Good afternoon, dear friends! In the last article, I introduced you to the indicator DIDI Index, today, as I promised, I bring to your attention a strategy in which only one is used.
Only the strategy will use a modified version of the indicator, which you can download together with the strategy template from the link at the end of the article.
So, before proceeding to the description of the strategy, first download the modified DIDI Index mtf indicator and install it in the terminal. The parameters of this indicator are more advanced, let’s dwell on them in detail:
TimeFrame – in this parameter, set the timeframe to which you want to apply the indicator’s moving averages calculation, by default Current time frame (calculation based on the currently selected timeframe). If you want to apply the calculation of moving averages only by the values of one timeframe, then set it in the following form – M1, M5, M15, M30, H1, H4, D1, W1, MN. Then, when choosing another timeframe other than the specified one, the value and calculation of the indicator will only reflect the timeframe specified in the parameters.
Curta_Length, Media_Length, Longa_Length – similarly, as in the classic indicator DIDI Index, the value of the periods of short, average and long moving averages, by default 3, 8 and 20, respectively.
Method – the method for calculating moving averages is set in the form of numbers:
0 – simple (Simple);
1 – exponential (Exponential);
2 – smoothed (Smoothed);
3 – Linear Weighted.
Price – set to which price value to apply the calculation of averages, similarly to the method, set in the form of numbers:
For all moving averages, the calculation method is the same and to which price value the calculation is applied.
The next group of parameters is setting up alerts – a sound signal (when crossing lines), sending a notification to the mailbox, the one you specified in terminal settings etc.
ShowLines – on off. displaying a vertical line, indicating the intersection of the blue and red lines of the indicator.
LinesColorForUp, LinesColorForDown – set the color of the line (ShowLines), by default blue color when the blue line crosses from bottom to top red (buy signal) and red when the red line crosses from bottom to top blue (sell signal).
I have described the main parameters of the indicator, now let’s move on to the essence of the strategy.
DIDI Trading Strategy Description
Any currency pair;
Timeframe – M15 and H1, H1 and H4, or H4 and D1.
Installing the indicator
Let’s consider the application of the strategy on the EURUSD currency pair, the timeframe of the M15 and H1.
First, install the DIDI Index mtf indicator with standard parameters on the chart, then reinstall the indicator again, but set the H1 timeframe value in the TimeFrame parameter, as shown in the screenshot:
We open the M15 timeframe. As a result, it should look as shown in the screenshot below:
Let’s consider the signals of the strategy.
Opening buy positions
First, we analyze the value of the indicator on a higher timeframe, in this example H1.
If the blue line of the indicator is above the red line, and they are on opposite sides of the black horizontal line, then the trend is up. In this case, we are waiting for the intersection of the blue line and the red one, but already on the indicator with the M15 timeframe and enter the market at the opening of the next candle:
Stop loss is set at the level of the last local minimum. We fix the profit at the opposite intersection (the red line crosses the blue) on the indicator with the value of the M15 timeframe, or a fixed take profit of 2-3 sizes of the stop loss.
Opening sell positions
If the red line of the indicator is above the blue line, and they are on opposite sides of the black horizontal line, then the trend is downtrend. We wait until the red line crosses blue, but already on the indicator with the M15 timeframe and enter the market at the opening of the next candle:
Stop loss is set at the level of the last local maximum. Take profit, by analogy with purchases, only in a mirror image.
Do not forgetthat the blue and red lines on H1 should be on opposite sides of the black horizontal line, if they are on the same side, then there is no signal!
To get a bigger profit when applying the strategy on higher timeframe pairs (H1 and H4 and H4 and D1), I recommend trailing a position at a distance equal to the size of the stop loss, when the profit is reached, it is also equal to the size of the stop loss.
To save time when installing and configuring indicators on different currency pairs and timeframes, create separate templates – М15 / H1, H1 / H4 and H4 / D1. How to do this, read the article “How to create a template in mt4 terminal“.
Download in one archive the DIDI Index mtf indicator for the mt4 terminal and the strategy template – DIDI Trading
Indicator archive – Didi_index_mtf
The effectiveness of the strategy depends on the broker, I recommend – Alpari, RoboForex
Actually, that’s all. Good luck with your trading! Goodbye.
Best regards, Evgeny Bokhach
Trading strategy “Double Stochastic”
Stochastic + CCI trading strategy
Trading strategy based on two Parabolic SAR indicators