Fisher Strategy – Rules of ApplicationMonday, 29 January 2018 12:29
Fisher Strategy is a trading method in the Forex market, which is very popular among traders around the world. Its developers dedicated many years to currency trading and created an efficient tactic for various currency pairs. To achieve the best results, we recommend using a daily timeframe.
Fundamentals of Fisher Strategy
This approach includes only two indicators: Fishingind and Alex_Activity_v02. The first tool automatically constructs the trend lines and allows finding the points of its breakdown. You will need a few preliminary settings:
- Otstup is the amount of indentation in pips. The parameter is used for constructing fractals and tangents; it is very important when using currency pairs, which demonstrate a high level of noise.
- Kolshow is a number of the previous candles, used for a markup in the strategy. This value should be increased when trading on the H1 and H4.
The second indicator is a histogram. Its columns grow as the bullish bars are formed, and reduce when the bearish bars appear.
Trading Algorithm of Fisher Strategy
New positions are opened when the trend lines are broken through. Thus, it is necessary to wait, while outside of this line the candle closes. Also, the Otstup parameter is important since at higher values you will receive fewer false signals in conditions of small price fluctuations.
Alex_Activity_v02 also serves as a filter. To do this, the extreme values are set, which determine the normal state of the chart. They vary for different currencies; EUR/USD corresponds to 100 pips. This means that if a histogram passed 100 pips, then the price overcame the same path for four days. This filter is used for Buy orders.
For Sell orders, you should be guided by the negative value, equal to -100.
At the same time, opening a new strategy deals requires a breakthrough through the strongest levels, because it will speak of the beginning of a new directed movement. As for other assets, the essential parameter is calculated by the comparison with the EUR/USD pair. Also, you can use ATR.
Open positions are accompanied with three various methods.
- The division of the position into two parts. The first has a Stop Loss, set at the local minimum/maximum value of the asset price. The first part is closed at the moment when the histogram approaches the extreme value. In this case, the second part, according to rules of the strategy, is transferred to a breakeven state and then a Trailing Stop is used.
- You can add to the chart additional moving averages with various period values. The exit is carried out at their intersection. This method cannot be considered as mandatory; Fisher Strategy shows effective results without additional MA.
- Fixed Stop Losses and Take Profits are set, their calculation is based on Alex_Activity. Stop Loss can be equal to the extreme value, and Take Profit should be at least twice as much, which corresponds to the rules of money management.
Fisher Strategy has several advantages over other tactics owing to its ultimate simplicity. Due to this fact, the strategy can be successfully used even by novice traders. Numerous tests allow us to conclude that Fisher Strategy is highly profitable, which is the reason for the growing popularity of this technique among Forex market participants.
We recommend you to apply any trading approaches after the successful testing on demo accounts. In this case, you can carefully study all the features of the trading algorithm, understand true and false signals, and avoid unnecessary losses when starting real Forex trading.