Strategies periodically appear to guarantee light earnings of about 40-50 points per day without much effort. Puria strategy (or Puria method) is one such weekly trading system. And although it has not been known for the first year, we will still try to figure out whether to pay attention to it.
It should be classified as a class of scalping indicator strategies. That is, no technical analysis and pork patterns, we will use only a certain set of indicators. Trading can be carried out on any currency pair, on the chosen instrument will depend only on the amount of established teak-profit.
The trade is carried out on a small timeframe - from М15 to Н1, although some traders try to trade on М1 as well. Either way, this strategy will suit fans of the intrigue of trade - in other words, most of us.
Press the "study" button, start using scalping effectively.
The Puria Method strategy is a fairly stable and conservative strategy for intraday trading during periods of increased volatility. The technique is simple and this is the key to its stable operation on most currency pairs even now that the Forex market is more dependent on fundamental factors.
The technique became widely discussed and applied in practice in late 2010, when an advisor working on its method came second in the prestigious international Automated Trading Championship 2010 competition. Classic indicators give clear signals that do not allow double interpretation. At the expense of a small profit on each deal, it is particularly suitable for aspiring traders, traditionally looking towards the minute scalping Forex, as a source of rapid profit. Here, a similar result is achieved without undue risk and nerves.
Basic Principles of Puria Strategy
Standard trend indicators are used, verified by years of use in both Forex and the stock market: three moving averages and a MACD oscillator. The first sign of a trend reversal will be the crossing of Moving Average.
Please note that the presence of this term in Puria 's description does not mean short-term transactions lasting 3-5 minutes. In this case, "scalping" is called quick closing due to small Take Profit 's, which the market can reach for both one Japanese candle and several consecutive bars.
Forex 15-minute (M15) time frame is used as the basis for technical analysis of the current situation, and deals are opened for longer М30 and Н1. The initial time frame may vary depending on the characteristics of the traded asset, and the profit size is desirable to remain fixed even when volatility externally allows to expand the range. Here we should remember that "it is better less, but more often."
Puria 's method was tested on all major currency pairs and it is better not to deviate from table values. Of course, there are no restrictions on changing the basic parameters according to the current Forex market, so confirm the current conditions every 2-3 months using a built-in trading terminal tester.
Settings of indicators
All required trading instruments are part of the basic set of the MetaTrader terminal.
The Weighted Average Moving Average (Linear Weighted MA) responds to price changes faster than other MA and in its calculation algorithm, the latter periods have more weight as opposed to the Simple (SMA) or Exponential (EMA) Forex average. During the trend, it is closest to the price schedule and its sample can be considered a leading signal of a change in the market trend.
The faster EMA is used as the first confirmation of entry and in general the combination of indicators resembles Bill Williams 'Alligator - the same three MA intertwined during the flute and going one way after its completion. So nothing new to the already existing trade strategies, Puria 's method adds.
The MACD histogram shows who now dominates Forex. It is considered that if it is above the zero level of power on the side of buyers, below sellers. Crossing the zero line will be the beginning of a new trend line or local correction. On the surface everything looks logical, but:
We do not forget about the delay, however, it concerns all technical indicators myforex. MACD in this sense is among the leaders and shows really reliable signals only starting from М30 and above.
Look at the history in the last 2-3 months. If MACD is the main problem of skipping good signals, try changing the base values. There is an option for Forex proposed by well-known trader and analyst John Appel - for the uptrend set to (8,17.5). For downstream motion, you can leave the basic settings.
Keep an eye on Forex divergences, that is, the difference between price movements and indicator graphics. Puria 's method does not take into account such a situation, but if it occurs, trade it, do not miss the chance to profit by an order of magnitude more than table values.
To avoid distracting attention, especially when many Forex indicators are used, you can set one color for both "slow" averages.
Trade signals on Puria strategy
The BUY deal opens when both slow averages are punched fast from the bottom up and at least one bar closes above zero on the MACD indicator. Always waiting for confirmation from MACD, otherwise the signal may be false!
For Forex sales (SELL) the opposite conditions are met: fast MA crosses slow from top to bottom, MACD drops below the zero line by at least one bar.
