Moving average is an effective indicator for determining trend. This forex trading strategy is based on moving average and alligator. Moving average will give trend direction and signal will come with the help of alligator. As this strategy is made with the trend direction, it can be more profitable.
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(1) Alligator Indicator (Default setting). click here to know, how to set Alligator indicator
(2) 200 Moving average. click here to know, how to set moving average
How to get buy signal
First market price should be above the moving average. You can use 200 SMA or EMA. First price should cross 200 EMA from lower to upper, then it need to cross Alligator indicator. When candle close above alligator indicator, then this strategy gives buy signal. Three lines of alligator usually act as support level. So with each retrace from the alligator, this strategy suggests for buy signal. Buy setup according to this strategy has been shown on the below chart.
How to get Sell signal
Market price should break 200 EMA or SMA from upper to lower. Then it need to cross alligator indicator in the lower side. When candle close below alligator indicator, then this strategy gives sell signal. Below 200 moving average, if price retrace on the alligator, then this strategy gives sell signal again as three lines of alligator act as dynamic resistance level. Sell setup process has been shown on below chart.
Time frame: H4 is preferable. M30 and H1 for scalping.
Currency pairs: All pairs.
Take profit and Stop loss:Take profit should be based on time frame. Minimum take profit 30 pips, you can target 80-150 pips profit from when price cross 200 SMA or EMA. When price retrace from alligator, then target can be 30-80 pips for every trade setup.
Stop loss need to be placed above swing high for sell signal and below swing low for buy signal.
Risk warning: This is trend following strategy and so this can’t be used on ranging zone. You have to follow money management theory for following this trendy strategy. Before using this strategy