It’s known that the financial exchange is in the accumulation stage two thirds of the time, and one third is devoted to the stage of local extremes formation.
Techniques of work designed to generate income from a long price movement are potentially more profitable than trading within the range.
Trader’s professionalism is shown in the application of the model relevant for market conditions. When you see that the levels of support / resistance break through, new extremes are formed as well as the figures for the continuation of the trend or its reversal, it is necessary to apply trend strategies.
Today we will consider such a trading strategy – the Sidus method. This technique is aimed at obtaining profit from emphasized trend movements, and it’s mainly focused on the application of the moving averages indicator. The system should be used in the period of active redistribution of capital, and the flat segments have a risk of losses. The technique works with any financial instruments, but the timeframe on Forex should be H1.
To start trading, you need to set up a schedule of four movings with different configuration periods. Curves based on the exponential configuration method should be set to 18 and 28. These lines are considered to be slow. Their main property is determination of the strengh and direction of the trend.
When EMA18 is above EMA28, we conclude that the demand exceeds supply, when it falls below – the supply dominates over demand. Another interesting property of exponential lines is the distance between them. The closely intertwined EMA indicators 18 and 28 mean the absence of a dominant force in the market. The divergence of the movings indicates new bidders and the increase in volumes. The greater the distance between the lines, the stronger the trend.
Also, the sidus method uses linearly weighted curves. WMA5 and WMA8 are sharply reacting to the change in quotations inextricably following the price. The WMA indicator does not act as a support, and its divergence does not serve as a trading signal.
Most strategies based on moving averages under the trade signal involve the crossing of lines with different periods. The Sidus method works differently. Crossing as it is is not a sufficient basis for opening an order. We know how often the lines can flirt with each other misleading by false signals.
Conditions for entering the market for selling by the Sidus method
1. EMA28 is above the EMA18.
2. WMA8 is above than WMA5.
3. EMA28 and EMA18 recently crossed and began to expand.
4. WMA8 and WMA5 recently crossed and began to expand.
5. WMA8 and WMA5 crossed with EMA28 and EMA18 and were distant from each other.
For purchasing the entrance technique will be opposite.
The Sidus strategy is well suited to enter the market at the time the trend is created. But what if you did not manage to make a deal on time? It is necessary to recall the resistance function of moving averages. When the value of an asset within the correctional movement approaches the exponential lines, options for selling with a short stop should be considered. Stop-loss is set by EMA28. If you opened the lot at the right time, the signal for closing the deal will be the intersection of WMA8 and WMA5.
The success of ordinary investors in this method is indicated by the fact that many followers have tried to modify and improve this model. The most popular was the following option.
The strategy has preserved exponential lines, but has lost linear-weighted indicators. They are replaced by the indicator Relative Vigor Index 100.
The RVI indicator in its window draws a series of successive peaks until the cost of the product increases. As soon as a divergence is formed, namely, the price has risen on the chart, and in the indicator window it could not rise above the previous high, it is a signal for closing the deal.
Conditions for entering the market for selling by the “New Vision”
1. EMA28 is above the EMA18.
2. EMA28 and EMA18 recently crossed and began to expand.
3. RVI is falling, and the fast line of the indicator has broken through the slow one from the top down.
The entrance technique will be the opposite for purchasing. The exit from the position is carried out by crossing the moving averages or when a divergence appears in the RVI indicator window.
Today we reviewed trading conditions for an interesting trading system. Remember that the Sidus method for binary options is also relevant, as for the Forex market. But the main lesson is that for successful work with any technique it is necessary to practice and apply the trade tool at suitable moment.