Find More Stories About Forex Momentum Trend Trading System, Trading Strategy – The Holy Grail Trading Setup.

Trading Strategy – The Holy Grail Trading Setup http://www.financial-spread-betting.com/trading/day-trading-course.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! In this video, we review the famous “Holy Grail Setup” used by market wizard, Linda Bradford Raschke featured in Jack Schwager’s book, The New Market Wizards.. It aims to catch retracements on strong trends.

The “Holy Grail” setup was developed by Linda Bradford Raschke and Larry Connors who named it so for its simplicity. The trading strategy is designed to catch corrections in markets that have shown evidence of increased momentum, with the average directional movement index (ADX) and a 20-day exponential moving average (EMA) providing the setup.

This trading strategy or pattern utilises Welles Wilder’s ADX (Average Directional Index), which basically takes into account the strength of a trend over a set period of time. The ADX will read higher for stronger trends. This pattern takes into account that the chances are high that when a stock reaches a new momentum high and pulls back, it will likely retest the recent high. As such any
pullback from a new momentum high can be bought because a top may be in place. With this strategy, chances that a top has been reaches is likely only 5% to 10%. If you check for individual shares that have rises in the last months you’ll see that a number of them have had Holy Grail patterns.

With the Holy Grail pattern, we want the stock to fall back to a 20 day moving average after its ADX indicator has moved to a value above 30

Holy Grail Pattern Buy rules (sells are reversed)
1. The 14-period ADX must initially be greater than 30 and rising.
2. Look for a retracement in price to the 20 period exponential moving average. This will usually be accompanied by a turndown in the ADX.
3) When the price touches the 20 period moving average, put a buy stop above the high of the previous bar.
4) Once filled, enter a protective sell stop at the newly formed swing low. Trail stops as profits grow.

The indicators you need for this strategy are:

3-10 oscillator. It is the difference between a 3-day simple moving average and a 10-day simple moving average. Plus, there’s a second line which is a 16-period simple moving average of the 3-10 line. You can simply alter the settings for an MACD (moving average convergence-divergence indicator), changing the moving average type from exponential to simple and the moving average lengths to 3, 10 and 16. For forex traders, we provide the MACD-SMA indicator here.

14-period ADX (average directional movement index). This indicator is used to gauge trend strength.

20-period Exponential Moving Average

Her rules for going long are as follows:

1. Wait for the ADX to rise above 30

2. Buy the first retracement to the 20-period EMA

3. Look to exit on the push to new highs

The best setups also have confirming factors such as the 3-10 oscillator making new momentum highs.

Her rules for going short are as follows:

1. Wait for the ADX to rise above 30

2. Buy the first retracement to the 20-period EMA

3. Look to exit on the push to new lows

The best setups also have confirming factors such as the 3-10 oscillator making new momentum lows.

This strategy is definitely interesting to us. With the clear take profit level of the last high/low respectively if you buy/sell, you can consider setting a stop loss level of the same absolute magnitude, for a 1:1 reward to risk ratio. With such a reward to risk ratio, you will require a higher win ratio. Let us know how this system works for you, especially if you know of any ways to increase the win ratio.

Trading Strategy  - The Holy Grail Trading Setup, Forex Momentum Trend Trading System

Forex Momentum Trend Trading System, Trading Strategy – The Holy Grail Trading Setup.

Momentum Indicators

The Momentum indication is a common device used for figuring out the Momentum of a particular possession. They are graphic gadgets, often in the form of oscillators that can show how rapidly the cost of a given possession is moving in a particular direction, along with whether the cost motion is likely to continue on its trajectory.

The idea behind the device is that as an asset is traded, the velocity of the cost motion gets to an optimum when the entry of new investors or cash into a particular profession nears its height. When there is less prospective new investment available, the propensity after the height is for the cost trend to squash or turn around direction.

Exactly how do you recognize if a stock is short term?

The total idea is to reveal whether a stock is trending upward or downward. Generally, a great prospect will certainly have a moving average that is sloping upward. If you are trying to find a great stock to brief, you normally wish to find one with a moving average that is flattening out or declining.

The direction of Momentum, in a simple manner, can be established by deducting a previous cost from an existing cost. A positive outcome is a signal of favorable Momentum, while a negative outcome is a signal of a negative Momentum.

Momentum devices typically appear as rate-of-change (ROC) indicators, which split the Momentum outcome by an earlier cost. Increasing this total by 100, traders can find a portion ROC to plot highs and lows in trends on a graph. As the ROC approaches among these extremes, there is a boosting possibility the cost trend will certainly compromise and also turn around instructions.

Exists a negative Momentum Trading?

Explanation: Momentum Trading is a vector amount, offered by the product of a things’s mass and also velocity. If the velocity of the object is negative, i.e. the object is traveling in what has actually been picked as the negative direction, the Momentum Trading will certainly also be negative.

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