60# Tor Signal filtered by Currency Strength Indicator

Submit by Dimitri ‘ 08/2024

Introduction

This trend-following strategy is designed to capture sustained market trends by using the Tor Signal as the primary entry trigger. The Tor Signal is a custom indicator that identifies potential trend reversals or continuations. To enhance the reliability of this signal, we apply a filter using the Currency Strength Indicator (CSI), which measures the relative strength of currencies in the forex market.

2. Key Components

Tor Signal: A proprietary indicator that generates buy or sell signals based on price action and momentum. The Tor Signal is designed to identify the beginning of a new trend or the continuation of an existing one.
Currency Strength Indicator (CSI): A tool that ranks currencies based on their relative strength over a specific period. The CSI helps to confirm the direction of the trade by ensuring that the currency pair chosen has one strong currency and one weak currency.
Time Frame 5 min or higher.
Currency pairs major and minor.

Tor Signal filtered by Currency Strength Indicator

3. Strategy Rules

Entry Rules:

Identify the Tor Signal:
- Buy Signal: A bullish Tor Signal is generated when the indicator suggests that the price is likely to move upward.
- Sell Signal: A bearish Tor Signal is generated when the indicator suggests that the price is likely to move downward.
Apply the CSI Filter:
- For a Buy Signal: The base currency of the pair must be among the strongest currencies according to the CSI, while the quote currency should be among the weakest.
- For a Sell Signal: The base currency should be among the weakest currencies, while the quote currency should be among the strongest.
Confirm the Signal:
- Only take the trade if the CSI filter confirms the Tor Signal by showing a clear divergence between the strength of the base and quote currencies.

Exit Rules:

Stop Loss Placement:
- Place a stop loss at the nearest support level for a buy trade or resistance level for a sell trade.
- Alternatively, use a fixed percentage or pip value based on the currency pair's volatility.
Take Profit:
- Set the initial take profit at a 1:2 or higher risk-to-reward ratio.
- Consider trailing the stop loss to lock in profits as the trade moves in your favor.
- Best Ratio Stop loss for this system is 1:1.1.

4. Trade Management:

Position Sizing: Use a risk management rule to determine position size, typically risking 1-2% of the trading account on each trade.
Trade Monitoring: Regularly monitor the trades and adjust the stop loss if necessary to protect profits.
Review and Adjust: Periodically review the strategy’s performance and make adjustments to the Tor Signal settings or CSI parameters if needed.

5. Conclusion

This trend-following strategy combines the technical precision of the Tor Signal with the broader market insight provided by the Currency Strength Indicator. By filtering trades through the CSI, the strategy aims to improve the accuracy of entry signals and capitalize on strong market trends. As with all trading strategies, it is essential to backtest thoroughly and adapt the rules to the specific trading environment.