Forex Trading Strategy – combining Moving Average Convergence Divergence and Parabolic SAR
You will learn about the following concepts
- Indicators used with this strategy
- Signals to be looking for
- Entry point
- Profit target
Here we provide a simple approach, with which only a number of currency pairs can be traded. Let us take EUR/USD. The time frame we will be using is 30 minutes. The indicators we will be using are the Moving Average Convergence Divergence (MACD) with its default settings (short term – 12; long term – 26; MACD SMA – 9) and the Parabolic SAR also with its default settings (0.02; 0.2).
A trader will usually look for a long entry, when the Parabolic SAR provides a buy signal, while the MACD main line crosses the MACD signal line from below to the upside.
A trader will usually look for a short entry, when the Parabolic SAR provides a sell signal, while the MACD main line crosses the MACD signal line from above to the downside.
A trader will usually look to close his/her position, when the MACD main line and MACD signal line cross again or the market demonstrates sideways movement for a while (trading range).
Below is an example of a long trade, based on this trading approach.