Originally posted on lifestylemaniacs.com
I posted an article this year about the only three technical indicators we need to make profits. It turned out we only need one. Not only that, but this indicator provides a higher profit with a lower risk. Sounds too good to be true?
First of all, we need to set up the chart style. We will only use the weekly and daily Heikin Ashi chart. We will never look at charts below one day because it is too much noise.
We always look in the long run, and we need to be patient and live our lives. The 50-day EMA on the weekly chart is a good long-term trend indicator.
- green Heikin Ashi candle above EMA (on both daily and weekly chart), we buy;
- we exit when a red Heikin Ashi candle occurs on the weekly chart;
- red Heikin Ashi candle below EMA (on both daily and weekly chart), we sell;
- we exit when a green Heikin Ashi candle occurs on the weekly chart.
That’s all. That is my strategy, backtested with many markets and assets, and the winning trades are at least three times greater than the losing trades. Let’s see on TradingView:
S&P 500 profit factor 44.658 Apple profit factor 145.173 Gold profit factor 41.678 EURUSD profit factor 45.015 BTCUSD profit factor 41.151
The profit factor is gross profit divided by gross loss. It is how many times we have more profit than loss. In all cases, we have at least 40 times more profit than loss. That is huge.
Keep in mind that the S&P chart above has data from its conception in 1871. Thus, I backtested 150 years’ worth of data.
S&P 500 all time data
Let's have a look at the BTCUSD chart and apply the strategy
We can see by looking at the arrows, we entered and exited according to the strategy. We entered long when the green candle was above the 50 EMA and closed the deal when a red candle occured. The same for short deals: we entered short when the red candle was below the 50 EMA and closed the deal when a green candle occured.
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Disclaimer: I am not a financial adviser and don’t recommend investing in anything as nothing is guaranteed. Everything I write on the topic is for informational and educational purposes only. Always do your research.