Corn flower is a trend following trading strategy. This strategy allows you to grab hundreds of pips in a single trade. However, the amount of pips you will grab will definitely depend upon the timeframe you use. This strategy was usually created to be used in a 30 Minutes chart and in an hourly chart. This strategy can be used for trading in counter trend direction too but that is risky so you are not recommended to trade in the countertrend direction. This strategy is based on the principle that the trades should be executed when the same trend presents itself on multiple time frames. On an hourly chart, the 24 EMA defines the daily trend. The intra day velocity of fast money is shown by 8 EMA. The EMA 12 shows the trend of the last half day. The value of EMA 12 is at such a place that the price will usually find the support when there is a dominant trend. Finally, the EMA 72 defines the dominant trend of the market. In another words, EMA 72 is used to find the major trend of the market. When the other three short term moving averages are above the EMA 72, it indicates that the major trend of the market is up and you should be looking for the long position instead of short.
Components of Corn flower:
- Exponential Moving Average, period 8 (Yellow)
- Exponential Moving Average, period 12 (purple)
- Exponential Moving Average, period 24 (corn flower blue)
- Exponential Moving Average, period 72 (Red)
- Stochastic oscillator
- Moving Average Convergence Divergence (MACD)
In this strategy, you have stochastic oscillator and MACD to filter your trade. The only buy/sell signal generated by the moving average crossovers might not be very effective. So in order to fine tune your trading positions you can use stochastic oscillator and MACD.
Corn flower Trading strategy Details:
Timeframe: 30 minutes and 60 minutes
Conditions for buying using Corn flower Trading Strategy
- The major trend should be up i.e. the price should be above the EMA 72 (Red).
- The EMA 8 (yellow) should cross above all the moving averages, meaning that yellow lined moving average should be above all the other moving averages.
- Stochastic oscillators should be trending higher. Be aware of the fact that it is risky when you buy at the overbought zone. It does not mean that you can never win a trade when you open position while the price is overbought, but the chances you win are less.
- The MACD histogram should be in positive territory.
Conditions for Selling using Corn flower Trading Strategy
- The major trend should be down i.e. the price should be below the EMA 72 (Red).
- The EMA 8 (yellow) should cross below all the other moving averages.
- Stochastic oscillators should be trending lower.
- The MACD histogram should be in negative territory.
Stop Loss and Take profit
Stop loss should be placed 10 pips below/above recent swing low/high. You can close your long position when the stochastic oscillator is overbought. Similarly, you can close your short position when the stochastic oscillator is oversold.
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