Bladerunner is named for the 20-period EMA, which “cuts” the price in half like a blade. If the price rises above the EMA and retests it, the market is likely to rise further. If the price falls below the EMA and retests it, the market is likely to continue to fall. This is a trading strategy that anyone can use.
The 20-period Exponential Moving Average will be our only technical indicator for this strategy (EMA). The approach can be used with any time range or currency pair. If the price is above the EMA, the trader’s bias will be long; thus, they will most likely be hoping for the price to drop and hit the EMA, bounce, and then go to the upside.
When putting this plan into action, it’s also vital to consider the levels of support and opposition. It’s important to remember that the Bladerunner forex trading strategy, like most other trading methods, should be modified to the time of day you trade.
How does Bladerunner forex trading strategy work?
You won’t need any off-chart indicators like MACD, Awesome Oscillator, or Stochastic for this technique. However, when trading with the Bladerunner approach, there is just one indicator that is absolutely necessary: a 20-period EMA.
The strategy’s logic is straightforward. If the price remains above the EMA and retests it, the upward trend is likely to continue. Conversely, if the price remains below the EMA, it is expected to continue its downward trend.
A trend reversal can be expected when the price moves through the EMA and the candle shuts on either side of the curve. To put it another way, the EMA acts as a shifting support/resistance level.
To make an entrance, the trader must first ensure that the price has moved out of the established range in which the asset has been traded for a long time. Second, the price must successfully retest the EMA: not only must the candle close above/below the EMA, but it must also bounce off the line and continue in the same direction for the signal to be considered verified.
What are the criteria to trade the Bladerunner forex trading Strategy?
Two criteria must be met before using the Bladerunner approach to take an entry:
Before implementing the approach, the price must have broken out of a range or be in a strong trend.
The price must successfully retest the 20-EMA when the first requirement is met. Next, if the currency is trading above the EMA, the test should see the price descend to the EMA, touch it, and reverse the dominating trend. Finally, a candle that closes above the EMA indicates that the uptrend is still alive and well. In a downturn, the same logic applies.
Before attempting to initiate the order, keep these two points in mind. Traders who want further confirmation can trade setups where the price bounces off the EMA and also happens to be a strong Support and Resistance level or a pivot point.
How to trade using the Bladerunner forex trading strategy?
When using the Bladerunner, using a stop-loss order is a good idea. As a result, if the trading system’s signal turns out to be erroneous, you’ll be able to limit the risk. Other indicators can be added to the trading system, but they are not required to reduce the false signals.
This is a real-life example of how to apply this method. You can use a 20-period exponential moving average on the price chart after identifying an asset that is traded in a specific range. Then wait for the price to break out of the range. If the asset price breaks out of its range and retests it, you might want to consider taking a long position in a bullish trend and a short position in a negative trend. This is how the Bladerunner forex trading strategy is traded.
The Bladerunner tactic can be traded in a variety of ways as long as the basic principle remains the same. Professional traders integrate this theory with their analysis before executing their trade, whilst novice traders enter only on the basis of the EMA. Here are a number of Bladerunner techniques for all types of traders.
If you were simply utilizing one or the other of the separate indications, you might not have thought this was a valid signal because it didn’t actually contact it. One of the benefits of employing the polarity indicator is this.
Buying
You can use the 20-period EMA to analyze the price chart on the Daily time frame.
If the market has been moving sideways in a range, read the chart from the left. And the market ultimately burst through the range’s top. Furthermore, the breakout occurred with the price considerably above the 20-period EMA.
If the market retreated to the EMA, two tails remained at the bottom. This is a sign that the market is getting ready to move higher. A trader can go long as the price stays above the EMA for a few candles.
The stop-loss should be a few pips below the top of the range, as well as below the EMA. Therefore, this approach does not have a set take profit point. However, the trade can be closed when the price falls below the 20-period EMA.
Selling
For example, let’s look at a price chart of a currency pair in the 4H time frame. If the market is initially range-bound, sellers will eventually drive it lower. As a result, the price retraced and challenged the EMA as well as the S&R after the breakout. The fact that the sellers pushed the market lower yet again indicates that the slump will continue. As a result, one can prepare to go short at these levels.
The stop loss can be securely positioned above the Support and Resistance levels as well as the range’s bottom. There is no predetermined take profit because there is no connection to the left. Once the market passes above the 20-period EMA, traders must liquidate their bets.
Another important case
Consider a daily timeframe price chart of a currency pair if the market’s overall tendency is down. The current level denotes the most recent region of Support and Resistance.
Before entering a trade in this market, we wait for the price to retrace up to the S&R level. At some point, the enormous decline started to retrace. Keep in mind that the retracement’s price action is above the 20-period EMA.
The price begins to stabilize as it approaches the Daily S&R but remains above the EMA. The price then rapidly dives below the 20-period EMA as the market slows. The price then retests the EMA and attempts to break above it but is pulled lower by a bearish candle. As a result, if another bearish candle forms, the pair can be shorted. Our Blog compares bearish and bullish markets.
Because the market turned around the S&R level, the stop loss can be set just above it. Furthermore, the stop loss should be placed above the EMA. This approach is essentially a trend pullback trade with the Bladerunner forex trading strategy incorporated. As a result, the take profit point might be set at the recent lows.
Trading signals for Bladerunner forex trading strategy
When you see that the prices trade above or below the EMA and subsequently test the EMA on multiple occasions, trading signals are sent using this approach. After a signal like this is identified, it becomes increasingly likely that prices will reject to the upside once the sideways consolidation period has ended.
Once the averages have corrected, this time provides the market with the impetus it requires to move further. In this scenario, long positions might have been taken and profited on until the final candles on the chart, where prices convincingly break in the bearish direction.
Some traders are hesitant to test any trading system that relies on a single signal. There’s a reason for this, so we’ll look at some of the ways traders can use Bollinger Bands readings to acquire more confirmation in the next section. The Forex Polarity research, which juxtaposes the 20-period EMA with the centre line in the 2-deviation Bollinger Band, is also known as this.
Traders on the forex market can employ the Blade Runner technique to offer a novel twist on the classic moving average strategy. For both the bullish and bearish versions of this approach, there are rules in place, and each of these procedures should be followed before any real-time transactions are made.
Moving averages are used in most technical analysis methodologies in some form or another. Alternative versions can be recognized when we look at the guidelines provided for the Blade Runner technique.
Risk Management
When trading long, traders may want to put a couple of stop orders 2-3 pips just above confirm candle and a pair of stop losses 2-3 pips underneath the signal candle. When it comes to stop orders, a frequent strategy is to aim for a profit objective equal to the risk in pips with the first one and double the risk in pips with the second.
Stop orders are put a few pips below the confirming candle, and stop losses are placed above the signal candle when trading short. The rest of the process would be the same as when going long.
Bottom Line
Because it blends with any other approach, the Bladerunner forex strategy is a superb strategy that can aid a lot of traders. Try combining this technique with your primary approach to improve your trading ability.
The Blade Runner approach generates trading signals based only on price activity. Off-chart indications aren’t necessary, although they can always be added for further assurance. Instead, the majority of the attention is on price action, which implies that using support and resistance levels, pivot points, and candlestick formations when seeking new chances may be advantageous.
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