Slow averages traditionally serve as a Forex trend filter. In fact, they show movement on older periods, as in the Three Screens Elder strategy. Here it is important to make sure that the trial occurred - if the price went below or above both slow ones, and EMA broke only one, then what signal Puria 's method considers false. And it doesn 't matter what MACD shows!
Size Take Profit and Stop Loss
If you follow the method clearly, the Take Profit size is selected according to the table above. There are two opinions about stop-loss: it can not be set at all, as the strategy provides for a rapid closure at the beginning of a new strong trend or price impulse and a more conservative approach claiming that SP is still necessary.
Beginners are categorically not encouraged to work without limiting losses, volatile Forex can punish such brave people with total loss of deposit. The minimum value is 50% of the table profit, but not less than 10-15 points. The second option, to place it behind the latest local price extreme: minimum for purchases, maximum for sales.
The forced Puria method
For assets with above-average volatility, such as the British pound or the Japanese yen, a more aggressive version of the methodology has been developed. The toolset remains the same, only the Forex price type for which the slow moving averages and oscillator will be calculated changes:
MA(85): Linear Weighted; HL/2.
MA(75): Linear Weighted; HL/2.
MACD: 15; 26; 1; HL/2.
TP/SL entry and calculation rules also do not change, but if an asset or Forex generally shows increased volatility, you can increase allowable profit by 10-15 points.
The signal from MACD may lag longer than normal, especially on М5-М15 timeframes, but this is for the better. Thus, the Puria Method gets rid of most of the false signals.
Deals close when the MACD histogram starts moving in the opposite direction (from positive to negative for purchases, from negative to positive for sales). Also, Puria 's method recommends closing at the moment of repeated crossing of trending moving averages fast in reverse.
Trading by method is perfectly automated with the help of advisers and on the Internet quite successful options, including free. But it is still better to use Puria in manual mode - so you can see faster that the strategy requires correction or see what the program does not see. For example, the Price Action pattern of a candle analysis canceling a signal.
Advantages and shortcomings
Even beginners can trade by the method, as standard technical analysis tools and simple login rules are used. Also attracts multicurrency - you can open on one transaction on different, better inversely correlated, currency pairs and make a significant profit.
However, apart from its merits, Puria, like any other method of forex trading strategy in financial markets, has disadvantages:
Only trend indicators are used. Despite the fact that MACD belongs to the group of oscillators the technique of its calculation is not much different from the moving averages. Therefore, it works only as a trend indicator on Forex and does not determine the moments of overbought/resale and other important parameters of market dynamics. Thus, Puria 's method violates one of the main principles of trade forex trading strategy construction: confirmation of entry point cannot be made on indicators of one group, in our case trending. To be fair, there is still a stable profit at fairly long time intervals.
Small teyk-profita. Given what is said in the first paragraph, it becomes clear why small levels of profit are recommended even on myforex senior timeframes. The absence in the basic version of the possibility to determine the truth of the breakdown of the average, forces to act on the principle of "grab and run." The trader hopes that at least the next candle after the break will go in the right direction and will allow to get even a small, but income. However, nothing prevents the use of trailer-stop for maximum development of possible trend.
Constant control of volatility. Forex is a more dynamic market than stock market, but it can also experience long periods of silence, in which case it is better to stay out of the market or disable the automatic advisor. Especially important is the dynamics of intraday price changes when working on М15-H1 timeframes. Built-in indicators can distort the real picture, better use external services, where you can look at historical data in more detail, for example, in terms of seasonality.
Impossibility of news trade. Moving average strategies such as Puria cannot be used in working out fundamental events. Sharp movement at their output can be a short-term pulse, and can lead to a complete reversal of the trend. In addition, candles of 100-200 points "break" the nearest history, myforex indicators behave unpredictable, which is especially visible on MACD. He may well break his zero level and give a signal to the input when it is categorically impossible to do so.
In summary, the Puria method is an example of the successful use of standard indicators for stable profits and may be the basis for further experiments. The main thing is not to forget about preliminary testing of settings on the demo account and it is recommended to add overbought/resale indicators such as Stohastic or RSI.