Forex trading system “Hammer Trading System”This trading system is based on candlestick analysis. The Japanese hammer candlestick is one of the reversals from a downtrend to an uptrend. It has a long tail and a short body. It usually takes shape at the bottom of the downtrend.
The strength and reliability of this candle signal depends on many factors. If the candle is closed at the top, i.e. white, the signal is stronger. The bigger the white body and the smaller the black body, the better. The upper tail also matters. Ideally, he shouldn’t be. The signal is amplified when the candle is at an important level of support.The analogue of the hammer candle is the Shooting Star. It differs only in that it signals a change in the upward trend to a downward trend.
All the characteristics of the Hammer also apply to the Shooting Star. To define these candlesticks in the system the indicator “Candlestick – Hammer and Shooting Star Signal” is used. Exponential moving averages with periods of 20 and 50 are set as a filter for inputs on charts.This strategy can be applied to short- and long-term trade. For short-term trading the chart M15 with the indicator “Pivots_Daily” is used. For the sake of..long-term trading – chart H4 and indicator “W1_Pivot”. You should use a different template for each type of trade.
A purchase example on a 15-minute chart. There are three basic conditions. The first is the appearance of the hammer candlestick, the second is a breakthrough of the beer level or resistance upwards. The price must be higher than 20EMA, and this line must be higher than 50EMA. Stop-loss is set at 10-20 points below the tail of the hammer candle. The third part of the open position is closed by take profit, which is equal to the number of stop-loss points. For the rest of the volume, the stop-loss position moves 5-10 points below the 20EMA line.
The rules of sale are similar, but opposite. Example of selling on a 4-hour chart. The price broke through the weekly beer level and after the appearance of the “Falling Star” fell below the moving averages.Download system files