Forex Strategy "Punctured trend" is a very simple trading system with quality signs recognized by only three usual indicators and the trendline of Demark. However, a considerable profit may still come from the simplicity. It is always a dream of every trader to own a powerful trading strategy in the simplest form. Today, "Punctured trend" has come into service. In this article, you will find the guide to apply this strategy on Forex market and witness the efficiency.
The “Punctured Trend” Strategy can be applied on a very wide range of currencies pairs. In addition, it is necessary to have a line of Tom Demark - indicating the direction of the trend in the market (it must connect at least 3 vibrational minimums or vibrational maximums) and help to form the indicators to enter the market.
The following indicators are required for the chart:
1) Exponential moving average EMA (9) - Color red
2) Exponential moving average EMA (30) - Color blue
3) Indicator Momentum (14):set the level at 100
4) Time Timeframe being set at (H1) is recommended
Conditions for purchases in the “Punctured Trend” Strategy:
1) The price on the market breaks the downward trend line of Tom Demark from the bottom up.
2) Momentum is above the set level 100.
3) The exponential moving average EMA (9) crosses upwards the exponential moving average EMA (30). The intersection of 2 moving average EMA may occur after the breakdown of the trend line Demark.
4) The stop-loss is set under the local nadir.
Also, it is important to note that the order should only be opened at the opening of a new candle on the given timeframe - in order to confirm the total breakdown of the trend line and the crossing of the EMAs.
Conditions for sales in the “Punctured Trend” Strategy: conversed conditions
1) The price on the market breaks the upward trend line of Tom Demark downwards.
2) Momentum is under the set level 100.
3) The exponential moving average EMA (9) crosses downwards the exponential moving average EMA (30). The intersection of 2 moving average EMA may occur after the breakdown of the trend line Demark.
4) The stop-loss is set just above the local nadir.
Once again, to confirm the total breakdown of the trend line and the crossing of the EMAs, traders should enter the market at the opening of a new candle on the given timeframe.
Important rules when applying this strategy:
• Opening one position at a time is a high recommendation.
• Don’t enter the market until the candle of confirmation is totally closed.
• All signals must be received after one trading day.
• The maximum risk for each transaction shouldn’t be more than 2% of your total balance.
• The order should be set expired in a maximum of eight hours.
Pros and cons of the strategy
• Provides easy-to-spot indicators for traders.
• Provides a detailed guide to trade.
• Requires good emotion control.
• Takes time to track potential points for ordering.
The “Punctured Trend” is an effective technical strategy with visual signs and simple-to-catch indicators. The simplicity may confuse you at first, but then the result will do the persuading work. Given a prudent approach combined with rigorous managing methods, making substantial profits in the long run with the “Punctured Trend” Strategy in restricted time is totally something you may get. Taking this as usual: to remember exactly the signal movements and adhere strictly to the mentioned rules are compulsory to success in this market.