Forex h4 strategies are usually built on indicators or the analysis of supply and demand, one of the interpretations of which are different levels, including the Fibonacci. First of all, let us review a simple but effective strategy called “Defile SAR”.
As it has become obvious from the name, this method is based on the standard Parabolic SAR indicator – you should set a step equal to 0.002 in its settings and leave the maximum leave as the default – 0.2. It should be emphasized that the following rules will be valid only for the EUR/USD pair – the other tools will require optimization given the volatility.
So, to buy you need to follow the procedure: first, the sequence of Parabolic SAR points should be broken upwards by the price, and secondly, after the breakdown candle you need to wait for the formation of a rollback in the amount of at least two candles, but the Parabolic should remain in the similar vein in the meantime. The figure below shows an example:
Next, two orders of Buy Stop type are set at a few pips above the high of the breakdown candle. The author recommends placing a take-profit for one order at a distance of 220 pips, and for another – at 330. After achieving the first goal, the stop-loss on the remaining positions is moved to breakeven.
Talking about the stops, the developers recommend them at a fixed value of 150 pips, but an analysis of recent years has shown that it is reasonable to either cut them twice, or place behind the closest strong level. To sell, the rules are diametrically opposed:
Forex h4 strategies at Fibonacci levels
Fibo levels are often used as an additional filter in the indicator systems, so let’s review hot on the trail the modification of the algorithm presented above. After analyzing the history, it can be seen that the attempt to measure the pullback by the number of candles often leads either to missed profits or to false signals, and as a consequence – losses.
Fibonacci levels can significantly reduce the negative consequences of this approach. We shall remind that Forex h4 strategies are focused on the medium term, so it is reasonable to assume that the “market footprint” will be sufficient to use for the last time, in this case – two weeks.
In order to simplify the process, it is recommended to check the box in the working window settings: Properties - General - Show period separators. Further, when building Fibonacci levels, join the minimum and maximum for the current period. It should be noted that the extremes are more important than the closing prices of the candles. The figure below shows an example in the framework of the above system:
Thus, in the reviewed Forex h4 strategies, there is an opportunity to break both the signal to close and open the order into several pieces, because if the first point was false, it remains possible to average the position without overstating the risk. In the opposite case, if the price turned in the desired direction, it is possible to build a pyramid on Fibo levels.
Unfortunately, the original strategy has some drawbacks, the main of which is to optimize strictly for one pair and the inability to transfer algorithm directly to other instruments. This problem can be solved, but requires significant time for collecting statistics, so it is advisable to either find a ready advisor written after the “Defile SAR”, or to build a robot from scratch, taking into account the recommendations concerning the Fibonacci levels.
In conclusion, we would like to note that an important feature of the Forex h4 strategies is stability, because they combine the advantages typical for other timeframes, while specific disadvantages vanish. In particular, the probability of true signal becomes higher than on the “fast” timeframes, and the frequency of their occurrence is much higher than in the daily charts. Source: DewinforexSocial button for Joomla