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Fisher Trend Flow Forex Trading Strategy

The forex market is a very liquid type of market. Usually moves smoothly and rarely stops. There are times when the market is calm, but often the market moves erratically and oscillates on the price chart. This is a natural characteristic of the forex market. It is the largest trading market with an average of more than $5.1 trillion traded daily. Given its sheer size, this also means that it's probably the most changeable. Plus the fact that market participants buy and sell currencies for reasons other than speculating on price movements. This makes the forex market very fluid and sometimes very unpredictable.

However, despite its seemingly erratic behavior, the forex market exhibits a flow that experienced traders can follow. Traders who are able to go with the flow and move with what the market is doing are those who make the most money from the forex market.

The Fisher Trend Flow Forex trading strategy is a systematic strategy that helps traders understand and follow the flow of the market. It uses technical indicators that can give traders clarity on what the market is doing and follow how the market is doing it. It generates trading setups that follow the general trend of the market when trading short and medium term fluctuations and cycles, and helps traders enter and exit trades in line with market flows.

Fisherman indicator

The Fisher indicator is an oscillating indicator that helps traders spot cyclical price movements.

It is based on the concept of a Gaussian distribution. This essentially converts recent historical prices into a Gaussian distribution. This allows the indicator to highlight extreme price movements, which are often the start of a potential reversal. It can also show reversals and turning points in the market quite accurately.

The Fisher indicator is displayed as an oscillator printing histogram bars. Positive bars indicate an uptrend, while negative bars indicate a downtrend. The histogram bars cross from negative to positive or vice versa indicating a potential trend reversal. This crossover can be used by traders as an entry signal for a trend reversal. Traders can also use bars to filter trades based on the direction of the trend.

EMA crossover signal

The EMA Crossover Signal is a trend-following signal indicator based on the exponential moving average (EMA).

One of the most popular ways for traders to spot a potential trend reversal is to use moving averages. Traders often apply a pair of moving averages to price charts, one representing a shorter trend and the other representing a longer trend. Traders will then wait for the moving averages to cross, signaling that the trend has reversed.

EMA crossover signals take advantage of this concept by drawing trend reversal signals based on the crosses of the underlying EMA lines. Then easily draw an arrow indicating the direction of the trend. Traders can then easily use the arrows to enter or exit the trade accordingly.

trading strategy

This trading strategy trades trend confluence and trend reversal using the Fisher indicator and the EMA crossover signal indicator. However, instead of picking up every available trend reversal signal, it also filters trades based on the longer term trend.

The 200-period Exponential Moving Average (EMA) is used as the basis for the long-term trend. It is based solely on the general position of the price action in relation to the 200 EMA line as well as the slope of the 200 EMA line.

Then we will look for a confluence of trend reversal signals coming from the Fisher indicator and the EMA Crossover Signals indicator.

With the Fisher indicator, the reversal signal is based on the shift of the bar from positive to negative or vice versa, depending on the direction of the trend.

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With the EMA Crossover Signals indicator, signals are based solely on the plot of the signal arrows.


200 EMA
EMA crossover signal
Faster EMA: 25
EMA slower: 30
Preferred timeframes: 30 minutes, 1 hour, 4 hours and daily charts

Currency pairs: FX majors, minors and crosses

Trading Sessions: Meetings in Tokyo, London and New York