level of 25);

• Momentum (14);

• ParabolicSar (0.2-0.02).

When to buy:

• ADX (14) is above 25, while D+ is above 25 and above D-;

• Momentum (14) is above 100.

When to sell:

• ADX (14) is above 25, while D- is above 25 and above D+;

• Momentum (14) is below 100.

When to exit:

• Stop-loss is 5-7 points away from the opening level;

• Take profit is points 14-16 away from the opening level

As an additional filter, the EMA55 can be used. Thus, buy when the price is above the EMA55 and sell when the price is below the EMA55.