AvaFx Review – Why is AvaFx Entry and Exit Strategy So Profitable?
If you look at avafx entry signals that would for example have been generated by a commonly used entry strategy, that is the crossing of the 20-period moving average with the 5-period moving average, one recognizes that a lot of the entry signals generated by MA crossings are of really poor quality, as they are not able to predict what will be the main market trend.
If you look at the entry signals that avafx strategy produces while trading or during the process of learning you can see that there entry signals are able to predict the main direction that the market will take. This enables them to catch up a long-term intra-day wave after entering the market and therefore pick up a considerable number of pips.
Most traders make a mistake by thinking that entering the trade is more important than exiting the trade, and if they have found an entry strategy with positive expectations, “the job is done”. Nothing could be further away from the truth. Exit strategy is equally if not more important than entry. In majority of strategies that are used by average traders a trailing stop is used.
A trailing stop is definitely better than a hard stop, however avafx strategy goes way beyond regular trailing stops when determining the place of exit. Before we go on, for the ones not knowing the meaning of a trailing stop, i will show you what a trailing stop is and how it works.
A trailing stop order with a moving rate of 30 pips works as follows: suppose you are entering long a position at the closing price of 1.2456 at 10:10 AM (see Table 2.1). Using the above defined exit strategy you will then put your stop order at 1.2426 (30 pips below 1.2456). If the next closing price is at least 30 pips greater than the last stop order, the new stop order will be the new closing price minus 30 pips.
For example at 10:15 AM the closing price of 1.2490 is 64 pips greater than the last trailing stop. Because of that the new trailing stop is set to be 1.2460 = 1.2490 – 0.0030. Also at 10:25 AM the closing price of 1.2495 is 35 pips greater than the last trailing stop. The new trailing stop is set to be 1.2465 = 1.2495 – 0.0030. In this example the position is exited at 10:30, because the low of that period of 1.259 is below the stop order of 1.2465.
The problem with an exit strategy using a trailing stop is that it works against the basic fundamental trading rule “cut the losses short and let the profits run”. And if you use a strategy that doesn’t let your profits run you are in real trouble. And why does an exit strategy using a trailing stop work against this rule?
Because very often such a strategy fails unnecessarily, it gets you out just at the moment when your trade needed just a little more space…Why? Every market trend, regardless of how strong it is, also shows movements against the long-term market trend. These deviations usually don’t last very long and after them the market moves again in the direction of the longterm market trend.
Avafx have used the phenomenon strategy described above as a starting point to develop a completely original and until now unpublished trading strategy that combines basic principles of Elliot Wave theory together with well-known properties of Fibonacci ratios. The result is amazing, when you join them you will soon find out. They have named the strategy “Impulsive/Corrective Wave Retracement (ICWR) Trading Rules”.
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Download and read quality how-to forex trade and get the easiest trading software platform for forex and e mini that will double your money fast: AvaFx Review
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