53# Spike Hunter Forex Strategy

Submit by Dimitri source www.forexfactory.com 2025

SpikeHunter is designed as a reversal trading indicator. It identifies candidate signals, applies filters, and marks recommended BUY and SELL positions directly on the price chart. While it is user-friendly, understanding its key components and settings is essential for optimal use.

Core Components of the SpikeHunter Strategy

Signal Generation
- Reversal Trading Approach:
  The strategy focuses on trading away from extreme price levels relative to an envelope band.
- Candidate Signals:
  A signal is generated when a price spike moves above or below the target band. SpikeHunter includes four types of envelope bands to experiment with:
  - M1 TMA (Triangular Moving Average)
  - Keltner-ATR Channels
  - @SwingMan's Lazy TMA Bands
  - ATR Envelope
- These signals act as potential trade entries, indicating overbought (SELL) or oversold (BUY) conditions.
Filtering Signals
- To differentiate between true and false signals, SpikeHunter uses momentum filters.
- Momentum Indicators:
- The R4M-MomentumFilter.ex4 actually combines two types of momentum indicators -- @Nih98's FX RSI momentum indicator and a Stochastics momentum indicator shared by @Hanover a few years back.
  The indicator is easy to use -- a purple dot means bearish momentum and a blue dot means bullish momentum.
  Two momentum tools are integrated:
  - @Nih98's FX RSI
  - Stochastics Momentum Indicator

- Filtering Criteria:
  - A spike above the envelope band must show bearish momentum to confirm a SELL signal.
  - A spike below the envelope band must show bullish momentum to confirm a BUY signal.
- Visualization:
  - Purple Dot: Indicates a SELL signal.
  - Blue Dot: Indicates a BUY signal.
Trading Window
- Reversal trading demands quick decision-making due to the narrow trading window.
- The indicator is designed for a fast response, prioritizing speed over perfect accuracy. This trade-off ensures timely entries but requires disciplined trade management.
Sweet Spot Indicator
- The Sweet Spot Indicator by @Nih98 highlights "round numbers," often key psychological or technical levels.
- These levels serve as visual cues for potential price targets, although they are not used in the computational process.

Trading Workflow with SpikeHunter

Identify Candidate Signals:
Monitor the price chart for spikes breaching the envelope bands.
Apply the Momentum Filter:
- Use the FX RSI and Stochastics momentum indicators to confirm the direction of the move.
- Only act on signals that align with the filtering criteria (bearish above, bullish below).
Execute Trades:
- Enter trades when a confirmed signal (purple or blue dot) appears.
- Manage trades with tight stops due to the limited reversal window.
Target Key Levels:
- Utilize the Sweet Spot indicator to identify potential profit-taking zones.

Key Considerations:

Experiment with different envelope types to find the most effective setup for your market.
Be mindful of the trade-off between speed and accuracy.
Regularly review your performance and adjust the settings if necessary.