Heiken ashi smoothed expert mt4 with Exponential moving average

The strength of the Heiken Ashi Smoothed chart is on defining the short-term trend, I will need a moving average indicator to identify the long-term trend. For this I would like to use the 100 Exponential Moving Average (EMA).

For the chart layout I looking to layer the Heiken Ashi Smoothed chart and the regular candlestick chart

The Buy Setup – Entry, Stop Loss & Exit

Buy Entry Rules:

§  Price should be above the 100 EMA

§  Price is on an uptrend

§  Coming from a red Heiken Ashi Smoothed candle due to a retracement, enter on the first blue Heiken Ashi Smoothed candle, which signifies that the trend has resumed

Stop Loss: The stop loss should be placed a few pips below the swing low formed on the retracement.

Trailing Stop Loss: As soon as price is at 1:1 risk reward ratio, the stop loss should be trailed a few pips below the Heiken Ashi Smoothed candles until the trade is stopped out in profit.

The Sell Setup – Entry, Stop Loss & Exit

Sell Entry Rules:

§  Price should be below the 100 EMA

§  Price is on a downtrend

§  Coming from a blue Heiken Ashi Smoothed candle due to a retracement, enter on the first red Heiken Ashi Smoothed candle, which signifies that the trend has resumed

Stop Loss: The stop loss should be placed a few pips above the swing high formed on the retracement.

Trailing Stop Loss: As soon as price is at 1:1 risk reward ratio, the stop loss should be trailed a few pips above the Heiken Ashi Smoothed candles until the trade is stopped out in profit.

This strategy’s strength is in the fact that it is a trend continuation strategy. Not only that it is a trend continuation strategy, both the long-term and the short-term trends are in confluence. Having the 100 EMA and the Heiken Ashi Smoothed in confluence increases the reliability of the strategy.

Another strength that this strategy has is its tendency to catch the whole short-term move because of the trailing stop. By doing this, the risk reward ratio improves, which also increases the trading edge.

However, it should be noted that the stop loss should not be trailed immediately until the profit is at 1:1. This is because since the stop loss is being trailed near the Heiken Ashi Smoothed, there is a tendency that the stop loss could be prematurely hit.