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CHAPTER 16

The Boomerang

So far, we have discussed a variety of strategies, each based on some tendency of the forex market. There is another tendency that we haven’t yet discussed—the tendency of the forex market to be very quiet at certain times of the trading day.

There is a stretch of several hours, starting after the U.S. forex session ends and prior to the beginning of the Asian session, which tends to be very low in volume. Although the Australian and New Zealand forex markets are active at this time of day, the overall volume is relatively slight.

This is because the “big three” of forex trading (Great Britain, the United States, and Japan) are mostly inactive at this time of day. Under these conditions, currency pairs tend to drift, and any movement in the market becomes highly suspect.

Breakouts that occur during these hours are notoriously unreliable, because they almost always occur on very low volume. A trending technique would be inappropriate during these hours due to the overall lack of market direction. Since any movement that occurs at this time is unreliable and likely to retrace, we can create a strategy that is designed to capitalize on these false breakouts, by “fading” or trading against them.

Since this time of day is also considered to be the beginning of the forex trading day, it is also the same time that many (but not all) market makers choose to charge or credit interest. However, unlike an interest rate arbitrage strategy,

Martingale Boomerang Forex strategy uses one indicator: The Exponential Moving Average (EMA).

You can trade any currency pair, though we recommend GBPUSD or GBPJPY.

H1-H4 is the time period.

The Boomerang strategy is virtually a combination of the classic Forex breakdown strategy and Martingale elements. The goal of the Martingale Boomerang strategy is to identify small targets and make profit.

The uniqueness of the Boomerang trading system is that when trading, we get a small profit on flats and a significant profit on trends. You can also use it alongside other trading systems, and it does not take much time.

On the H4 chart, set the period for the EMA to 18, apply to Close, Blue. The H4 time frame is used to determine the market entry point; we monitor open positions on H1 or shorter time intervals.

Open a long position when:

1. the current price is above the EMA (18) on H4 (we recommend that you open at the opening point of a new candlestick).
2. the price is above the median (average) of the previous candlestick on H4

Helpful tips:

1. For better visualization of the determination of the median (average) level, you can use Fibonacci levels; they are placed on the extremes of the candlestick. In this case, the level of 50% pullback will be clearly visible.
2. Once the deposit has doubled, we recommend you withdraw some of the money.
3. Use the right money management system

• calculate the lot size with your deposit thoroughly. As a rule, no more than 10 positions are opened from one entry point.
• double the lot only after doubling the deposit.

Check out EA that Use this Strategy: Visit

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

The Boomerang Forex Trading System For MT4 is specifically designed to trade in the H4 time frame. Before you get into the details of this system, you should know trading a higher time frame requires patience. So, those who are looking for an aggressive trading method to use might get disappointed. But remember, by trading the market in a higher time frame or by using a conservative technique, you can reduce the stress at trading.

How to Identify The Trend?

The trend can be identified in various ways. The majority of the rookie traders prefer to use a complicated trading method which is not a smart move. You should be using a simple approach for the trend identification process as it will give you enough time to analyze the other important trading parameters.

Being a rookie trader, you might not understand the importance of a trend trading strategy. Trend trading techniques are mostly used to reduce the number of losing trades. Even if you intend to trade a major breakout, trade in favor of the last trend as the breakout tends to favor the trend most of the time.

The Boomerang Forex Trading System For MT4

In the Boomerang Forex trading system, we will focus on the trending nature of the market. However, we should also have a fair knowledge about the ranging market. If the price of a certain asset remains stuck within a confined zone, we call it the consolidation period. Price movement during the consolidation period is often called the ranging movement of the asset. 

While using strategy, try to analyze the data in the 4H or higher time frame. This should give you a better chance to evaluate the direction of the trend by using the highs and lows of the market. 

Let's have a look at the key indicators used in the Boomerang Trading Strategy:

• Exponential Moving Average (EMA)- value 20
• Candlestick chart

In the chart above, we can see the price is trading above the EMA So, we can assume the existing trend is bullish. If the price trades below the 20 EMA, we should be expecting a downtrend in the market. However, we might notice frequent breaks of the EMA lines since the period is set to

Bullish Boomerang Forex Trading System For MT4

In this trading method, we should look for few important parameters to take the long trades. Let's see the prerequisite conditions to open the long order.

Bullish Trading Condition

• The price should be trading above the daily pivot level.
• The price should be trading above the 20 EMA.
• We should see a strong bullish break at the 20 EMA.

Entry 

After checking the necessary conditions in the H4 time frame, we can execute our long trade with low risk.

Stop Loss

The 20 EMA is going to act as the dynamic support level. So, we may use 20 EMA as the reference point to identify the SL price.  Those who have strong skills in the price action trading strategy can use the price action confirmation signal to place the stop loss.

Take Profit

The take profit level should be determined by analyzing the nearest resistance level. We can also use the most recent high to determine the potential exit point for our trades.

Bearish Boomerang Forex Trading System For MT4

The process of taking the short trade is similar to the long trade. Let's see the key conditions for taking the short trades. 

Bearish Trading Condition

• The price should be trading below the daily pivot level.
• The price should be trading below the 20 EMA.
• We should see a strong break at the 20 EMA.

Entry

We need to check the above-mentioned three conditions to take the short trade. Once we have the confirmation, we can open our short trade.

Stop Loss

The 20 EMA is going to act as the dynamic resistance line. So, we can set the stop loss above the 20 EMA. To be on the safe side, some retail traders often place their stop loss above the most recent high. 

Take Profit

The take profit should be set by analyzing the nearest support level. But it should be set in such a way so that the minimum risk to reward ratio is better than

Boomerang Forex Trading System For MT4 - Summary

The functions of this system are closely related to the use of the EMA. So, we should be keen on using the 20 EMA in the H4 or higher time frame. Before we start using this strategy, the system should be tested in the demo trading account. By doing so, we can easily know the pros and cons of this system.

Note that, everyone needs to deal with stress during the learning stage. After learning the core functions of the system, never expect that you will win % of the trades. Always be prepared to have some losing trades as losing trades are nothing but a part of this business.

Download the complete system description and the files here:

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