HomeForex MarketHeiken Ashi DeMarker Forex Swing Trading Strategy

Heiken Ashi DeMarker Forex Swing Trading Strategy

“Slow is smooth, and smooth is fast.” This is a popular Navy SEAL motto which holds a lot of truth. It means not rushing through tasks and executing tasks accurately. The more accurate you are, the less mistakes you make. The less mistakes you make, the less unnecessary slowdowns occur and the faster you reach your goal.

The concept should hold true with forex trading. Traders who are very accurate can have more consistent gains over a period compared to traders with erratic gain trajectories. The more consistent a trader is, the faster he or she grows his account.

However, most traders do not have enough patience to wait for a high probability trade. Most are even drawn to forex trading for the promise of making a lot of money in a short amount of time. Traders who develop such discipline are usually the ones who can grow their accounts over time.

Swing trading is a type of trading strategy wherein traders wait for the right trade setup on the higher timeframes and hold their trade setups for a few days or even weeks. This means fewer trades in a week, but it also means less trade decisions based on market noise. This often allows traders to have a more consistent profit trajectory.

Heiken Ashi DeMarker Forex Swing Trading Strategy is a swing trading strategy which produces trade setups based on market reversal signals. It trades on confluences coming from two high probability technical indicators, which should allow traders to have more high probability trade setups than low quality signals.

Heiken Ashi Smoothed

Heiken Ashi Smoothed is a trend following technical indicator based on the Heiken Ashi Candlesticks and the Exponential Moving Average.

Heikne Ashi translates to average bars in Japanese. The Heiken Ashi Candlesticks is literally a candlestick modified to show the direction of the trend based on the recent average movement of price. It retains the same high and low for each period. However, it modifies both the open and close of each candle depending on the average movement of price. This creates candlesticks that change color only when the indicator detects a reversal on the short-term momentum, yet at the same time displays price action based on the high and low of each candle.

The Heiken Ashi Smoothed however, differs from the Heiken Ashi Candlesticks. Instead of showing candlestick highs and lows, it modifies the highs, lows, open and close. This creates bars that move smoothly following price action quite closely. It also resemble the movement characteristics of the Exponential Moving Average more closely, creating bars that follows price action responsively yet is stable enough to avoid false signals during choppy market conditions. It displays bars that change color only when the mid-term or long-term trend is showing signs of reversal.

DeMarker Indicator

The DeMarker indicator is an oscillator type of indicator which indicates trend direction based on the most recent historical price movements. It does this by comparing the maximum and minimum prices to prior period’s highs and lows in order to asses the demand for an underlying asset or currency pair.

The DeMarker indicator plots a line that oscillates within a range of 0 to 1. It also typically has markers at level 0.7 and 0.3. These levels are indicative of thresholds where price could be considered overbought or oversold. If the DeMarker line is above 0.7, the market is considered overbought and might be due for a bearish reversal. On the other hand, if the DeMarker line is below 0.3, the market is considered oversold and might be due for a bullish reversal.

Trading Strategy

This trading strategy is a simple swing trading strategy which provides trade signals based on a confluence of trend reversal signals coming from the DeMarker and Heiken Ashi Smoothed indicators.

To trade this strategy, first we will have to modify the markers on the DeMarker indicator. We will be adding levels 0.45 and 0.55 on the oscillator window. We will use these markers the way we would identify trends on the Relative Strength Index (RSI). A breach above 0.55 indicates a bullish trend with a support at level 0.45. Inversely, a drop below 0.45 indicates a bearish trend with a resistance at 0.55.

Then, price action should crossover the Heiken Ashi Smoothed bars with strong momentum. This crossover should cause the Heiken Ashi Smoothed bars to change color indicating a trend reversal.

Confluences between both signals together with price action supporting the direction of the trend reversal would qualify as a valid trend reversal.

Indicators:

  • Heiken_Ashi_Smoothed
  • DeMarker

Preferred Time Frames: 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action should cross above the Heiken Ashi Smoothed bars with strong bullish momentum.
  • The Heiken Ashi Smoothed bars should change to lime.
  • The DeMarker line should cross above 0.55.
  • Enter a buy order upon the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the support below the entry candle.

Exit

  • Close the trade as soon as the Heiken Ashi Smoothed bars change to red.
  • Close the trade as soon as the DeMarker line crosses below 0.45.

Heiken Ashi DeMarker Forex Swing Trading Strategy

Heiken Ashi DeMarker Forex Swing Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should cross below the Heiken Ashi Smoothed bars with strong bearish momentum.
  • The Heiken Ashi Smoothed bars should change to red.
  • The DeMarker line should cross below 0.45.
  • Enter a sell order upon the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the resistance above the entry candle.

Exit

  • Close the trade as soon as the Heiken Ashi Smoothed bars change to lime.
  • Close the trade as soon as the DeMarker line crosses above 0.55.

Heiken Ashi DeMarker Forex Swing Trading Strategy 3

Heiken Ashi DeMarker Forex Swing Trading Strategy 4

Conclusion

This trading strategy is a great swing trading strategy based on two highly reliable indicators. The Heiken Ashi Smoothed indicator is a very reliable trend following indicator which has the potential to produce high yields with a relatively high accuracy.

The DeMarker indicator, which serves as a confirmation of the trend filters out trade signals with weak trend bias.

Trading on the confluence of these two indicators significantly increase the probability of a winning trade.

On top of this, the confirmation of a price action with strong reversal momentum also has a very high probability of resulting in a trend reversal.

Traders who can effectively identify good price action signals while incorporating the filters of the two indicators can profit from the forex market using this strategy.


Forex Trading Strategies Installation Instructions

Heiken Ashi DeMarker Forex Swing Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

Heiken Ashi DeMarker Forex Swing Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this strategy accordingly.

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How to install Heiken Ashi DeMarker Forex Swing Trading Strategy?

  • Download Heiken Ashi DeMarker Forex Swing Trading Strategy.zip
  • *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex strategy
  • Right click on your trading chart and hover on “Template”
  • Move right to select Heiken Ashi DeMarker Forex Swing Trading Strategy
  • You will see Heiken Ashi DeMarker Forex Swing Trading Strategy is available on your Chart

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.

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